Matinenga released

Newly elected Buhera Member of Parliament Eric Matinenga was released after five days in jail. The magistrate dismissed charges that he paid Movement for Democratic Change youths to perpetrate violence against ZANU-PF supporters.

Other MDC leaders and legislators who had been arrested were also released.

The leader of the main faction Morgan Tsvangirai was detained allegedly on charges of “drawing a large crowd”. The Herald said he had never been arrested.

The leader of the smaller faction Arthur Mutambara who had been arrested for writing a scathing article describing President Robert Mugabe’s government as “imbecilic” was also released after two days.

The legislator for Marondera Ian Kay was also released after spending eight days in Jail.

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Viewing cable 08HARARE490, ZIM NOTES June 6, 2008

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UNCLAS SECTION 01 OF 04 HARARE 000490 

SIPDIS 

AF/S FOR S.HILL 

ADDIS ABABA FOR USAU 

ADDIS ABABA FOR ACSS 

NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN 

TREASURY FOR D.PETERS AND T.RAND 

STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN 

COMMERCE FOR BECKY ERKUL 

E.O.12958: N/A 

TAGS: PGOV PREL ASEC PHUM ECON EAGR EFIN EMIN ZI

SUBJECT: ZIM NOTES June 6, 2008 

--------------- 

¶1. SUMMARY 

--------------- 

Topics of the week: 

- U.S. Diplomats, Staff, Detained and Harassed By Police 

- Gov Suspends Field Operations of All NGOs 

- United Opposition Unlikely 

- Public Unenthusiastic About GNU 

- Senior MDC Officials Released 

- Violence Spurs Internal Displacement 

- Youth Movements Consolidate Election Efforts 

- Labor Leader Elected To ILO Governing Board 

- Local Currency Plunges at Record Rate 

- Annual Inflation Breaching Two Million Percent 

- Chamber of Mines Reviews Industry Performance 

- Air Zim Paying Retention Bonus 

- Poor Outlook for Winter Wheat Crop 

- More Dismal Corporate Results 

--------------------------------------------- --------- 

¶2. Price Movements-Exchange Rate and Selected products 

--------------------------------------------- --------- 

Parallel rate for cash diverged further at ZW$1.5 billion:US$1 from 

inter-bank average of Z$990 million:US$1 

Bank transfer rate jumped to Z$2 billion:US$1; official rate: 

ZW$$30,000: US$1 

Sugar soared to Z$1.4 billion/2kg vs. controlled price of Z$8 

million/2kg 

Cooking oil jumped to Z$2 billion/750ml vs. controlled price of 

Z$9.3 million/750ml 

Petrol and diesel rose to Z$1.3 billion/liter vs. controlled price 

of Z$60,000/liter 

----------------------------- 

On the Political/Social Front 

----------------------------- 

¶3. U.S. Diplomats, Staff, Detained and Harassed By Police... On 

June 5, five U.S. diplomats and two locally employed staff, 

accompanied at times by British diplomats, were detained and 

harassed by government security forces, officials, and their 

supporters, in violation of the Vienna Convention during a 

pre-election assessment trip in Mashonaland Central province. 

Despite having followed the usual diplomatic procedures of 

notification, two vehicles carrying Mission staff were detained for 

more than four hours by police. Mission is closely monitoring the 

impact of this incident on the local community and is using public 

and private diplomatic tools to refute regime propaganda and condemn 

the governmentQs illegal actions. 

¶4. Gov Suspends Field Operations Of All NGOs... Following the 

suspension last week of CAREQs humanitarian food aid operations 

pending investigations of the NGOQs Qpolitical activitiesQ (see 

Harare 475), on June 4, Minister of Public Service, Labor and Social 

Welfare Nicholas Goche suspended all NGO field operations until 

further notice, claiming that a number of them were in breach of the 

terms and conditions of their registration. 

¶5. United Opposition Unlikely... In separate briefings, MDC 

presidential candidate Morgan Tsvangirai and former independent 

candidate Simba Makoni discussed violence, the June 27 runoff, and 

their perspectives on a government of national unity (GNU). 

HARARE 00000490 002 OF 004 

Significant differences in their views indicate that a united 

opposition will not be immediately achieved. Both deplored ongoing 

violence, but Tsvangirai laid the blame fully at the feet of ZANU-PF 

while Makoni stated that both parties were to blame. Both men 

called for a GNU to be convened as soon as possible, but v8Q8blic Unenthusiastic About GNU... Approximately 100 

Zimbabweans crowded into a discussion sponsored by the Mass Public 

Opinion Institute on the prospects for a GNU on May 29. Nearly 

everyone in attendance spoke out against the continuing and growing 

violence and questioned the motivation to discuss a GNU. Several 

pointed out that Zimbabwe already had a failed GNU - the merger of 

rival liberation parties ZAPU and ZANU that formed ZANU-PF. 

Regardless, talk of a GNU continues in the local press with little 

publicized criticism of the idea. 

¶7. Senior MDC Officials Released... The list of MDC officials 

fighting legal battles continues to grow. Morgan Tsvangirai was 

detained on June 3 - allegedly on charges of "drawing a large 

crowd." Notably, today's The Herald claims he was never arrested. 

MDC leader Arthur Mutambara was arrested on June 1 in connection 

with a scathing article he wrote in April criticizing MugabeQs 

government as Qimbecilic;Q he was released on bail two days later. 

