Makumbe says GPA is a bad deal, a very bad deal

“This is a bad deal: a very bad deal. I wonder where these guys were when they signed this deal. Perhaps they were in a stinking toilet. But even a stinking toilet stops smelling if you stay in it for a long time.”-Political analyst John Makumbe on the power-sharing agreement.

Full cable:

Viewing cable 08HARARE1122, ZIM NOTES 12-12-2008

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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN

DE RUEHSB #1122/01 3510812

ZNR UUUUU ZZH

R 160812Z DEC 08

FM AMEMBASSY HARARE

TO RUEHC/SECSTATE WASHDC 3822

RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

RUEHUJA/AMEMBASSY ABUJA 2144

RUEHAR/AMEMBASSY ACCRA 2496

RUEHDS/AMEMBASSY ADDIS ABABA 2619

RUEHRL/AMEMBASSY BERLIN 1112

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RUEHDK/AMEMBASSY DAKAR 2243

RUEHKM/AMEMBASSY KAMPALA 2668

RUEHNR/AMEMBASSY NAIROBI 5096

RHEHAAA/NSC WASHDC

RHMFISS/EUCOM POLAD VAIHINGEN GE

RUEHGV/USMISSION GENEVA 1763

RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK

RHEFDIA/DIA WASHDC

RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 001122

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 12-12-2008

———–

¶1. SUMMARY

———–

Topics of the week:

– PF-ZAPU Revitalizing Party…

– MDC Holds Strategy Meeting…

– Manyika’s Death an Accident?…

– ZANU-PF Conference Delayed…

– Mugabe Says Cholera Stopped…

– Zimbabwe to be Discussed at UNSC…

– EU Adds 11 Names to Sanctions List…

– Harare Sends Team to Investigate Plot in Botswana…

– Government Orders Retailers to Reduce Prices…

– New Z$200 Million Note Issued and Cash Withdrawal Limits

Raised…

– Wheat Crop Abysmal; Maize to Follow…

– Zimbabwe Introduces Fuel Tax…

– Survival of Stockbrokers Threatened…

– Fall In Platinum Prices Hits Zimplats…

———————————

¶2. Price Movements-Exchange Rate

and Selected products

———————————

Parallel rate for cash rose seven-fold to Z$70,000,000:US$1

Check rate came down to Z$10 quadrillion:US$1 against inter-bank

average of Z$226,955:US$1

Bread on the parallel market went up to Z$80,000,000

Sugar rose to Z$100,000,000/2kg

Petrol and diesel rose to Z$100,000,000/liter

—————————–

On the Political/Social Front

—————————–

¶3. PF-ZAPU Revitalizing Party… The former liberation party

PF-ZAPU is holding a conference in Bulawayo on December 13 and 14 to

establish the party’s political structures. PF-ZAPU declared it was

breaking away from ZANU-PF in November and has already publicly

nullified the 1987 Unity Accords that merged the two independence

parties. See Harare 1115.

¶4. MDC Holds Strategy Meeting… The MDC met in Gaborone this week

to discuss strategy. Subsequently, MDC negotiators Tendai Biti and

Elton Mangoma met with South African facilitators to discuss

Amendment 19. There have been no discussions on outstanding issues

such as the equitable distribution of ministries. See Harare 1117.

¶5. Manyika’s Death an Accident?… ZANU-PF political commissar

Elliot Manyika died in a car accident last Saturday when his car

suffered a blown tire. In rumor-driven Zimbabwe there is

considerable speculation that this was not in fact an accident.

Manyika was close to Emmerson Mnangagwa and was viewed as a

hardliner who was attempting to reform ZANU-PF party structures in

support of Mnangagwa. Perhaps not coincidentally, his two immediate

predecessors died under similar circumstances. Border Gezi died on

April 28, 2001 when his car skidded of the road. Moven Mahachi died

on May 26, 2001 when his Range Rover also went off the road.

¶6. ZANU-PF Conference Delayed… Party leaders announced that the

ZANU-PF annual conference scheduled for December 10-14 has been

HARARE 00001122 002 OF 003

delayed due to the recent death of Manyika. The conference is now

expected to be postponed until December 19. Despite the party’s

explanation for the delay, there is speculation that a lack of funds

is the real cause of the postponement.

¶7. Mugabe Says Cholera Stopped… In a speech on December 11

memorializing Manyika’s death, Mugabe stated that the cholera

epidemic had been halted. Meanwhile, the UN has said that cholera

fatalities are approaching 800 with numerous undiagnosed deaths

indicating the actual number likely exceeds 1,000 and rising.

