The uncontested victory of Robert Mugabe in the presidential elections run-off of 2008 failed to stop the economic collapse with more companies turning to barter trade to preserve value.
The United States embassy said its internet service provider preferred fuel coupons or Old Mutual shares instead of worthless Zimbabwe dollars.
Suppliers of potatoes to Cairns Holdings Limited wanted payment in fuel coupons or any other commodity that maintained value.
Golf club membership fees were also payable in fuel coupons.
Full cable:
Viewing cable 08HARARE611, ZIM NOTES 7-11-2008
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|
Reference ID |
Created |
Classification |
Origin |
VZCZCXRO6484
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0611/01 1961447
ZNR UUUUU ZZH
R 141447Z JUL 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3175
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2013
RUEHAR/AMEMBASSY ACCRA 2145
RUEHDS/AMEMBASSY ADDIS ABABA 2265
RUEHRL/AMEMBASSY BERLIN 0801
RUEHBY/AMEMBASSY CANBERRA 1542
RUEHDK/AMEMBASSY DAKAR 1900
RUEHKM/AMEMBASSY KAMPALA 2321
RUEHNR/AMEMBASSY NAIROBI 4752
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1411
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC
UNCLAS SECTION 01 OF 03 HARARE 000611
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
SIPDIS
E.O.12958: N/A
TAGS: PGOV PREL ASEC PHUM ECON ZI
SUBJECT: ZIM NOTES 7-11-2008
———–
¶1. SUMMARY
———–
Topics of the week:
– ZANU-PF-MDC Preliminary Talks Begin…
– Parliament to Convene…
– Violence Continues…
– Attack on Government IDP Camp…
– IDPs Flee to Embassy…
– Global Opinion of South Africa Slumps…
– Remittance Disbursements Capped for Lack of Hard Currency
Notes…
– Grain, Vegetable Oil eficits Worsen…
– Back to Barter as Money Loss Value…
——————————————— ———
¶2. Price Movements-Exchange Rte and Selected Products
——————————————— ———-
Parallel rate for cash nearly doubled to Z$47billion:US$1 against
inter-bank average of Z$19 billion:US$1
Bank transfer rate doubled to Z$140 billion:US$1; official rate:
Z$$30,000:US$1
Bread on the parallel market more than doubled to Z$55 billion vs.
controlled price of Z$400 million
Sugar increased fivefold to Z$250 billion/2kg vs. controlled price
of Z$8 million/2kg
Cooking oil shot to Z$90 billion/750ml vs. controlled price of Z$9.3
million/750ml
Petrol and diesel climbed to Z$50 billion/liter vs. controlled price
of Z$60,000/liter
—————————–
On the Political/Social Front
—————————–
¶3. ZANU-PF-MDC Preliminary Talks Begin… For the last couple of
weeks, MDC president Morgan Tsvangirai has insisted that
negotiations between ZANU-PF and the MDC would not resume until
certain conditions were met, including the involvement of the
African Union in the mediation process, an end to violence, and the
release of over 1,500 MDC detainees. The government-controlled The
Herald trumpeted inter-party talks taking place July 10 and 11 in
South Africa as a flip flop on the part of the MDC. The MDC
subsequently issued a press release clarifying that the South
African talks between ZANU-PF and representatives of the two MDC
factions (Patrick Chinamasa and Nicholas Goche for ZANU-PF, Tendai
Biti and Elton Mangoma for the Tsvangirai faction, and Welshman
Ncube and Priscilla Misihairabwi-Mushongo for the MDC Mutambara
faction) were designed to iron out the conditions set by Tsvangirai
so that actual negotiations could take place. See Harare 605 for
the post-electoral state of play and status of negotiations.
¶4. Parliament to Convene… By law, President Mugabe must convene
Parliament by July 17. As a result of the March 29 and June 27
elections, the combined MDC has 110 members in the House of
Assembly, ZANU-PF has 99, and there is one independent. MDC should
theoretically be able to elect the powerful House Speaker. But
ZANU-PF’s campaign of violence has reportedly resulted in the deaths
of two MDC parliamentarians-elect, the disappearance of one, and the
continuing incarceration of several. Several others are underground
HARARE 00000611 002 OF 003
since they are targeted for arrest. While the MDC is hopeful it can
produce a majority in Parliament next week, this is problematic;
treatment of parliamentarians-elect will certainly be one of the
subjects of the South African preliminary talks taking place now.
See also Harare 605.
¶5. Violence Continues… Since the June 27 election, violence
appears to have subsided in Harare and ZANU-PF bases have been
dismantled. Apart from sporadic outbreaks, violence during the
electoral period was never a big issue in Bulawayo and Matabeleland.
But ZANU-PF bases continue to exist in the rest of the country, and
there have been serious pockets of violence in communities in the
Mashonaland provinces, Masvingo, Midlands, and Manicaland.
Additionally, targeting of MDC officials at all levels continues.
See Harare 606.
