Crisis! What crisis?

Crisis! What crisis? This was the quote of the week by the United States embassy in Harare in one of its diplomatic cables about the crisis in Zimbabwe as the country’s political leaders tried to get a solution to the country’s political and economic problems, six months after the March 2008 general elections.

“We have organisations which call themselves ‘Crisis in Zimbabwe’. What crisis are they talking about? They are the ones who are encouraging the crisis, and as a government we cannot accept that,” Information Minister Sikhanyiso Ndlovu was quoted as saying.

The three major political parties signed the Global Political Agreement, nine days later.

Full cable:

Viewing cable 08HARARE785, ZIM NOTES 9-5-2008

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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

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E.O.12958: N/A

TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: ZIM NOTES 9-5-2008

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¶1. SUMMARY

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Topics of the week:

– Talks to Continue Monday…

– NGO Ban Lifted…

– Back to School, if You Can Pay…

– MDC MPs Ejected from Swearing-in…

– Mugabe and Tsvangirai attend Mwanawasa funeral…

– ZBC Television turns to Korea…

– Britain Eases Travel Advice…

– Survey says…

– Banks Benefiting Short-Term from State Spending…

– Inflation Rages On…

-Reserve Bank Seeking Local Solution for Banknote Paper Supply…

– World Bank Officials Visit Harare…

– Tobacco Board Concedes Poor Crop…

– Levy On Generators Scrapped…

– Local Conglomerate Expands Outside Zimbabwe…

——————————————— ———-

¶2. Price Movements-Exchange Rate and Selected Products

——————————————— ———-

Parallel rate for cash rose to Z$235:US$1

Bank transfer more than doubled to Z$5500:US$1 against inter-bank

average of Z$46.03:US$1

Bread on the parallel market rose by half to Z$450

Sugar almost doubled to Z$500/2kg

Cooking oil remained static at Z$90/750ml

Petrol and diesel rose by two-thirds to Z$500/liter

—————————–

On the Political/Social Front

—————————–

¶3. Talks to Continue Monday… Renewed ZANU-PF – MDC talks had been

expected to resume on Thursday and Zimbabwean president Robert

Mugabe threatened to appoint a cabinet if an agreement was not

reached by the weekend. MDC president Morgan Tsvangirai, however,

decided to postpone his return to Harare after attending former

Zambian president Mwanawasa’s funeral in Lusaka and South African

president Thabo Mbeki accordingly delayed his trip to Harare. Mbeki

is now planning to travel to Harare on Monday in a last-ditch effort

to reach a deal. The obstacle still remains an agreement on the

distribution of executive power between Mugabe as president and

Tsvangirai as prime minister.

¶4. NGO Ban Lifted… The Government lifted the suspension on NGO

field operations on August 29, allowing humanitarian assistance and

vital food aid distribution to recommence. However, a debate

continues among human rights and democracy-building organizations as

to whether their activities are still “banned”. See Harare 765 and

¶778.

¶5. Back to School, if You Can Pay… Most schools started this

week. Despite its illegality, many private schools are demanding

payment in foreign currency, gas coupons, and even livestock. See

Harare 767.

¶6. MDC MPs Ejected from Swearing-in… The swearing-in ceremony

HARARE 00000785 002 OF 003

for the Makoni rural council was violently interrupted on September

2, when eight losing ZANU-PF councilor candidates arrived, demanding

to be sworn in. Tensions quickly rose and the 23 MDC

councilors-elect, three MDC MPs, and their supporters were forcibly

removed by riot police and ZANU militia that were called by the

District Administrator. The 16 ZANU elected councilors and the

eight losing ZANU councilors were then sworn in. Monica Chinamasa

(Senator Patrick Chinamasa’s wife) and David Mutasa (National

Security Minister Didymus Mutasa’s cousin) were among the eight who

apparently appointed themselves to the council. David Mutasa was

then “elected” Chairman of the Council.

