US embassy cable - 05HARARE1

UNCLAS SECTION 01 OF 02 HARARE 000001 
 
SIPDIS 
 
AF/S FOR BNEULING 
NSC FOR SENIOR AFRICA DIRECTOR C. COURVELLE, D. TEITELBAUM 
USDOC FOR ROBERT TELCHIN, TREASURY FOR OREN WYCHE-SHAW, 
PASS USTR FOR FLORIZELLE LISER, STATE PASS USAID FOR 
MARJORIE COPSON 
 
E.O. 12958: N/A 
TAGS: ECON, PGOV, ELAB, ZI, Economic Situation 
SUBJECT: THE INDIAN COMMUNITY OF BULAWAYO 
 
 
1. (SBU) Summary: Despite their strong ties to the country, 
Zimbabwe,s ethnic Indians are increasingly contemplating 
emigration as a result of the country,s continuing economic 
slide.  This was the message Econoff received from the Indian 
community in Bulwayo on a recent visit.  The loss of this 
economically important minority would be a further blow to 
the country.  End Summary. 
 
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THE BUSINESS CLIMATE: AN ASIAN PERSPECTIVE 
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2. (SBU) On a December 6-7 visit to Bulawayo, Zimbabwe,s 
second largest city, EconOff met on December 7 with 40 ethnic 
Indian businesspeople.  Jyots Laxmidas, a prominent Indian 
and owner of a textile manufacturer called Style 
International, undertook to give EconOff a tour of 
Bulawayo,s industrial and commercial areas.  During the 
tour, Laxmidas noted in particular the significant number of 
manufacturers who had gone out of business.  He said their 
place was increasingly being taken by distributors of 
imported products.  However, these distributors employ far 
fewer people than the outgoing manufacturers did and as a 
result unemployment in Bulawayo has worsened.  Laxmidas noted 
that for those still manufacturing in Zimbabwe, costs are 
rising and sales dwindling.  For instance, his company went 
from 170 employees at the start of 2004 to 60 by December. 
 
3. (SBU) In order to make up for declining sales, Laxmidas 
said Indians were expanding the scope of their businesses and 
investing in real estate.  In addition to his textile 
business, Laxmidas said he now exported Zimbabwean curios and 
other items and that he and his friends had purchased several 
buildings around Bulawayo.  Laxmidas said with high inflation 
and negative real interest rates, it was the only safe 
domestic investment.  He added that the GOZ had effectively 
made overseas investments illegal through its prohibition on 
externalizing foreign exchange.  Several businesspeople with 
whom Econoff met pressed for the U.S. to do more for 
Zimbabwe, with one person noting that the U.S. was unfairly 
punishing Zimbabwe by excluding it from AGOA, arguing that 
other countries which do not meet the qualifying criteria 
were being included. 
 
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ETHNIC INDIANS CONSIDER LEAVING ZIMBABWE 
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4. (SBU) Laxmidas and others noted that the Indian community 
in Zimbabwe has historically had close ties to President 
Mugabe and the ZANU-PF, one of the reasons they had not 
suffered the same fate as white farmers over the past few 
years.  Nonetheless, he said most ethnic Indians had at least 
considered leaving Zimbabwe, and had at least one relative 
who has done so.  He reminisced that ten years ago Indian 
Zimbabweans would never have contemplated such a move. 
Driving down streets of Indian-owned businesses, Laxmidas 
recounted how one Indian shop owner,s son had gone to the 
U.K., another,s parents had departed for Australia, and so 
on.  In fact, he said roughly eighty percent of Indian 
families in Zimbabwe had relatives who had left Zimbabwe. 
Laxmidas noted that the U.S. was also becoming a popular 
destination.  His own brother had recently left for the U.S. 
and several of the Indian business people in Bulawayo had 
already obtained U.S. citizenship. Interestingly, Indian 
Zimbabweans are not going to South Africa as they see too 
many parallels between the South Africa of today and the 
Zimbabwe of 10 years ago. 
 
5. (SBU) Laxmidas said the main spur to Indian emigration was 
economic.  However, a strong contributing factor was their 
fear for their children,s future.  Before the temporary 
closure of private schools this past winter, Indians believed 
their children could at least receive a quality high school 
education in Zimbabwe.  Now the education-minded Indian 
community worried that the GOZ would run down the private 
schools as they had already done to the public ones. 
 
6. (SBU) Another contributing factor is the political climate 
and especially the uncertain presidential succession.  Both 
ZANU-PF and the opposition MDC have appealed to the Indian 
community for financial and electoral support.  Those appeals 
include promises of &protection8 for the Indian community 
but also veiled threats should the Indians support the wrong 
side.  Laxmidas said Indians believe they are safe from any 
ethnic backlash while Mugabe remains in power due to their 
(and India,s) historic support for the ruling ZANU-PF. 
However, the Indian community is worried that any Mugabe 
successor might be tempted to &indigenize8 Indian-owned 
businesses, especially if the community supports the losing 
side. 
 
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COMMENT 
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7. (SBU) It,s a measure of how far conditions in Zimbabwe 
have deteriorated in recent years that so many ethnic Indians 
are leaving or thinking of leaving.  The loss of this 
economically significant minority would be yet another heavy 
blow to the country. Yet, if economic and social conditions 
continue to deteriorate- especially the school system- it 
seems inevitable.  We will continue to engage this small but 
important minority in follow-up reporting on both the larger 
Indian community in Harare and smaller communities in other 
parts of Zimbabwe. 
SCHULTZ