Mugabe’s mistaken or deliberately deceptive statement may have been

the cause for the denial of visas to a French team of disease

specialists who had intended to aid in cholera treatments and

prevention.

¶8. Zimbabwe to be Discussed at UNSC… British Prime Minister

Gordon Brown indicated that he had spoken with UN Secretary General

Ban Ki-moon who told him that the UNSC could meet as early as

December 15 to discuss the deteriorating situation in Zimbabwe.

Brown said that Zimbabwe faced a “humanitarian emergency of colossal

proportions.”

¶9. EU Adds 11 Names to Sanctions List… Following a growing

chorus from world leaders calling for Mugabe to go, the EU added 11

names to their Zimbabwean sanctions list that freezes assets and

bars travel to Europe. The statement also indicated further

sanctions could be imposed depending on events in Zimbabwe. The new

names, described by British foreign secretary David Miliband as

“middle-ranking members of the regime” were added to 168 others on

the list.

¶10. Harare Sends Team to Investigate Plot in Botswana… For the

second time in two weeks, Zimbabwe has sent a team of investigators

into Botswana to uncover evidence of a purported plot to train

Zimbabwean dissidents and members of the opposition in tactics that

would lead to the government’s overthrow. Botswanan president Ian

Khama has been outspoken that the charges were trumped up by ZANU-PF

and invited SADC to assemble its own investigations team to dispel

the accusation.

———————————-

On the Economic and Business Front

———————————-

¶11. Government Orders Retailers to Reduce Prices… The chairman

of the National Incomes and Prices Commission, Godwills

Masimirembwa, ordered retailers on December 9 to reduce prices of

basic commodities to their December 3 levels because the increases

were “not cost based.” The wave of price increases that coincided

with the introduction of new higher denomination bank notes last

week was caused by a fivefold fall in the cash value of the Zimbabwe

dollar. It is not yet clear how the order will be enforced in light

of the empty shelves and public outcry that accompanied enforced

price controls in July 2007.

¶12. New Z$200 Million Note Issued and Cash Withdrawal Limits

Raised… The Reserve Bank of Zimbabwe introduced a new Z$200

million (Under US$3 at today’s cash rate of Z$70 million:US$1) note

and increased the weekly cash withdrawal limit to Z$500 million. In

anticipation of the increase, lines started forming at banks around

8 pm on December 11. Although higher cash withdrawal limits and the

higher denomination bank notes have previously cut bank lines, the

effect is temporary as prices quickly rise.

¶13. Wheat Crop Abysmal; Maize to Follow… Total production for

the 2008 wheat crop was 38,933 metric tons (MT) which reflected an

average yield of 1.2 MT/hectare. These figures are the lowest

recorded for wheat production since 1980. The GOZ has also only

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distributed 5,445 MTs of maize seed out of a specified goal of

12,500 MTs. The humanitarian community distributed an additional 838

MTs of maize seed and/or fertilizer to about 330,000 households.

¶14. Zimbabwe Introduces Fuel Tax… The GOZ introduced a fuel tax

to raise funds for the Zimbabwe National Road Administration to fund

road maintenance. The formula for determining the tax rate is a

complex function of quantities imported and the invoiced purchase

and shipping costs when the fuel arrives in Mutare. The tax will

increase fuel prices to motorists at a time when world oil prices

are falling. In view of the government’s widening deficit, there is

no guarantee that the money will go towards road maintenance.

¶15. Survival of Stockbrokers Threatened… There has been no

recent trading activity on the Zimbabwe Stock Exchange since reserve

bank governor Gono introduced punitive measures against stockbrokers

and banks that traded on unfunded checks. Most stockbrokers are

busy counting their losses as a number of them were either victims

of fraudulently drawn bank checks or were affected by the market’s

collapse.

¶16. Fall In Platinum Prices Hits Zimplats… Zimplats Holdings

Limited expects to post a loss for the second half of 2008 because

of the 65 percent fall in global platinum prices from a peak of

US$2,300 per ounce in March to US$817 per ounce by December 9, 2008.

The company said it would have to borrow in order to complete the

first phase of the expansion of its Ngezi mine because it failed to

generate enough cash flow for the project.

—————–

Quote of the Week

—————–

¶17. “This is a bad deal: a very bad deal. I wonder where these

guys were when they signed this deal. Perhaps they were in a

stinking toilet. But even a stinking toilet stops smelling if you

stay in it for a long time.” Political analyst John Makumbe on the

power-sharing agreement.

DHANANI

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