Cablegate: Zim Notes 7-25-2008

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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0637/01 2100616
ZNR UUUUU ZZH
R 280616Z JUL 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3221
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2026
RUEHAR/AMEMBASSY ACCRA 2177
RUEHDS/AMEMBASSY ADDIS ABABA 2296
RUEHRL/AMEMBASSY BERLIN 0828
RUEHBY/AMEMBASSY CANBERRA 1573
RUEHDK/AMEMBASSY DAKAR 1931
RUEHKM/AMEMBASSY KAMPALA 2352
RUEHNR/AMEMBASSY NAIROBI 4783
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1442
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000637

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

SIPDIS

E.O.12958: N/A
TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: ZIM NOTES 7-25-2008

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1. SUMMARY
-----------

Topics of the week:

- MOU Signed, Talks Started...
- Over a Quarter of MDC MPs Targeted...
- EU Expands Sanctions List...
- SADC Tribunal Rules Against Zimbabwe on Land...
- State Media Tone Down Rhetoric...
- Zim Journalist Wins CNN Award...
- Holding Mugabe Accountable...
- Looming Cash Shortage...
- Cargill's Cotton Caught in Cash Crunch...
- Another EU Company under Boycott Pressure...
- Nickel Production Down...
- Zimbabwe International Book Fair Cancelled...

--------------------------------------------- ----------
2. Price Movements-Exchange Rate and Selected Products
--------------------------------------------- ----------

Parallel rate for cash inched up to Z$110 billion:US$1 against
inter-bank average of Z$49 billion:US$1

Bank transfer rate shot to Z$780 billion:US$1; official rate:
Z$$30,000:US$1

Bread on the parallel market Z$150 billion vs. controlled price of
Z$400 million

Sugar steady at Z$300 billion/2kg vs. controlled price of Z$8
million/2kg

Cooking oil rose to Z$180 billion/750ml vs. controlled price of
Z$9.3 million/750ml

Petrol and diesel shot to Z$190 billion/liter vs. controlled price
of Z$60,000/liter

-----------------------------
On the Political/Social Front
------------------------------

3. MOU Signed, Talks Started - Robert Mugabe, Morgan Tsvangirai,
and Arthur Mutambara signed a Memorandum of Understanding on July 21
laying out a framework for inter-party negotiations that started in
South Africa on July 24. Reaction to the MOU has varied. While it
has generated significant buzz, some actors in the MDC and
Zimbabwean civil society remain deeply pessimistic. See Harare 625
and 628.

4. Over a Quarter of MDC MPs Targeted - Since March 29, a dozen MDC
legislators have been charged with crimes; others were on police
"wanted lists" or held without charge. Since signing of the MOU, it
appears the MP hunt has been called off, but many MPs-elect still
fear returning home/facing trial. See Harare 622.

5. EU Expands Sanctions List - The European Union this week added
37 people and entities to its targeted sanctions list. While most
of the new names are members of the military involved in
election-related violence, the list also includes Peter Chingoka,
the Chairman of Zimbabwe Cricket, and two hate-mongering journalists
associated with the state-sponsored newspaper The Herald.

6. SADC Tribunal Rules Against Zimbabwe on Land - On July 18, the
SADC Tribunal in Namibia ruled that the GOZ had violated the body's

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December 2007 injunction against the harassment or eviction of
several dozen white farmers. The farmers are contesting the seizure
of their property under fast-track land reform. Prosecutions of
farmers for contravening eviction orders slowed down starting in
mid-May, but there has been no letup in disruptions on the ground.
The Tribunal's authorizing legislation provides that once its orders
have been breached the matter is turned over to the SADC Secretariat
for appropriate action. The next SADC Summit, at which action could
be taken, will be on August 15 under South Africa's chairmanship.
See Septel.

7. State Media Tone Down Rhetoric - State media rolled back hate
speech against Morgan Tsvangirai and the MDC this week; they even
referred to Tsvangirai for the first time as "the opposition
leader." A senior journalist at The Herald told us the paper had
edited out a diatribe against Tsvangirai and the MDC by the First
Lady at the launch of an orphans project this week. Attacks,
however, on the U.S./EU for their targeted sanctions persisted.

8. Zim Journalist Wins CNN Award - Despite the GOZ's refusal to
grant him a license to cover news, Hopewell Rugoh Chin'ono last week
won the prestigious CNN-sponsored African Journalist of the Year
competition for an uncompromising documentary on Zimbabwe's struggle
against HIV-AIDS: "Pain in My Heart." The documentary beat 1911
entries from across Africa. Chin'ono has been filing news footage,
including a recent interview with Ambassador McGee, undercover to
international news agencies.

9. Holding Mugabe Accountable - !Enough and Impunity Watch issued a
discussion paper this week that highlights the legal options
available to hold President Robert Mugabe accountable for various
international crimes.
www.enoughproject.org/files/reports/july_zim_ 2.pdf.

10. Readings on Transitional Governments - The Center for
Contemporary Conflict's January 2006 "Strategic Insights" focused on
transitional governments. It looked at variety of experiences,
including from Kosovo, Liberia, East Timor, and El Salvador. See
www.ccc.nps.navy.mil/si/archiveDate.asp#vol5i ssue1.

-----------------------------------
On the Economic and Business Front
----------------------------------

11. Looming Cash Shortage - Hyperinflation is driving demand for
cash as problems of bank connectivity, the quadrillions and
quintillions, and transaction lag discourage the use of debit cards,
checks and bank transfers. Barter is on the rise, along with price
indexing to a stable currency, or outright dollarization. Banks are
still getting their daily cash requirement from the Reserve Bank,
but the disruption in the supply of banknote paper combined with
hyperinflation presage an imminent shortage. The GOZ has responded
with some unsustainable stopgap measures, including introduction of
a new Z$100 billion note this week. See Harare 627.

12. Cargill's Cotton Caught in Cash Crunch - Cargill has been
unable to access enough cash to buy up its contracted cotton crop
for the past three weeks. In the meantime, better connected
competitors are moving in to exploit the company's distress in a
sector notorious for side-marketing.

13. Another EU Company under Boycott Pressure - Media pressure is
mounting on the small Austrian security software company Jura JSP to
suspend the provision of security software to Zimbabwe's banknote
printer. Similar pressure compelled Germany's Giesecke & Devrient
to end delivery of banknote paper earlier this month.

14. Nickel Production Down - Bindura Nickel Corporation (BNC)

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reported production down 37% in the year ending March 31. Weaker
nickel prices, the RBZ's stranglehold on earned foreign exchange,
skills flight, and aged equipment dampened results. The unviable
inter-bank exchange rate and spiraling inflation will likely
continue to hurt performance, although BNC is opening a new mine
this year. Nickel was Zimbabwe's fourth largest mineral export last
year. US$30.8 million worth of Zimbabwe nickel went to the U.S. in
2007, according to TradStats Express. That amount is over 40% of
Zimbabwe's US$71.8 million in exports to the U.S. in 2007.

15. Zimbabwe International Book Fair Cancelled - Economic
conditions and the loss of support from international sponsors have
forced cancellation of this year's ZIBF. A major publishing event
in Africa since 1983, its demise is a significant blow to the
African publishing industry, not to mention one more sign of
Zimbabwe's decline.

MCGEE

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