Mugabe claims Solomon Mujuru’s support

President Robert Mugabe declared two weeks before the elections that he had the support of former army commander Solomon Mujuru but United States embassy officials who still believed that Mujuru was behind Makoni said he could be deceiving Mugabe.

Mugabe said he had had a conversation with Mujuru and he had disowned Makoni and had sworn his allegiance.

Embassy officials said while they believed that the conversation was true, there was reason to believe that Mujuru supported Makoni and was deceiving Mugabe.

Full cable:

Viewing cable 08HARARE204, Zim Notes – March 14, 2008

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

VZCZCXRO4955

RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN

DE RUEHSB #0204/01 0741059

ZNR UUUUU ZZH

R 141059Z MAR 08

FM AMEMBASSY HARARE

TO RUEHC/SECSTATE WASHDC 2585

RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

RUEHUJA/AMEMBASSY ABUJA 1871

RUEHAR/AMEMBASSY ACCRA 1812

RUEHDS/AMEMBASSY ADDIS ABABA 1936

RUEHRL/AMEMBASSY BERLIN 0515

RUEHBY/AMEMBASSY CANBERRA 1213

RUEHDK/AMEMBASSY DAKAR 1570

RUEHKM/AMEMBASSY KAMPALA 1992

RUEHNR/AMEMBASSY NAIROBI 4423

RHEHAAA/NSC WASHDC

RHMFISS/EUCOM POLAD VAIHINGEN GE

RUEHGV/USMISSION GENEVA 1063

RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK

RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000204

SIPDIS

AF/S FOR S.HILL

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

CIA WASHDC

SIPDIS

E.O.12958: N/A

TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: Zim Notes – March 14, 2008

¶1. The Embassy Harare Political/Economic Section began producing

Zim Notes in July, 2007 to present a perspective on current events

in Zimbabwe. Suggestions are always welcome. If you would like to

receive Zim Notes by email, as well, please contact Frances Chisholm

at chisholmfm@state.gov. Distribution is restricted to U.S.

government employees.

———————————–

Price Movements:

Exchange Rate and Selected products

———————————–

¶2. Parallel rate for cash: ZW$30million:US$1; bank transfer rate:

Z$40 million; official rate: ZW$$30,000:US$1

Sugar soared to Z$40 million/2kg vs. controlled price of

Z$8million/2kg

Cooking oil climbed to Z$40million/750ml vs. controlled price of

Z$9.3million/750ml

Petrol and diesel inched up to Z$38million/liter vs. controlled

price of Z$60,000/liter

—————————–

On the Political/Social Front

—————————–

¶3. SADC Election Observers Arrive…The vanguard of what is

expected to be a 120-member SADC observation mission arrived in

Harare this week. The head of the mission, Angolan Foreign Minister

Joao de Miranda, in the face of Western concerns about Zimbabwe’s

capacity to hold a free and fair election, expressed optimism about

the elections and said Western critics were wrong. Western

diplomats, invited to the SADC observer launch on March 11 at a

local hotel, were less than impressed with the beginning of the

mission.   On arriving for the launch, they were told de Miranda was

not yet in Zimbabwe and were asked to return the following morning;

de Miranda was a no show the next day, as well. An NGO

representative told us she had spoken to the mission about voter

registration problems, the inadequate number of polling stations,

and ongoing violence and intimidation. She reported the observers

appeared disinterested.

¶4. Election Pay Raise…President Robert Mugabe announced that on

Monday he had signed a “new salary schedule of big salaries” for

teachers, many of whom are on strike, and civil servants. He did

not specify the increases. Mugabe is pulling out all the stops in

advance of elections in an attempt to demonstrate ZANU-PF can

deliver.

¶5. Mugabe Claims Solomon Mujuru’s Support…The Herald’s banner

headline on Thursday was “Gen Solomon Mujuru Disowns Makoni.” In

the accompanying article, Mugage said he had talked to Mujuru who

had sworn his allegiance.   While we believe the conversation to be

true (see Harare 197), there is reason to believe that Mujuru

supports Makoni and is deceiving Mugabe. See Harare 200.

