Mbeki told MDC Zimbabwe would never share borders with West

Zimbabwe talks mediator Thabo Mbeki wrote a 10-page letter to Prime Minister designate and Movement for Democratic Change leader Morgan Tsvangirai rebuking the MDC for lack of concern about the plight of Zimbabweans and excessive ties to the West.

He was responding to a letter from MDC secretary-general Tendai Biti dismissing results of the Southern African Development Community summit and questioning the usefulness of discussions.

“Realistically, Zimbabwe will never share the same neighbourhood with the countries of Western Europe and North America, and therefore secure its success on the basis of friendship with these, and contempt for the decisions of its immediate African neighbours,” Mbeki wrote.

Full cable:

Viewing cable 08HARARE1057, ZIM NOTES 11-28-2008

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RHEFDIA/DIA WASHDC

RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 001057

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 11-28-2008

———–

¶1. SUMMARY

———–

Topics of the week:

– Negotiators Sign Constitutional Amendment 19…

– Treasury Department Designates More Cronies…

– Supreme Court Dismisses Danish Suit…

– Elders Turned Away…

– Frustrated Soldiers Trash Bank…

– Mbeki expresses frustration with MDC-T…

– Gono’s Term Renewed…

– RBZ Directs Public Utilities To Accept Checks…

– RBZ Issues a One-Year Insurance and Pension Industry Bond…

– Russians and South Africans Snap Up Properties In Zimbabwe…

– Five Banks Thrown Out of Stock Exchange…

———————————

¶2. Price Movements-Exchange Rate

and Selected products

———————————

Parallel rate for cash doubled to Z$2,000,000:US$1

Check rate shot up five-fold to Z$100 quadrillion:US$1 against

inter-bank average of $70,198:US$1

Bread on the parallel market went up to Z$2,500,000

Sugar rose to Z$5,000,000/2kg

Petrol and diesel rose to Z$2,000,000/liter

—————————–

On the Political/Social Front

—————————–

¶3. Negotiators Sign Constitutional Amendment 19… Negotiators of

all three parties came to agreement on Constitutional Amendment 19

which, when passed by Parliament, will legalize the terms of the

power-sharing agreement signed on September 11 and September 15. An

online newspaper cited sources saying that the terms were based

solely on what was contained in the agreement, and did not include

additional provisions sought by ZANU-PF and MDC-T. The same report

said the amendment was based on the September 11 version of the

power-sharing agreement, rather than the fraudulently altered

version that was publicly signed on September 15. An MDC-T

spokesperson said, “We signed the draft bill but that does not mean

we gave commitment to join the unity government before all these

other equally important issues are resolved,” referring to issues

including the nomination of governors and other senior officials.

¶4. Treasury Department Designates More Cronies… The U.S.

Department of the Treasury’s Office of Foreign Assets Control on

November 25 designated four individuals with ties to the Mugabe

government and a number of entities owned or controlled by two of

them. A Treasury spokesman said the financial and logistical

support they had provided to the regime had enabled Mugabe to pursue

policies that seriously undermine democratic processes and

institutions in Zimbabwe. The named individuals include John

Bredenkamp, Muller “Billy” Rautenbach, Nalinee Joy Taveesin, and

Mahmood Awang Kechik.

¶5. Supreme Court Dismisses Danish Suit… Zimbabwe’s Supreme Court

dismissed a lawsuit brought by the Danish former owners of Nyahondo

Farm in Chinhoyi who were challenging the farm seizure orchestrated

by Brigadier-General Tapfumanei. The Danish owners were arguing

that the seizure violated the Bilateral Investment Protection

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Agreement (BIPA) between Zimbabwe and Denmark. The ruling could

expose Zimbabwe to economic reprisals via the World Trade

Organization. Zimbabwe also has BIPAs with Austria, France,

Germany, Malaysia, Mauritius, the Netherlands, South Africa, and

Sweden.