¶7. Mugabe and Tsvangirai attend Mwanawasa funeral… Both Robert

Mugabe and Morgan Tsvangirai attend the funeral of Zambian President

Levy Mwanawasa in Lusaka on September 3. Mugabe surprised many by

praising Mwanawasa as a “frank and honest man”. Mwanawasa was the

first African president to openly criticize the Mugabe regime when

he likened it to a “sinking titanic”.

¶8. ZBC Television turns to Korea… Cash strapped state

broadcaster, ZBC TV, launched a new programming schedule this week

that will feature South Korean dramas and comedies, in addition to

locally produced dramas and talk shows. The new schedule runs until

December 2.

¶9. Britain Eases Travel Advice… Citing decreased post-election

violence, the Foreign Office downgraded its advice against all but

essential travel to Zimbabwe on August 27, effectively putting

British advice in-line with U.S. guidance.

¶10. Survey says… A Gallup poll conducted before the March 29

elections pegged Mugabe’s approval rating at a pitiful 17%. In

contrast, Mugabe declared victory in the June 27 election with a

whopping 86% of the vote. See: http://www.gallup.com/poll/109963

/Most-Zimbabweans-Disapprove-

Their-Leadership.aspx.

———————————-

On the Economic and Business Front

———————————-

¶11. Banks Benefiting Short-Term from State Spending… The bank

liquidity crisis of late 2007/early 2008 has abated, perversely due

to high election-related government expenditure. The spending has

caused explosive growth in money supply and hyperinflation. When

Zimbabwe returns to sound macroeconomic policies, the downside risks

to the banking sector will be high. See Harare 773.

¶12. Inflation Rages On… Although official statistics put

year-on-year rate inflation for June at 11.2 million percent,

reliable private estimates put the rate at close to 10 billion

percent in August, with food inflation close to 8 billion percent.

Supply side rigidities and the precipitate depreciation of the

Zimbabwe dollar on the parallel market have been largely responsible

for the rise.

¶13. Reserve Bank Seeking Local Solution for Banknote Paper

Supply… See Harare 760.

¶14. World Bank Officials Visit Harare… Three World Bank

officials visited Harare the week of August 18 to brief donors on

developments related to the Multi Donor Trust Fund and to take the

pulse of the economy. Maputo-based country director Michael Baxter

said the World Bank had geared up to re-engage with Zimbabwe once

policies came right, but at the end of his visit he saw the chances

of the Bank moving forward on Zimbabwe receding. See Harare 777.

¶15. Tobacco Board Concedes Poor Crop… Tobacco Industry Marketing

HARARE 00000785 003 OF 003

Board Acting CEO Dr. Andrew Matibiri told us the 2008/09 tobacco

crop would likely be about 55 million kg, close to the

post-independence low. In addition, growers were holding back

deliveries to the auction floor due to high transportation costs,

the unfavorable inter-bank exchange rate, and dearth of inputs, even

on the black market, for purchase with their quickly depreciating

proceeds. Matibiri described the state of seedbed preparation for

next year’s crop as “very poor and very late.”

¶16. Levy On Generators Scrapped… The ill-advised US dollar levy

on domestic and industrial generators introduced two weeks ago has

been scrapped.

¶17. Local Conglomerate Expands Outside Zimbabwe… Having expanded

beyond its local presence in tourism, insurance, and the fertilizer

industry, 72% of TA Holdings’ balance sheet is now outside Zimbabwe

and 50% of the company’s assets are financial. With little debt,

Zimbabwe’s second largest conglomerate, is seeking further

acquisitions in Zimbabwe and beyond. TA’s Sable Chemicals had

contributed 45% to the group’s balance sheet as recently as four

years ago, but under price controls the fertilizer plant is now

operating at only 17% capacity.

—————–

Quote of the Week

—————–

¶18. Crisis? What crisis? Information and Publicity Minister

Sikhanyiso Ndlovu in an interview on September 2:

“We have organizations which call themselves ‘Crisis in Zimbabwe’.

What crisis are they talking about? They are the ones who are

encouraging the crisis, and as a government we cannot accept that.”

MCGEE

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