Mbeki facilitates one-on-one talks between Mugabe and Tsvangirai

South African President Thabo Mbeki was to facilitate one-on-one talks between Zimbabwean President Robert Mugabe and Movement for Democratic Change president Morgan Tsvangirai to discuss unresolved issues leading to the formation of a transitional government.

The principal unresolved issue was the distribution of power between Mugabe as President and Tsvangirai as Prime Minister.

Other issues included the transitional constitution, the size of cabinet and allocation of ministries, the future role of the security chiefs, and the nature and extent of amnesty.

Full cable:

Viewing cable 08HARARE675, ZIM NOTES AUGUST 8, 2008

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SUBJECT: ZIM NOTES AUGUST 8, 2008

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¶1. SUMMARY

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Topics of the week:

– Negotiations Continuing

– OFDA Director Visit

– Price Controls Re-Imposed on Tourism

– Coins No Remedy for Cash Shortage

– Scramble for Alternative Banknote Supplier

– “Homegrown Solutions” – the Fuel Couponization of Zimbabwe’s

Economy

– Corrigendum

– Cartoon of the Week

– No Comment…

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¶2. Price Movements-Exchange Rate and Selected products

——————————————— ———

Parallel rate for cash shot to Z$350billion ($35 revalued):US$1

against inter-bank average of Z$9 (revalued):US$1

Bank transfer rose to Z$850 billion ($85 revalued):US$1; official

rate unchanged

Bread on the parallel market rose to Z$250 billion ($25 revalued)

Sugar steady at Z$350 billion (Z$35 revalued)/2kg

Cooking oil rose to Z$300 billion (Z$30 revalued)/750ml

Petrol and diesel more than doubled to Z$540 billion (Z$54

revalued)/liter

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On the Political/Social Front

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¶3. Negotiations Continuing…South African president Thabo Mbeki is

expected in Harare August 9 or 10 to facilitate one-on-one talks

between Zimbabwean president Robert Mugabe and MDC president Morgan

Tsvangirai. The principal unresolved issue is the distribution of

power between Mugabe as president and Tsvangirai as prime minister.

Other issues include the transitional constitution, the size of

cabinet and allocation of ministries, the future role of the

security chiefs, and the nature and extent of amnesty. If an

agreement is reached, it is expected to be signed next week. See

Harare 661, 669, 674.

¶4. OFDA Director Visit… USAID’s Director of the Office of U.S.

Foreign Disaster Assistance (OFDA), Ky Luu, visited Harare, Zimbabwe

July 29-31 to consult with humanitarian organizations, UN agencies,

donor representatives, and Zimbabwean citizens regarding the crisis

in the country. The timing of his trip was particularly opportune,

as Zimbabwe’s humanitarian community has been operating under a

restrictive and threatening environment in the post-March 29

election period. Luu’s interactions and analysis led to a statement

released by USAID Administrator Fore calling on the GOZ to rescind

its ban on NGO field activities and create conditions suitable for

humanitarian organizations to resume work safely and constructively.

USAID is discussing a series of moves toward a strategic plan of

action on the humanitarian situation. See Harare 663, and for

Fore’s statement, go to:

http://www.usaid.gov/press/releases/2008/ps08 0731.html

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Economic and Business News

HARARE 00000675 002 OF 002

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¶5. Price Controls Re-Imposed on Tourism… In a hastily arranged

meeting this week to explain the reintroduction of price controls in

the tourism sector, the chairman of the National Incomes and Pricing

Commission (NIPC), Goodwills Masimirembwa, accused players of

profiteering through the use of the bank-transfer exchange rate

rather than the agreed inter-bank rate in pricing products and

services. The President of the Zimbabwe Council for Tourism, Chipo

Mutasa, expressed disappointment, highlighting the industry’s

position at the tail end of the value chain and its consequent

inability to control costs. Masimirembwa proposed a new system

whereby players would apply individually for price increases so that

the NIPC could identify “pockets of abuse” in the value chain.

¶6. Coins No Remedy for Cash Shortage… The reintroduction of coins

that had been taken out of circulation in 2006, and the introduction

of some new coins (highest denomination Z$2.5 billion old value),

are likely to fuel the growth in money supply further–in the short

term, at least. We learned that the Reserve Bank provided Cargill

with Z$100 quadrillion (old value) solely in coins this week to meet

the company’s cash purchases of cotton.

¶7. There is an apparent shortage of cash in the economy. Most

banks do not have enough resources and securities to enable them to

get sufficient cash from the RBZ every day. Unable to meet their

customers’ demand for cash, the banks still have long lines at their

branches every day.

¶8. Scramble for Alternative Banknote Supplier… Having lost its

regular supplier of banknote paper and issued a new revalued

currency in a hyperinflationary environment, the GOZ is scrambling

to locate an alternate secure paper supplier.   See Harare 672.

¶9. “Homegrown Solutions” – the Fuel Couponization of Zimbabwe’s

Economy… Already widely traded as a stable-even

appreciating-shadow currency as the value of the local currency

swoons, the GOZ approved use of BP and Caltex fuel coupons at an

inaugural private “Auction by Barter” today where “executive

vehicles,” trucks and other vehicles will go under the hammer under

the auctioneer’s slogan “Tough Times – New Ideas!”

¶10. Corrigendum… Last week’s ZimNotes on the FEWSNet Executive

Overview of Food Security should have read that Zimbabwe’s national

cereal deficit is “just over one million metric tons,” not “just

over one metric ton.”

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No Comment

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¶11. August 1, 2008 The Herald:

“The Reserve Bank of Zimbabwe has donated … for the sitting judges

(of the High Court)…16 top of the range Mercedes Benz E 280 …

32-inch plasma screen televisions and a full set of satellite dishes

each …. Apart from the top-of-the-range Mercedes Benz, the judges

also have utility vehicles which include Toyota IMV and Isuzu

trucks, courtesy of the Central Bank. (Master of the High Court)

Mr. Nyatanga said it was not desirable for judges to drive Mercedes

in rough terrain going to their farms.”

MCGEE

(17 VIEWS)