¶6. ZESN Observers To Be Accredited…The Zimbabwe Electoral Support

Network announced on March 13 that the Ministry of Justice had

issued a letter of invitation for accreditation of its 11,800

observers. We understand there will be about 8,200 polling

stations, so ZESN should be able to have at least one observer at

each station.

————————–

Economic and Business News

————————–

HARARE 00000204 002 OF 003

¶7. Business Nervous About Indigenization Bill Despite Government’s

Softened Message… The announcement that the Indigenization and

Economic Empowerment Act had been signed by Mugabe and officially

published last week sent shudders through the business community.

Many observers thought the Bill had died a procedural death when it

was not announced 21 working days after arriving at the President’s

desk on 15 November, but Mugabe appears to have held the Bill back

as an election tool. The responsible minister, Paul Mangwana, tried

to calm fears at a press conference where he said the 51 percent of

shares would be purchased by indigenous Zimbabweans without

government interference. He said the government would only set a

timetable for the transfer of shares and would not get involved in

setting prices or determining buyers. Nonetheless, international

businessmen said privately at a lunch hosted by the Ambassador that

their companies would close their Zimbabwean branches rather than

turn over management of their operations and brand. White Zimbabwean

business people fear that the Bill could devastate their remaining

assets that are held as companies. The Bill still has to be enacted

by statutory instrument.

¶8. Gold Support Price Reviewed Upward… The Reserve Bank of

Zimbabwe increased the gold support price from Z$100 million per

gram to Z$700 million per gram effective March 1, 2008. According

to a public notice issued in The Herald of March 12, 2008, the

upward review is designed to improve the operational viability of

gold producers. The new price translates into an increase per ounce

from US$71 to US$497, still a far cry from the world gold price of

close to US$1,000/ounce. With inflation around 300,000%, we expect

the sevenfold increase to erode quickly in US dollar terms.

¶9. Two CEO’s Arrested For Violating Price Controls… The chief

executive officer of Blue Ribbon Foods was arrested early this week

on allegations of flouting the National Incomes and Pricing

Commission Act by overcharging for flour. According to the

allegations, Blue Ribbon Foods sold flour to another company at Z$2

billion to Z$5 billion per ton when the controlled price for the

commodity at the time was Z$600 million per ton. The arrest came on

the heels of the arrest last week of the chief executive officer of

National Foods on charges of breaching the same Act. The CEO of a

third major food company told the Ambassador this week, “We’re all

guilty; it’s just a question of who they want to come after.” The

controlling interests behind the first two food companies are widely

regarded to be in the Mujuru camp.

¶10. Two-Tier Pricing For Hotel Accommodation… The National

Incomes and Pricing Commission (NIPC) has come up with a two-tier

pricing structure under which civil servants (but not parastatal

employees), will pay just under half the rate paid by other guests

for accommodation at Zimbabwe’s hotels and lodges. According to the

chairman of the NIPC, the two-tier pricing structure was proposed by

the industry. Although the NIPC believes the new system will clear

some of the confusion bedeviling the tourism industry, it is likely

to encourage cheating as guests seek to secure favorable room

rates.

¶11. Two More Sets Of Weak Corporate Results, And One Winner…

Notwithstanding strong demand for the company’s products, African

Distillers Limited turned in subdued results to December 2007, due

to shortages of bottles, other raw materials, and foreign exchange.

Moreover, power outages, price controls, and coal and fuel shortages

resulted in revenues rising by a paltry 58,175 percent in 2007.

Border Timbers Limited recorded worse results, with turnover growth

of only 28,800% for the six months to December 2007 largely due to

operational problems arising from severe disruption of electricity

supplies, fires that destroyed 540 hectares of forest, and labor

HARARE 00000204 003 OF 003

shortages. Revenue growth was well below the rate of inflation.

On the other hand, RBZ quasi-fiscal spending on agricultural

implements and firm export sales drove Zimplow’s earnings up a

massive 368,784% in the six months to December 2007. CEO Tony

Rowland told analysts that total volumes were up 56%; local volume

soared 75% while exports were 38% higher and accounted for 56% of

total volumes but only 49% of turnover as a result of the misaligned

exchange rate.

MCGEE

(79 VIEWS)