¶6. Elders Turned Away… Former U.S. President Carter, Nelson

Mandela’s wife Graca Machel, and former UN Secretary General Kofi

Annan were denied entry into Zimbabwe last week to assess the

humanitarian crisis. President Mugabe’s government said it stopped

the Elders’ visit because it was ill-timed coming when the country

was busy with negotiations to form a government of national unity.

Nonetheless, the three Elders held meetings on Zimbabwe in South

Africa and issued somber assessments of the country’s plight. “We

were expecting a gloomy situation, but the situation is far beyond

what we could have imagined,” said Graca Machel at a press briefing

in Johannesburg.

¶7. Frustrated Soldiers Trash Bank… After a day of waiting in

lines to withdraw cash, between 60 and 70 soldiers were told on

November 27 that there was no more cash available for withdrawal.

The soldiers ran amok and took their anger out on the staff of the

bank located on Samora Machel Avenue in Harare. After beating

several bank employees, they smashed the bank’s windows before

eventually being restrained by military police. There were also

reports of soldiers creating disorder at one army barracks and

confiscating forex from citizens on the streets of Harare.

¶8. Mbeki expresses frustration with MDC-T… In response to a

letter from MDC Secretary General Biti dismissing the results of the

Nov 9 SADC Summit and questioning the usefulness of discussions at

this time, Facilitator Mbeki on November 22 wrote a 10 page letter

to Morgan Tsvangirai, rebuking the MDC-T for lack of concern about

the plight of Zimbabweans and excessive ties to western powers.

———————————-

On the Economic and Business Front

———————————-

¶9. Gono’s Term Renewed… President Mugabe renewed Gideon Gono’s

term as governor of the Reserve Bank of Zimbabwe (RBZ) for another

five years. This effectively kills speculation that he would be

sacked due to his lax monetary policies and extensive quasi-fiscal

operations that pushed inflation through the roof. His new term

extends his position until December 2013. It is not yet clear how

difficult it would be for a new government to reverse this

appointment; this will depend in part on whether Amendment 19 to the

Zimbabwean constitution includes a ZANU-PF supported provision

validating decisions made by government officials since the last

Parliament was dissolved.

¶10. RBZ Directs Public Utilities To Accept Checks… On November

20, the RBZ directed parastatals to accept checks as a legitimate

form of payment of bills in lieu of cash. This was in direct

response to the Zimbabwe Electricity Supply Authority’s (ZESA’s)

refusal to accept payment of electric bills by check.

¶11. RBZ Issues a One-Year Insurance and Pension Industry Bond…

On November 14, the RBZ issued a one year bond to insurance

companies, pension funds, and other financial institutions to raise

funds for GOZ capital projects at a 450% interest rate. Given the

low interest rate relative to inflation, the bond effectively

provides the GOZ with free capital and enforces the RBZ policy that

insurance and pension funds invest 35% of their assets in prescribed

government investments.

¶12. Russians and South Africans Snap Up Properties In Zimbabwe…

According to a report by the real estate group Pam Golding

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Properties, Russian and South African property investors are buying

houses in Harare. There are few local buyers because of the

collapse of the Zimbabwean mortgage industry.

¶13. Five Banks Thrown Out of Stock Exchange… Following the

tightening of trading conditions on the Zimbabwe Stock Exchange

(ZSE), First Bank, CFX, Kingdom, NMB and ZABG were kicked out of the

market on November 22, 2008 for failing to meet debts amounting to

hexillions of Zimbabwe dollars. (Note: One hexillion is the

equivalent of US$10,000 at the current check rate. End Note.)

—————–

Quote of the Week

—————–

¶14. November 22 letter from Facilitator Mbeki to Morgan Tsvangirai:

“Realistically, Zimbabwe will never share the same neighborhood

with the countries of Western Europe and North America, and

therefore secure its success on the basis of friendship with these,

and contempt for the decisions of its immediate African neighbors.”

MCGEE

(38 VIEWS)