Mugabe retained significant power

President Robert Mugabe retained significant power in the inclusive government under the Global Political Agreement signed on 15 September 2008 despite the prolonged negotiations under which Prime Minister Morgan Tsvangirai insisted that he wanted to be head of government with executive powers.

Mugabe chaired the National Security Council and the cabinet. He had the ability to appoint the two Vice Presidents, 15 of the 31 members of Cabinet, and 8 senators.

As Prime Minister, Morgan Tsvangirai’s power centred on his chairmanship of the Council of Ministers and overseeing policy formulation.

Full cable:

Viewing cable 08HARARE862, ZIM NOTES 09-19-2008

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UNCLAS SECTION 01 OF 03 HARARE 000862

AF/S FOR G.GARLAND

ADDIS ABABA FOR USAU

ADDIS ABABA FOR ACSS

NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN

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TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: ZIM NOTES 09-19-2008

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¶1. SUMMARY

———–

Topics of the week:

– Mugabe and Tsvangirai sign deal

– Mugabe Retains Significant Power

– Tsvangirai Briefs Diplomats on Challenges

– MDC and ZANU-PF Reactions to the Deal Differ Sharply

– Students Arrested

– Labor Leaders’ Case Referred to Supreme Court

– Zim Dollar Appreciates Following Signing Of Agreement

– Another Step Toward Dollarization

– SADC Tribunal Dismisses Black Zim Farmers Land Claim

– Gono Issues New Z$1,000 Note and Increases Withdrawal Limit

– Mostly Miserable Company Results Through June

——————————————— ———-

¶2. Price Movements-Exchange Rate and Selected Products

——————————————— ———-

Parallel rate for cash appreciated to Z$480:US$1

Bank transfer appreciated slightly to Z$45,000:US$1 against

inter-bank average of Z$97:US$1

Bread on the parallel market rose to Z$1,200

Sugar is steady at $1,000/2kg

Petrol and diesel rose to Z$1,000/liter

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On the Political/Social Front

—————————–

¶3. Mugabe and Tsvangirai sign deal… In a ceremony attended by

other African leaders, President Robert Mugabe and Prime Minister

Morgan Tsvangirai signed their power sharing agreement on September

15 in Harare. Tsvangirai gave a concise speech discussing

Zimbabwe’s future and how to address the economic and social crises.

In contrast, Mugabe spoke for nearly an hour as he outlined the

(external) sources of Zimbabwe’s ills. See Harare 833.

¶4. Mugabe Retains Significant Power… In the new power-sharing

deal, Mugabe retains many of his executive powers such as chairing

the National Security Council and the Cabinet, the ability to

appoint the two Vice Presidents, 15 of the 31 members of Cabinet,

and 8 senators. As Prime Minister, Morgan Tsvangirai’s power

centers on his chairmanship of the Council of Ministers and

overseeing policy formulation. Arthur Mutambara is now a Deputy

Prime Minister. See Harare 842.

¶5. Tsvangirai Briefs Diplomats on Challenges… In a briefing to

the diplomatic corps on September 19, Tsvangirai described the

contentious negotiation process and stalled allocation of

ministries. With Mugabe scheduled to leave for the UNGA, little

progress is expected in the near term. Tsvangirai also raised the

prospect of having to go back to South Africa or SADC to get support

for an equitable share. See Harare 855.

¶6. MDC and ZANU-PF Reactions to the Deal Differ Sharply… There is

considerable optimism about the agreement among MDC supporters.

While cautious, they are hopeful the deal will lead to tangible

quality-of-life benefits. Zimbabwean and South African trade unions

were not as optimistic and have criticized the agreement, and

ZANU-PF insiders are engaged in a scramble to retain lucrative posts

HARARE 00000862 002 OF 003

and influence. Significant questions remain as to how the deal will

work and how the new government will function. See Harare 837, 840,

842, 843, and 854.

¶7. Students Arrested… 10 students at Bindura University were

arrested on September 16 while protesting university fee increases

(from $8000 to $30,000). The students were charged with criminal

nuisance, fined $2000 and released after spending one night in

jail.

¶8. Labor Leaders’ Case Referred to Supreme Court… The freedom of

speech case involving Zimbabwe Congress of Trade Unions’ Secretary

General Wellington Chibebe and President Lovemore Matombo will be

heard by the Supreme Court on December 5. The two were arrested and

accused of “communicating falsehoods” and “inciting the public to

rise against the government” after a speech on May 1. As a

condition of bail, granted on May 19, they were barred from

addressing any political gathering until the matter is finalized.

———————————-

On the Economic and Business Front

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¶9. Zim Dollar Appreciates Following Signing Of Agreement… The

Zimbabwe dollar appreciated somewhat on the foreign exchange market

with the bank transfer rate moving from about Z$50,000:US$1 a week

ago to Z$45,000:US$1 by September 18, 2008. Zimbabwe dollar cash

also appreciated from Z$550:US$1 to Z$480:US$1 over the same period.

The appreciation largely reflects market anticipation of

significant foreign currency inflows following the signing of the

power-sharing agreement. Given the current political stalemate and

donors’ wait-and-see attitude, the appreciation is likely to be

short lived.

¶10. Another Step Toward Dollarization… The Reserve Bank of

Zimbabwe this week authorized exporters, with RBZ approval, to pay

salaries in foreign currency to employees with “critical skills.”

¶11. SADC Tribunal Dismisses Black Zim Farmers Land Claim… The

SADC regional tribunal dismissed the complaint of over 300 black

Zimbabweans that, because of the Tribunal’s interim restraining

order in the Campbell case contesting seizure of white-owned farms,

they could not move onto land allocated to them by the GOZ. The

ruling judge said the applicants had not exhausted their legal

options in Zimbabwe, and called the application frivolous and an

abuse of process.

¶12. Gono Issues New Z$1,000 Note and Increases Withdrawal Limit…

In view of skyrocketing inflation, the RBZ issued a new Z$1,000 note

(about US$2 at today’s cash rate) and doubled the daily cash

withdrawal limit to Z$1,000. Indicating a worsening cash shortage,

banks are no longer getting their desired daily cash allocation from

the RBZ.

¶13. Mostly Miserable Company Results Through June…

– In interim results to June 30, 2008, Hwange Colliery Company

reported a 19% drop in total coal sales from 1,069,890 MT in H1 2007

to 862,393 MT.

– Furniture giant TEDCO announced in the same reporting period

turnover down 85% and a push into higher-margin markets in South

Africa close to the Zimbabwe border.

– Dairibord’s exports in the same period were up 23% but raw milk

intake fell by 39%, indicating one reason why milk products

disappeared from Zimbabwe’s shelves this year.

HARARE 00000862 003 OF 003

– National Foods reported milling volumes down 61% in the reporting

year; the volume of oil processed was down 86%; the stock feed plant

operated at 3.2% capacity; and of the company’s fleet of 143

vehicles, 113 were out of service due to shortages of spares and

tires.

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Quote of the Week – On the same page?

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President Robert Mugabe, addressing the ZANU-PF Central Committee on

September 17: “Anyhow here we are, still in a dominant position

which will enable us to gather more strength, as we move into the

future. We remain in the driving seat.” The Herald, Thursday

September 18, Pg 2.

Prime Minister Morgan Tsvangirai referring to his relationship with

Mugabe in a radio interview on September 17: “I’m quite certain his

commitment to the agreement is unquestionable… at a personal

level, we don’t have a strained relationship.” The Herald, Thursday

September 18, Pg 2.

DHANANI

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