Newly elected MDC MP Eric Matinenga was released from police custody 

on June 4 - having spent 5 days in jail - after the magistrate 

dismissed charges that he paid MDC youths to perpetrate violence 

against ZANU-PF supporters. Another newly elected MDC MP, Iain Kay, 

was released on bail on June 4 after spending 8 days in jail. 

¶8. Violence Spurs Internal Displacement... Independent 

international organizations estimate that as many as 20-30 thousand 

Zimbabweans have been displaced due to electoral violence since the 

March 29 elections, with many more likely unreported. Access to 

areas impacted by the violence remains severely limited by the 

ruling partyQs systematic campaign to control voting in rural areas. 

 See Harare 486. 

¶9. Youth Movements Consolidate Election Efforts... Seventeen 

Zimbabwean youth organizations are joining forces to launch a 

get-out-the-vote campaign ahead of the June 27 presidential runoff. 

In addition, they estimate that they have several thousand 

volunteers prepared to act as election observers or agents and that 

they will be able to reach even the most remote polling places. 

They are coordinating their efforts with the MDC to provide 

nationwide coverage by MDC-friendly observers and agents, in 

contrast to the uncoordinated efforts during the March 29 election 

which left some polling places with several observers and others 

with none. See also Harare 487 on the Zimbabwe Election Support 

NetworkQs (ZESN) runoff plans. 

¶10. Labor Leader Elected To ILO Governing Board... The Zimbabwe 

Congress of Trade Unions (ZCTU) 1st Vice-President Lucia Matibenga 

was elected to serve as one of 56 members of the governing body of 

the International Labor Organization (ILO) at its ongoing annual 

conference in Geneva. Meanwhile, Zimbabwe is set to answer charges 

of contravening ILO Conventions 87 and 98 which deal with freedom of 

association and collective bargaining rights. Matibenga drew 

international attention when she was arrested and beaten by police 

after a peaceful labor rally in 2006. 

-------------------------- 

Economic and Business News 

--------------------------- 

¶11. Local Currency Plunges at Record Rate... The Zimbabwe dollar 

is trading at Z$1.5 billion:US1$ on the street today, having fallen 

HARARE 00000490 003 OF 004 

56% in value in the past week and 93% since partial liberalization 

of the foreign exchange market in early May. While the divergence 

between the street and inter-bank rates narrowed immediately 

following the loosening of policy, it has since widened, with the 

latter exchange rate now about two thirds of the street rate. The 

local currency is expected to continue to fall in value as long as 

inflationary expectations remain extremely high. 

¶12. Annual Inflation Breaching Two Million Percent... The swoon in 

value of the Zimbabwe dollar is propelling prices into the 

stratosphere. A leading supermarket chain calculated the 

year-on-year rate of increase in the price of its food-heavy basket 

at about 1,350,000% in May and the monthly increase at about 470%. 

Another leading company that uses broader based and 

income-differentiated baskets put the year-on-year rate in May at 

between 1,880,000% and 2,680,000% and the month-on-month rate at 

334%. 

¶13. Chamber of Mines Reviews Industry Performance... At its AGM on 

May 30, Jack Murehwa, outgoing President of the Chamber of Mines 

said that the mining industry was the countryQs largest foreign 

currency generator; it contributed about 6% to ZimbabweQs GDP, up 

from 4.5% in the 1990s despite declining performance since 2000. He 

applauded both the recent replacement of the gold support price with 

the international gold price, and the redemption of 35% of forex 

earnings at an exchange rate that is now SQmz4:@rk closely with government as 

the causes of the industryQs malaise. 

¶14. Air Zim Paying Retention Bonus... A senior Air Zimbabwe 

aircraft engineer told us on the visa line that the troubled state 

airline had begun paying senior staff a retention bonus of 

US$1,000/month in addition to regular salaries/benefits. 

¶15. Poor Outlook for Winter Wheat Crop... The Financial Gazette 

reported today figures from the Agriculture Ministry that showed 

that less than half the area planted to winter wheat in 2007 had 

been planted this season. A second consecutive poor crop will put 

immense pressure on the treasury to close the wheat deficit with 

costly imports. 

¶16. More Dismal Corporate Results... 

- Mutare Board & Paper Mill reported poor results thanks to the 

collapse of local paper demand. The controlled price of newsprint, 

in particular, weighed down the companyQs 6-monthly results. 

- National Tyre Services Limited reported declining sales, 

increasing operating costs, and competition from informal and other 

small businesses that provide cheaper tires. Nevertheless, analysts 

recommend the counter as an economic recovery play, as the company 

FQqgU.g@QQs debt-free, has a quality brand, and a country-wide service 

network. 

- PG Industries noted a 35% drop in volumes across the board in the 

past reporting year. The Group manufactures and distributes glass, 

wood, boards, doors and related building materials and value-added 

products for the furniture, automotive and building industries. It 

is shifting its focus to the export market for long-term survival. 

- OK Zimbabwe reported revenue down 46% over the past reporting 

year; the supermarket chain lost 50% of its stock at the onset of 

price controls one year ago this month. 

- Econet Wireless HoldingsQs turnover was down 35% in the past 

reporting year on the back of unviable tariffs and the soaring cost 

of energy, staff, and maintenance. Econet has 60% of ZimbabweQs 

HARARE 00000490 004 OF 004 

mobile network market. 

MCGEE

(22 VIEWS)