VZCZCXRO9779
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0323/01 1021102
ZNR UUUUU ZZH
R 111102Z APR 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2768
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1916
RUEHAR/AMEMBASSY ACCRA 1912
RUEHDS/AMEMBASSY ADDIS ABABA 2035
RUEHRL/AMEMBASSY BERLIN 0601
RUEHBY/AMEMBASSY CANBERRA 1312
RUEHDK/AMEMBASSY DAKAR 1669
RUEHKM/AMEMBASSY KAMPALA 2091
RUEHNR/AMEMBASSY NAIROBI 4522
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1167
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC
UNCLAS SECTION 01 OF 03 HARARE 000323
SIPDIS
AF/S FOR S.HILL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN
TREASURY FOR J.RALYEA AND T.RAND
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN
COMMERCE FOR BECKY ERKUL
CIA WASHDC
SIPDIS
E.O.12958: N/A
TAGS: PGOV PREL ASEC PHUM ECON ZI
SUBJECT: ZIM NOTES April 11, 2008
-------------
1. SUMMARY
-------------
Topics of the week:
- Election Results Still Pending
- Regional Engagement On Zimbabwe
- Electoral Commission Under Fire
- Post-Election Surge In Violence And Intimidation
- *Zimbabwe Dollar Dives
- Punitive New Income Tax Bands, Higher Rates, And Steep Increase In
Social Security Deduction
- Wheat/Barley Farmers Still Awaiting Payment For 2007 Crop
- Delta Beverages Warns Of Unviable Prices
- Corrigendum
------------------------------
2. Price Movements-Exchange Rate
and Selected products
------------------------------
*Parallel rate for cash shot to ZW$65million:US$1;
Bank transfer rate: Z$73 million; official rate: ZW$$30,000:US$1
Sugar rose to Z$90 million/2kg vs. controlled price of
Z$8million/2kg
*Cooking oil increased to Z$110 million/750ml vs. controlled price
of Z$9.3million/750ml
Petrol and diesel moved to Z$90 million/liter vs. controlled price
of Z$60,000/liter
-----------------------------
On the Political/Social Front
-----------------------------
3.Election Results Still Pending ... As Zimbabwe ends its second
week without the announcement of official results in the March 29
presidential election, rumors of runoffs, recounts and reruns
continue to swirl. The Herald reported today that the Zimbabwe
Electoral Commission (ZEC) had taken the position it could not
announce presidential election results until the completion of the
court hearing on the MDC's application to compel the ZEC to announce
results. The hearing ended yesterday; the judge presiding over the
case indicated he would give his judgment on the morning of April
14.
4. Regional Engagement On Zimbabwe... In advance of the April 12
emergency SADC summit on Zimbabwe to be held in Lusaka, Zambia (see
Lusaka 412), the MDC spent much of the week on a regional diplomatic
tour, appealing to Zimbabwe's neighbors for assistance in concluding
the election. MDC presidential candidate Morgan Tsvangirai, met
with South Africa's ANC president Jacob Zuma and President of
Botswana Ian Khama (see Gaborone 264). Tsvangirai reportedly plans
to travel to Mozambique to meet President Armando Guebuza before
arriving in Lusaka for the SADC summit and a meeting with Zambian
President and SADC Chairman Levy Mwanawasa. The Zimbabwe
Independent reported that Mugabe also planned attend this weekend's
summit, equipped with a "dossier" defending the delay in releasing
results and ZANU-PF's calls for a recount. Meanwhile, MDC Secretary
General Tendai Biti held a press conference in South Africa to
announce that the MDC would not participate in a runoff, contending
that Tsvangirai won the presidential contest outright. The MDC made
similar claims in previous elections, including the March 29
contest, before ultimately deciding to participate and many believe
the MDC is once again posturing.
5. Electoral Commission Under Fire... The Zimbabwe Electoral
Commission (ZEC) has drawn a spate of criticism for disbanding its
HARARE 00000323 002 OF 003
central command center, where votes from the March 29 election were
being counted, in favor of returning to its main offices. The move
comes amid calls for results to be released by the international
community and ongoing deliberation by the High Court on an MDC
petition for the court to compel ZEC to release their results. ZEC
claims that it is continuing to count votes and has not yet begun
the verification process. Under fire from both sides, several ZEC
officials and poll workers have been arrested by the Mugabe regime
for allegedly prejudicing results for the MDC. See Harare 313.
6. Post-Election Surge In Violence And Intimidation... We have
received reports from around the country of intimidation and
violence against opposition supporters, civil society and white
farmers in the past week. For example, one ZANU-PF dissident
reported that command centers run by off-duty soldiers had been
established in rural areas to coordinate attacks, and that his own
properties had been looted (see Harare 317); while a newly elected
MP raised concerns that war veterans and ZANU-PF youth militia were
reassembling in his province, causing fear amongst his constituents.
In addition to threats and beatings targeting election observers
and party agents, as many as 45 white-owned farms were seized in the
days following the election, again by war veterans and ZANU-PF youth
militia (see Harare 314). These reports track with MDC Secretary
General Tendai Biti's public reports of the "militarization" of the
countryside by ZANU-PF; Biti claims that security forces have been
systematically deployed by the Mugabe regime to force a ZANU-PF win
in the event of a runoff (see Harare 313).
--------------------------
Economic and Business News
--------------------------
7. *Zimbabwe Dollar Dives... After having maintained its value for
the past three weeks, the local currency swooned on the parallel
market these last days, losing half its value on the street in one
week. We hear from bankers that the Reserve Bank of Zimbabwe, a
major parallel market player, has returned to the forex market,
apparently with a bursting wallet.
8. Punitive New Income Tax Bands, Higher Rates, And Steep Increase
In Social Security Deduction... The GOZ announced last week
punitive new income tax bands and an increase in the tax rate for
the highest bracket, i.e. for those earning over Z$5 billion/month
(that's about US$77/month), effective April 1. On top of those
deductions come a 3% AIDS Levy, pension deductions that range from
5-8%, and a huge increase in the National Social Security Authority
(NSSA) deduction that works out to Z$150 million/month for employees
and employers alike on wages and salaries of Z$5 billion/month.
9. Wheat/Barley Farmers Still Awaiting Payment For 2007 Crop... The
Commercial Farmers' Union (CFU) reported last week that the vast
majority of growers were still waiting for the hard currency portion
of their payment for last year's winter wheat and barley crops. The
CFU suggested that the delays in payment would discourage farmers
from growing wheat, which is primarily grown by commercial farmers,
this approaching season.
10. Delta Beverages Warns Of Unviable Prices... The Herald reported
today that Delta Beverages could stop producing carbonated soft
drinks and cut off the production line if prices are not reviewed to
economic levels. The state-owned newspaper quoted an approved
selling price of less than Z$10 million while apparently it costs
Delta Z$22 million to get the product (content only) off the
production line.
11. Corrigendum... In last week's Zim Notes, an error crept into
our calculation of the value of the just-released Z$50 million note
- it was worth US$1.16 at issuance, not 58 US cents. However, a
HARARE 00000323 003 OF 003
week later, its value on the street has already tumbled to about 75
US cents.
MCGEE