¶6. Attack on Government IDP Camp… On June 26, over 300 IDPs
arrived at the South African Embassy in Harare seeking shelter and
assistance. On June 27, Election Day, following a reported
arrangement between some international agencies and Zimbabwean
authorities, the IDPs were relocated to a facility run by the
Ministry of Social Welfare in Ruwa, outside Harare. In the early
morning hours of July 7, an unknown number of masked armed men,
suspected to be police, raided the site and beat the IDPs. Eight
were hospitalized as a result of their injuries and 14 fled into the
bush. Zimbabwean officials blamed the opposition MDC for the
attack. See Harare 598 and 602.
¶7. IDPs Flee to Embassy… The GOZ’s campaign of violence has
displaced at least 33,000 Zimbabweans, and the humanitarian crisis
remains acute. On July 3, over 300 displaced MDC supporters sought
shelter, food, medical care, and supplies at Embassy Harare. In the
absence of a coordinated humanitarian response to the crisis,
Mission staff assisted women and children to alternative locations
and moved the remaining men offsite the next day. Informal networks
of organizations and individuals have stepped in to attempt to
assist the IDPs, most of whom remain too frightened, or without the
means, to return to their home areas. Exacerbating the situation,
the “safe houses” are vulnerable to government security forces and
food is scarce. UN agencies are not equipped to meet the heavy
demand for services, and, significantly, fear getting involved
without government permission. See Harare 598.
¶8. Global Opinion of South Africa Slumps… Communications monitor
Media Tenor says global opinion of South Africa has slumped
significantly in the past year. The report released July 8th 2008
analyzed 96 opinion leading media in 15 countries between January
2007 and May 2008. The findings show coverage of recent xenophobic
attacks and President Thabo Mbeki’s stance on Zimbabwe are partly to
blame. The report says western media have grown increasingly
critical of President Thabo Mbeki and South Africa’s foreign policy
especially with regards to Zimbabwe. The report says Mbeki’s
profile internationally has become synonymous with his relationship
with Mugabe.
———————————–
On the Economic and Business Front
———————————-
¶9. Remittance Disbursements Capped for Lack of Hard Currency
Notes… On the heels of Giesecke & Devrient’s termination of the
supply of bank note paper to Zimbabwe, U.K.-based Travelex suspended
its supply of foreign cash to Western Union in Zimbabwe in late
June, apparently fearful of being tarred, like Barclays and Anglo
American, with sustaining the Mugabe regime. Lines for cash at
Western Union outlets are up to 400 people long as the country’s
biggest money transfer agency caps disbursements and scrambles for
other sources of cash. See Harare 604.
HARARE 00000611 003 OF 003
¶10. Grain, Vegetable Oil Deficits Worsen… Zimbabwe’s winter
wheat crop is 30,000 MT-less than a tenth of the local consumption
requirement-according to the annual Zimbabwe Grain and Feed Report
published by the USDA FAS Global Agriculture Information Network
(GAIN). In addition, the country faces a sizeable maize deficit
following a poor harvest estimated at 470,000 MT. The magnitude of
imports needed coupled with the global rise in food prices will put
a significant strain on the fiscus. The GAIN Oilseeds and Products
annual report notes that cottonseed production, which accounts for
about half of total oilseed production, increased 27.9% in the
2007/08 season, but soybean output dropped 35%, threatening the
country’s poultry and piggery sectors. Ironically, demand for
cottonseed meal is in decline as Zimbabwe’s commercial beef herd
shrinks. Domestic vegetable oil production is estimated at 32,000
MT against a national requirement of 80,000 MT.
¶11. Back to Barter as Money Loses Value… With year-on-year
inflation now in the tens of millions percent, more companies are
turning to barter to preserve value. The Embassy’s local internet
service provider advised us formally that it is accepting payment in
fuel coupons from selected service stations or in highly valued Old
Mutual shares; suppliers of potatoes to Cairns Holdings Limited are
seeking payment in fuel coupons or any other commodity that
maintains value. Golf club membership fees are also payable in fuel
coupons.
——————–
Allegory of the Week
——————–
¶12. from Imara Asset Management CEO John Legat’s “Investment Notes”
of July 2008:
¶13. The Titanic has now sunk. There are a small number of
lifeboats left drifting filled with shocked, injured and traumatized
passengers. One of the lifeboats has the Captain and his senior
officers on board, those same people who irresponsibly drove the
ship at high speed into the iceberg that ultimately sank the great
ship. As the sun begins to rise, a sense of relief is felt on the
boats, with hope that nearby ships from Europe and America could
soon provide assistance. The Captain looks very concerned and
helpless as it becomes apparent that his lifeboat is sinking. Those
in the other lifeboats, sensing that their help is required, look
the other way as their boats are already full. A chuckle is heard
from one of them. Too bad.
—————–
Quote of the Week
—————–
¶14. From interview with RBZ Governor Gono in The Herald, July 11,
2008:
“Ultimately for me, I would like the whole world and Zimbabweans in
particular to know that I want to be counted as one of those
patriotic sons of the soil who was there for my country, stood for
and by my country and countrymen/women at Zimbabwe’s hour of maximum
danger, its hour of maximum need and not one who hid behind a finger
or heap of lies, or under the desk when the country needed men and
women to uphold its laws, preserve and promote peace and stability
through whatever modes efforts I am able to make, and contributed to
the preservation of the nation’s legacy as defined by our present
and departed heroes and heroines of the liberation struggle.”
DHANANI
(28 VIEWS)
