Mugabe threatened riot act on business

President Robert Mugabe threatened the riot act if businesses did not roll back prices claiming that price increases were part of a scheme to effect regime change.

Mugabe said this at a rally, a week before the crucial 2008 elections.

The government met with the business community on March 25, four days before the elections, to discuss its “unjustified price

Increases” but an official from the Confederation of Zimbabwe Industries told United States embassy officials that that a price rollback was not discussed. The focus was on business abiding by the price control mechanisms already in place.

Full cable:

Mugabe threatened riot act on businessViewing cable 08HARARE243, Zim Notes 03-28-2008

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SUBJECT: Zim Notes 03-28-2008

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¶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.

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Price Movements-Exchange Rate and Selected Products

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¶2. Price Movements-Exchange Rate and Selected products

Parallel rate for cash steady at ZW$42million:US$1; bank transfer

rate: Z$65 million; official rate: ZW$$30,000:US$1

Sugar rose to Z$50 million/2kg vs. controlled price of

Z$8million/2kg

Cooking oil more than doubled to Z$95million/750ml vs. controlled

price of Z$9.3million/750ml

Petrol and diesel rose to Z$60million/liter vs. controlled price of

Z$60,000/liter

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On the Political/Social Front

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¶3. Zimbabweans Head To The Polls… A poll conducted by the Mass

Public Opinion Institute of Zimbabwe (MPOI) from March 3 to March 10

showed the MDCQs Tsvangirai with about 30 percent support, President

Robert Mugabe with about 20 percent, and Simba Makoni with about 9

percent. Thirty percent declined to state a preference; the

individuals who conducted the poll believe that most of this group

is sympathetic to the opposition. The MPOI poll comports with what

Embassy pre-election teams who visited a number of provinces found:

significant and growing support for Tsvangirai. Countering the MPOI

poll is a poll conducted by Joseph Kurebwa, a University of Zimbabwe

lecturer known to be sympathetic to Mugabe. He claims to have

sampled over 10,000 voters between February 15 and March 15 and

found that Mugabe had 56 percent support, Tsvangirai 26 percent, and

Makoni 13 percent. This poll may be an attempt to justify a Mugabe

victory which we believe cannot be achieved without significant

rigging. See Harare 227.

¶4. Sparse Attendance At Makoni Meeting In Harare… Independent

presidential candidate Simba MakoniQs March 26 meeting in Harare

targeted at women attracted only about 60 people, including SADC

observers and other independent candidates such as Fay Chung.

Makoni responded rather unconvincingly to the audience’s questions

on social issues by saying he did not have any answers to their

concerns but as president would work to remove the barriers put in

place by ZANU-PF that prevent people from solving their own

problems. Makoni also argued that he was not a newcomer and had

always spoken out against poor GOZ policies when he was on the

ZANU-PF Central Committee and Politburo.

¶5. Health Sector Assessment… Dr. Sambe Duale from Tulane

University School of Public Health conducted a rapid assessment of

ZimbabweQs public health system for USAID from March 10-15. The

purpose was to provide an independent view of the current state of

the health care system and formulate recommendations for increased

support for short-term assistance to mitigate the effects of the

current social and economic decline. Despite the difficult and

deteriorating health care delivery environment, the dedication shown

by health care workers to maintain service provision is remarkable.

It is clear, as evidenced by the HIV programs, that little

investments in the system can yield outstanding results. While

health sector human resources, essential drugs, water and

sanitation, immunization, maternal and newborn health, and supply

chain logistics management were all recommended areas of focus,

essential drugs and supply chain delivery would be ripe for rapid

start-up for USAID given current in-country partners and existing

HARARE 00000243 002.2 OF 003

activities.

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Economic and Businss News

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¶6. Tighte Monetary Policy… In a move to mop up excess liuidity

that has been averaging Z$4 quadrillion a ay, driven primarily by

high government expenditre associated with the upcoming elections,

the Rserve Bank of Zimbabwe (RBZ) this week increased te term of

excess liquidity management zero-coupo bonds to 90 days from seven

days; hiked statutor reserve requirements on demand deposits for

comercial and merchant banks from 35-40 percent to 50percent; and

increased secured and unsecured accmmodation rates from 1,200

percent to 4,000 percent and from 1,650 percent to 4,500 percent

respectively. It will now be extremely expensive for banks to

borrow from the RBZ in case of shortages on the market. While the

tightening of monetary policy in a hyperinflationary environment is

welcome, these measures, in fact, penalize banks for a crime they

did not commit and increase the fragility of the sector by reducing

banksQ ability to lend profitably to the private sector. The more

prudent measure to counter excess liquidity would have been to

reduce GOZ spending.

¶7. RBZ Set To Raise Daily Cash Withdrawal Limit… Daily cash

withdrawal limits will rise from Z$500 million to Z$5 billion with

effect on April 4, 2008. The increase will alleviate a cash

shortage on the street that has arisen from the high transactions

demand for cash under hyperinflation. Although banks are currently

receiving all the cash they order from the RBZ, the low withdrawal

limit and consequent shortages slowed depreciation of cash on the

parallel market this week.

¶8. Civil Servant Salary Increases And An Apparently Hollow Threat

Of Another Price Blitz… The average salary of a civil servant

went up from Z$100 million in December 2007 to Z$500 million on

February 12, and was reportedly revised up again last week to more

than Z$4 billion a month (close to US$100/month). At a rally on

March 21, calling price increases part of a scheme to effect regime

change, President Mugabe threatened the riot act if businesses did

not roll back prices to February 12 levels. The GOZ met with the

business community on March 25 to discuss its Qunjustified price

increases,Q but an official from the Confederation of Zimbabwe

Industries (CZI) told us with relief that a price rollback was not

discussed; the focus was on business abiding by the price control

mechanisms already in place.

¶9. No Noticeable Increase In Supermarket Stocks… Contrary to our

expectations, and perhaps a sign of just how tight grocery supplies

continue to be, HarareQs supermarket shelves have failed to fill up

in this pre-election week. The aisles are still bare of most

price-controlled goods like fresh meat (except pork), milk, maize

meal, cooking oil, sugar, eggs and flour; bread deliveries arrive

only sporadically.

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Quotes Of The Week

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¶10. President Mugabe addressing a rally in Bulawayo on March 23:

QYou can vote for them (MDC), but that will be a wasted vote. You

will be cheating yourself as there is no way we can allow them to

rule this country.

¶11. Independent presidential candidate Simba Makoni addressing a

rally in Chitungwiza on March 20, as reported in The Herald, March

24: QThere are stories that I have some Qbig wigsQ behind my

campaign but I want to make it clear today, I have no so-called Qbig

wigsQ from the ruling party behind my campaign. My Qbig wigsQ are

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the people who are going to vote for me…

¶12. Chorus to the ZANU-PF campaign jingle aired regularly on the

GOZ-owned radio stations:

If you want a farm, Vote ZANU-PF

If you want a business, vote ZANU-PF

For a visionary leader, vote ZANU-PF

For consistent leadership, vote ZANU-PF

¶13. And Another Rich Pre-Election Week for Cartoons… See the Word

version of Zim Notes for those, and have a safe and quiet weekend.

MCGEE

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