ZIM NOTES 11-7-2008

UNCLAS SECTION 01 OF 03 HARARE 001013 AF/S FOR B. WALCH ADDIS ABABA FOR USAU ADDIS ABABA FOR ACSS NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN TREASURY FOR D. PETERS 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 11-7-2008 -------------- ¶1. SUMMARY -------------- Topics of the week: - SADC Extraordinary Summit on Deck... - Mugabe Congratulates Obama... - Global Fund "diversion" goes public... - Cholera Outbreak Continues... - Civil Service Corruption Rampant... - WOZA Women Released on Bail... - Visiting American Surgical Team in Limbo... - ZBC Bars U.S. Embassy from U.S. Election Panel... - Government Suspends Duty on Agricultural Inputs... - RBZ Introduces New Notes and Raises Withdrawal Limits... - Air Zimbabwe Now Servicing Tehran... - Zimbabwean Ivory Sold... - Gold Sector Starts Closing Down Mines... -------------- ¶2. Price Movements-Exchange Rate and Selected products -------------- Parallel rate for cash more than doubled to Z$180,000:US$1 Check rate skyrocketed to Z$100 trillion:US$1 against inter-bank average of Z$770:US$1 Bread on the parallel market rose to Z$250,000 Sugar rose to $360,000/2kg Petrol and diesel went up to Z$240,000/liter -------------- On the Political/Social Frot -------------- ¶3. SADC Extraordinary Summit on Deck... The SADC extraordinary summit on Zimbabwe is scheduled to be held on November 9 in Johannesburg. All 15 SADC heads of states have been invited, but Tanzania's Kikwete and Botswana's Khama are not expected due to other commitments. ¶4. Mugabe Congratulates Obama... Friday's The Herald contains a statement from President Robert Mugabe congratulating Barack Obama on his victory and expressing desire for improved U.S.-Zimbabwe relations. An op-ed in Thursday's The Herald, entitled "Obama's victory an inspiration to many," also congratulated Obama, but blamed President Bush and sanctions, specified as the Zimbabwe Democracy and Economic Recovery Act (ZDERA),for Zimbabwe's economic predicament. It expressed hope for better relations with the U.S. and noted that "Our quarrel is with the British." ¶5. Global Fund "diversion" goes public... The New York Times broke the story on the Reserve Bank's "diversion" of over US$7 million that was donated to Zimbabwe by the Global Fund for AIDS, TB, and Malaria. On November 6, the government mouthpiece The Herald declared Zimbabwe would pay the money back within seven days and quoted Reserve Bank Governor Gideon Gono as saying that only "cheap minds" would suggest the money was used to buy tractors and TVs for the judiciary. On November 7 The Herald reported that the RBZ on November 6 provided the Global Fund with proof the funds had been repaid. Post is seeking confirmation. ¶6. Cholera Outbreak Continues... A cholera outbreak continues in the Harare high-density suburb of Budiriro, as the WHO confirmed 210 HARARE 00001013 002 OF 003 cases and 20 deaths as of Wednesday. Harare City Health has agreed to "super-chlorinate" shallow wells in Budiriro, and an outbreak taskforce-including UNICEF, WHO, NGO partners, and the GOZ's Civil Protection Unit and Ministry of Health-is meeting daily to coordinate a response. Water is being delivered daily throughout the suburbs by UNICEF, a robust health and hygiene promotion campaign is in process, and the Budiriro Polyclinic has been set up as a cholera treatment center. ¶7. Civil Service Corruption Rampant... Another indication of Zimbabwean decay is the endemic corruption within the Zimbabwean civil service, resulting in a near total collapse of government controls over passports and official documents. Civil servants, whose salaries have been eroded to practically nothing by hyperinflation, have become not only susceptible, but dependent on bribes and kickbacks for basic subsistence. As a result, government controls over passport applications and civil documents have disappeared and fraudulent document vendors have become widespread. See Harare 996. ¶8. WOZA Women Released on Bail... After three weeks in jail, Women of Zimbabwe Arise leaders Jenni Williams and Magodonga Mahlangu were granted bail by the High Court on November 4. Leaving jail, they shared horrific stories of worsening conditions and food shortages that plague Zimbabwe's prisons. ¶9. Visiting American Surgical Team in Limbo... The volunteer medical team providing free cleft lip and palate operations to individuals with facial deformities is "on temporary hold" due to failure to procure much-needed medical supplies. Jenifer Trubenbach, coordinator of Operation of Hope told journalists that the team is having difficulties procuring drugs locally for conducting the operations. ¶10. ZBC Bars U.S. Embassy from U.S. Election Panel... The Zimbabwean Broadcasting Corporation withdrew an invitation to have a U.S. Embassy official on its televised panel on U.S. elections this week saying "their equipment needed servicing." The producer of the program later told PAS that their CEO was pressured from above not to go ahead with the program "if a U.S. Embassy official is on board." The debate went ahead with local panelists. -------------- On the Economic and Business Front -------------- ¶11. Government Suspends Duty on Agricultural Inputs... In a desperate move to augment meager local production, the government announced three statutory instruments suspending import duties on certain agricultural inputs such as seed, fertilizers, gum shoes and rain coats. While welcome news for farmers, it may be a case of too little too late given that the 2008/09 planting season is already underway. ¶12. RBZ Introduces New Notes and Raises Withdrawal Limits... In keeping with precedent, this week the Reserve Bank of Zimbabwe introduced a Z$100,000 note (US$0.56 at the cash rate of Z$180,000:US$1),a Z$500,000 note (US$2.78) and a Z$1,000,000 (US$5.56) note. The move comes in conjunction with an increase in daily cash withdrawal limits from Z$50,000 and Z$10,000 to Z$500,000 and Z$1,000,000 for individuals and companies respectively. Given the prevailing hyper-inflationary environment, the new limits are likely to become inadequate almost immediately. ¶13. Air Zimbabwe Now Servicing Tehran... According to state media, Air Zimbabwe has inked a deal with Iran allowing the airline five weekly flights to Tehran. The Iranian deal is supposedly representative of the GOZ's "look east" policy designed to increase HARARE 00001013 003 OF 003 trade between Zimbabwe and Middle Eastern and Asian countries. ¶14. Zimbabwean Ivory Sold... On November 3, Zimbabwe sold 3.5 tons of ivory for over US$450,000, with the money purportedly earmarked for the country's cash-strapped wildlife authority. Last year, the Convention on International Trade in Endangered Species (CITES) ruled that Botswana, Namibia, South Africa and Zimbabwe could sell some 97 tons of stockpiled ivory to approved Japanese and Chinese buyers. ¶15. Gold Sector Starts Closing Down Mines... According to the Chamber of Mines, Zimbabwe's largest gold mining group, Metallon, has suspended operations at five of its mines forcing more than 3,500 employees (14% of total gold mining jobs) to go on forced leave. The sector is short of working capital due to the US$30 million they are owed by the RBZ. According to the Chamber of Mines, these problems are not unique to gold as Bindura Nickel is also facing serious problems. -------------- Quote of the Week -------------- ¶16. "The question is, for how long shall Tsvangirai urinate in our faces and tell us it's raining?" Caesar Zvayi, Senior Asst. Editor for The Herald, November 3, 2008. DHANANI