ZIM NOTES 02-27-2009

UNCLAS SECTION 01 OF 03 HARARE 000163 AF/S FOR B. WALCH ADDIS ABABA FOR USAU ADDIS ABABA FOR ACSS NSC FOR SENIOR AFRICA DIRECTOR STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN COMMERCE FOR ROBERT TELCHIN SIPDIS E.O.12958: N/A TAGS: PGOV PREL ASEC PHUM ECON ZI SUBJECT: ZIM NOTES 02-27-2009 -------------- ¶1. SUMMARY -------------- Topics of the week: - MDC and ZANU-PF Going Head to Head in Government... - SADC Looking to Raise US$2 Billion for Zimbabwe... - Roy Bennett Granted Bail, but Still in Jail... - Tsvangirai to Attend Bob's Birthday Bash? ... - USAID Employee Released... - WOZA Women Beaten-Again... - Commodity Prices Keep Falling... - Policy Tug of War on Dual-Listed Stocks... - Platinum and Diamond Companies Buck Gono Directive... - ZESA Told to Reconnect Customers... - Zimbabwe has Trade Surplus with U.S... - IMF Coming to Zimbabwe... -------------- On the Political/Social Front -------------- ¶2. MDC and ZANU-PF Going Head to Head in Government...On February 24, President Mugabe unilaterally appointed a new slate of permanent secretaries-the third-ranking official in each ministry-without the "consultation and agreement" of the senior members of government (including the Prime Minister) as stipulated in the Interparty Political Agreement signed last September and in Amendment 19 to the Constitution. Tsvangirai immediately held a press conference and declared their appointments "null and void." He also said the appointments of Reserve Bank Governor Gideon Gono, Attorney General Johannes Tomana, and of provincial governors should be dealt with immediately, that Mugabe had agreed to the release of political detainees but this had not happened, and condemned the recent spate of farm seizures. See Harare 149. Mugabe publicly responded that the appointments of Gono, Tomana, and the permanent secretaries had been appropriately made. At week's end, government principals Mugabe, Tsvangirai, and Arthur Mutambara met to discuss these issues. ¶3. SADC Looking to Raise US$2 Billion for Zimbabwe... On the heels of Prime Minister Tsvangirai's fund-raising trip last week to South Africa, and after a meeting of SADC finance ministers including Zimbabwe's Tendai Biti, South African Finance Minister Trevor Manuel told the media on February 26 that SADC would seek to raise US$2 billion in funds for Zimbabwe's recovery. The figure is less than the US$5 billion Tsvangirai said was necessary to rebuild the country. Half of the money would be spent on activities that would restore economic activity, while the other half would be directed towards restoring basic services such as health and education. Meanwhile, several of the new MDC ministers have been appealing for financial support, including new Education Minister David Coltart who estimated he needed US$483 million to resurrect the education sector. See Harare 156. ¶4. Roy Bennett Granted Bail, but Still in Jail... The incarcerated Deputy Minister of Agriculture, Roy Bennett, was granted bail by Zimbabwe's High Court. Zimbabwean law grants the State seven days in which to decide whether to appeal the bail decision and, pursuant to law, Bennett remains in custody for this period. Bennett's lawyers are optimistic that the State will not appeal and that Bennett will Qare optimistic that the State will not appeal and that Bennett will then be released. ¶5. Tsvangirai to Attend Bob's Birthday Bash? ... A spokesperson for Tsvangirai informed the press that the Prime Minister planned to attend Mugabe's lavish 85th birthday party this weekend. While his presence is certainly intended to strengthen their long-frayed relationship, Tsvangirai's attendance has drawn criticism at a time of great economic hardship for most Zimbabweans. The menu for the event purportedly includes 2,000 bottles of champagne, 8,000 HARARE 00000163 002 OF 003 lobsters, 200 pounds of shrimp, 4,000 portions of caviar, 8,000 boxes of Ferrero Rocha chocolates, and 500 bottles of high-end liquor. Perhaps most offensive to hungry Zimbabweans was the boast that "no mealie meal or beef!" would be served. ¶6. USAID Employee Released... USAID employee Frank Muchirahondo was released from prison on February 24, after the State failed to make the case that he was involved in the alleged attempted assassination of Air Marshal Perence Shiri. Muchirahondo had been held in police custody since January 22. ¶7. WOZA Women Beaten-Again... At least nine members of Women of Zimbabwe Arise (WOZA) were treated for injuries inflicted by police and five were arrested on Wednesday when 450 members attempted to deliver a petition to Education Minister David Coltart. The petition, signed by 25,000, called on government to cancel the 2008 school year and allow children to repeat the year at no charge. As of Friday morning, the five in custody had not yet been charged. Riot police indiscriminately beat protesters and chanted, "today we are going to beat you" and "why are your husbands allowing you to protest?" The arrested women sang "we want education for our children" as they were hauled off to jail. One woman sustained serious injuries and is unable to walk; another's toe was fractured when a policeman stomped on her foot. -------------- On the Economic and Business Front -------------- ¶8. Commodity Prices Keep Falling... A quick survey of six different shops in Harare on February 26 showed that prices of most basic commodities continued to fall during the week under review. The decline in prices ranged from as low as 4 percent for maize meal to as high as 30 percent for salt and sugar. Despite the recent declines, most prices are still above regional averages and are expected to fall further in the short term. ¶9. Policy Tug of War on Dual-Listed Stocks... Boding ill for the promotion of foreign investment, and hardly a week after Finance Minister Biti had restored trading of dual-listed shares offshore (i.e. their fungibility),Reserve Bank of Zimbabwe (RBZ) Governor Gono issued a directive on February 23 reversing the practice. The RBZ also reiterated its claim to 5 percent of hard currency sales of shops for "monitoring and administration" purposes. ¶10. Platinum and Diamond Companies Buck Gono Directive... Zimbabwe's established platinum and diamond mining companies are not complying with RBZ Governor Gono's directive to localize their foreign currency accounts and submit to greater RBZ control. See Harare 161. ¶11. ZESA Told to Reconnect Customers... The new Minister of Energy and Power Development has ordered Zimbabwe Electricity Supply Authority (ZESA) to reconnect consumers who had failed to pay its new forex rates until "appropriate tariffs" have been set. Following years of under-pricing, ZESA appeared to have set rates designed to Qyears of under-pricing, ZESA appeared to have set rates designed to recoup all its losses in the shortest time possible. With many people still being paid the bulk of their salaries in worthless local currency, the move drew the public's ire. ¶12. Zimbabwe has Trade Surplus with U.S... Interestingly, despite the U.S. targeted sanctions on Zimbabwe that have been blamed by ZANU-PF stalwarts for the country's economic decline, Zimbabwe posted a trade surplus in 2008 with the United States. In 2008, Zimbabwe exported US$112 million worth of goods to the U.S., dominated by minerals exports, and imported US$92.9 million worth, predominantly food, according to the U.S. Census Bureau. ¶13. IMF Coming to Zimbabwe... The IMF expects to arrive on March 8 for a mission to Zimbabwe to assess the economic health of the HARARE 00000163 003 OF 003 country and forestall future financial problems. -------------- Quotes of the Week -------------- ¶14. "Therefore the announcement of the permanent secretaries has no force of law and is therefore null and void." -- Morgan Tsvangirai in reference to the unilateral nomination by Mugabe of permanent secretaries. ¶15. "I do not see any reason why those people should go and they will not go." -- Robert Mugabe's response to calls to dismiss Gono, Tomana, and the permanent secretaries. MCGEE