ZIM NOTES 8-29-2008

UNCLAS SECTION 01 OF 03 HARARE 000758 AF/S FOR G.GARLAND 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 8-29-2008 -------------- ¶1. SUMMARY -------------- Topics of the week: - MDC Wins House Speakership... - Police Forcefully Disrupt NGO Meeting... - Looming Food Crisis... - Death Toll at 171... - Infrastructure Bombing... - Abuses of Students Come to Light... - Olympic Swimmer Returns Triumphant... - Payment Delays/Power Cuts Strain RioZim... - Delta Corporation in "Survival Mode"... - Dismal Turnout at Harare Ag Show - Inflation Factoid... -------------- -------------- ¶2. Price Movements-Exchange Rate and Selected Products -------------- -------------- Parallel rate for cash doubled to Z$200:US$1 Bank transfer nearly quadrupled to Z$2000:US$1 against inter-bank average of Z$31:US$1 Bread on the parallel market rose to Z$300 Sugar rose to Z$300/2kg Cooking oil inched up to Z$90/750ml Petrol and diesel rose by a third to Z$300/liter -------------- On the Political/Social Front -------------- ¶3. MDC Wins House Speakership... The MDC (MDC-T) Tsvangirai formation shocked ZANU-PF and President Robert Mugabe by winning the House of Assembly speaker's position on Monday. MDC-T's Lovemore Moyo defeated Paul Themba Nyathi, nominated by the MDC Mutambara faction (MDC-M) by a vote of 110-98. In a secret ballot, apparently 4 ZANU-PF MPs and 8 MDC-M MPs defied their parties and voted for Moyo. The following day, Mugabe convened Parliament. In a blatant demonstration of disrespect for Mugabe and his position as president, the MPs jeered and heckled him throughout his speech. Moyo's election confounded SADC, which had called for the convening of Parliament after Tsvangirai failed to sign a power-sharing deal, and put to bed an alliance between ZANU-PF and MDC-M designed to undermine MDC-T. Tsvangirai and his party are emboldened and will undoubtedly continue to take a strong stand in negotiations with ZANU-PF. See Harare 747, 741, 730. ¶4. Police Forcefully Disrupt NGO Meeting... The anti-riot squad illegally disrupted the annual meeting of Crisis in Zimbabwe Coalition (CZC) at a local hotel on August 28, claiming that under the dreaded Public Order and Security Act (POSA),CZC should have given them four days' notice for convening a public meeting. However, the High Court previously determined that under POSA internal meetings do not require police permission. ¶5. Looming Food Crisis... The Mugabe government continues to deny NGOs and Private Voluntary Organizations access to over 1.3 million at-risk Zimbabweans to provide food, water, seed, fertilizer, and hygienic support. Currently, less than 300,000 people are receiving assistance, and record-low harvests may expose up to 5 million HARARE 00000758 002 OF 003 Zimbabweans to a severe food crisis. While there are large stockpiles of supplies in South Africa and Zimbabwe, the supply backlog is forcing donors to reconsider the utility of sending additional aid to Zimbabwe. Some NGOs have been able to conduct discrete workaround operations with the consent of local officials, though these groups still routinely face the threat of violence from war veterans and youth brigade members. See Harare 754. ¶6. MDC Secretary General Tendai Biti is seeking to have the humanitarian access issue raised in Parliament. The UN Food and Agriculture Organization is preparing a presentation for parliamentarians on the impact of the suspension on food aid. The MDC is also planning a media blitz on the effects of the NGO ban. In addition, local and international NGOs are increasing their advocacy by issuing a common statement on behalf of 100+ agencies. They are also finalizing a presentation to convey the impact of the ban on food security, agricultural recovery, nutrition/child protection, and water/sanitation, and they also plan to step up advocacy in the region. ¶7. Death Toll at 171... The death toll from post-March 27 election violence now stands at 171. However, the actual number is likely higher, due to the unknown number of unconfirmable deaths. See Harare 751. ¶8. Infrastructure Bombing... On the evening of August 21, two bombs were detonated on the Hunyani bridge 25 kilometers from Harare on the Bulawayo-Harare road. The bombs caused minor damage to the road and rail line. Police have no leads or suspects in their investigation. This is the second bombing to take place this month. At this point we don't know if this was malicious mischief, efforts by an anti-Mugabe group to harm infrastructure, or intentional ZANU-PF action to later blame on the MDC. ¶9. Abuses of Students Come to Light... "Inside Pandora's Box" details the strong-arm tactics used against Zimbabwean student protesters in 2006. Produced by Students Solidarity Trust-a local Zimbabwean student activist group-the 42-page report delves into the detentions and beatings of students, as well as the legislative measures taken by the Mugabe regime to suppress student protests. The report is on the Embassy intranet site. ¶10. Olympic Swimmer Returns Triumphant... Olympic gold and silver medalist Kirsty Coventry returned to a hero's welcome at Harare International Airport this week. The Herald awarded her a front page picture and banner headline, "Royal welcome for Kirsty." Mugabe mentioned her triumph in his speech at the opening of Parliament; the MDC responded by shouting, "she's white, she's white," in mockery of Mugabe's customary racist attitude toward Zimbabwe's white population. -------------- On the Economic and Business Front -------------- ¶11. Payment Delays/Power Cuts Strain RioZim... Nonpayment for gold deliveries to the Reserve Bank continues to constrain cash flow at RioZim. In its half-year results, RioZim reported that gold production at Renco Mine declined 31% compared to the same period last year, affected by load shedding and plant breakdowns. Nickel and copper production fell 39%, primarily due to power cuts. Analysts see the company's best prospects in coal and diamonds. Coal production at Sengwa Colliery increased just over 10% before RioZim recently terminated mining there in May to focus on seeking a partner for a 2000 MW power station envisioned for the site. Murowa Diamonds, 22% owned by RioZim, nearly tripled its diamond output to 135,000 carats. HARARE 00000758 003 OF 003 ¶12. Delta Corporation in "Survival Mode"... Delta executives said the economy had entered the "melt down zone" and Delta was in "survival mode," streamlining operations and refocusing on exports. Capacity utilization at the beverage giant is 25-35%. Illustrative of the export strategy, local sales of malt-based lager declined 46% in the last 6-month reporting period as Delta sidetracked its barley malt for the export market. Elsewhere in the business tea production fell 62% over the previous reporting period, along with declines in poultry, beef, fruits and vegetables. Analysts nevertheless recommend Delta for its strong balance sheet, cash flow and brands. ¶13. Dismal Turnout at Harare Ag Show... At mid-week, attendance at the once-renowned Harare Agricultural Show was less than a quarter of last year's already poor showing, matched only by the low turnout of exhibitors. ¶14. Inflation Factoid... The highest-denomination note (Z$500) fell in value on the street from US$33 to US$2.50 in the month of August. -------------- Quote of the Week -------------- ¶15. Mugabe at a lunch marking the opening of Parliament, reported in The Herald of August 27: Cde Mugabe said judging by the number of new cars on the roads, some of which included the latest models, it was surprising to note that Zimbabwe was regarded as poor. MCGEE