US embassy cable - 03HARARE2184

UNCLAS HARARE 002184 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR 2037 DIEMOND 
TREASURY FOR OREN WYCHE-SHAW 
PASS USTR FLORIZELLE LISER 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ECON, EINV, PGOV, ZI 
SUBJECT: Mugabe to Restructure Economic Team 
 
Refs:  a) Harare 2140   b) Harare 2149 
 
1. (SBU) Summary:  In a clear indication that hardliners 
are winning out over Finance Ministry and Reserve Bank 
(RBZ) moderates (refs a/b), President Mugabe has 
announced his intent to shake up his economic team.  It 
also suggests the November 20 budget speech will offer 
Zimbabwe's beleaguered private sector scant relief.  End 
summary. 
 
2. (U) Mugabe's remarks closely paralleled recent 
comments by cabinet hardliners Jonathan Moyo and Joseph 
Made: 
 
- Forex Shortage.  Mugabe continued to blame parallel 
market traders for creating a forex shortage.  In some of 
his strongest language to date, he said the "black market 
. . . is run and supported by a mercenary breed of wily 
and selfish merchants, a breed that neither sows nor 
sweats." 
 
- Targeted U.S. and EU sanctions.  Mugabe referred to 
"the vicious campaign led by Britain and her allies" as 
another main reason for the economic downturn. 
 
- Land Reform.  Mugabe hinted that Zimbabwe's chaotic 
land redistribution was not over:  "Fast track was just a 
phase . . . within a broader and ongoing land reform 
program.  Its conclusion is therefore not the end of land 
reform."  He lashed out again at white farmers who "hope 
that Zimbabwe will be their colony again.  It will not. 
Never, ever!" 
 
Comment 
------- 
3. (SBU) The GOZ's departure from reality is becoming 
more pronounced.  It routinely mischaracterizes U.S. and 
EU targeted sanctions as broad trade restrictions, 
fabricates burgeoning numbers of foreign visitors to 
Zimbabwe and will not acknowledge that the official 
exchange rate of Z$824:US$1 is merely a GOZ subsidy for 
certain services.  (Only on the parallel market is 
currency freely exchanged.) 
 
4. (SBU) The private sector had been hoping against hope 
that a positive sign would emerge from the November 20 
budget speech:  devaluation, formal end to land reform, 
return of exchange bureaux, higher revenue retention for 
exporters (currently 50 percent).   Mugabe's remarks not 
only stymie these hopes, they weaken the impact of recent 
GOZ reforms.  By lashing out so fervently against the 
black market, for example, Mugabe ensures that oil 
companies will think twice about selling fuel at market 
rates (counteracting Energy Ministry assurances that they 
may do so). 
 
5. (SBU) It is also probable that Mugabe will replace 
several RBZ and Finance moderates with hardliners. 
Finance Minister Herbert Murerwa appears to be through. 
Hardline Justice Minister Patrick Chinamasa has already 
been standing in for him, a snub to moderate Finance 
Deputy Chris Kuruneri, who criticized remarks by 
Agriculture Minister Made last week (ref a). 
 
Sullivan