US embassy cable - 02HARARE2360

UNCLAS HARARE 002360 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR 2037 DIEMOND 
PASS USTR ROSA WHITAKER 
TREASURY FOR ED BARBER AND CWILKENSON 
USAID FOR MAJORIE COPSON 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, ETRD, ZI 
SUBJECT: Biggest Trucker Expounds on Smuggling, Fuel 
 
 
Sensitive but Unclassified.  Not for Internet posting. 
 
Ref: a) Harare 2339  b) Harare 2246 
 
1. (SBU) Summary: As some U.S. business reps have pointed 
out to us (ref a), unrecorded trade transactions now 
comprise a sizeable chunk of Zimbabwe's economy.  In fact, 
the country's largest trucker has confirmed reports of 
rampant smuggling, citing sugar, cigarettes and fuel as hot 
items.  His firm has avoided halting deliveries during the 
ongoing fuel shortage by keeping large reserves.  End 
Summary. 
 
Smugglers capitalize on weak zimdollar 
-------------------------------------- 
2. (SBU) Unifreight CEO David Cruttenden told us trucking 
companies are witnessing an explosion of smuggling out of 
Zimbabwe.  The heavily-devalued zimdollar (having collapsed 
from 302 to 1,300/$US on parallel markets in a year) coupled 
with price controls have created relative bargains here. 
Freight companies are clamping down on drivers, who are 
supplementing income by illicitly transporting cigarettes, 
sugar and other goods to neighboring countries.  In one 
instance, a driver was caught hauling an extra 7 tons of 
smuggled goods in addition to his full load, creating a 
potential hazard to rig, road and other motorists.  Once at 
the border, drivers make numerous trips back-and-forth, 
filling up on fuel in Zimbabwe for sale abroad. 
 
Truckers maintain large reserves 
-------------------------------- 
3. (SBU) Known in-country mostly as Swift, Unifreight tries 
to keep 1 million liters of fuel in its own tanks.  That's 
over 5 weeks reserve capacity, since Unifreight requires 
about 180,000 liters per week.  Since June, the firm has 
been unable to fully replenish its reserve tanks, which have 
occasionally fallen to critical levels (i.e., less than 2 
days supply).  Cruttenden noted that suppliers have been 
selling him a disproportionate amount of fuel on weekends, 
when government monitors are off-duty.  (Note: Sensitive to 
shortages at the pumps, the GoZ has sometimes instructed 
downstream operators to supply retail over commercial 
customers. Ref b).  The Unifreight chief believes a deeper 
fuel crisis will gradually ground Zimbabwe's economy to a 
halt. 
 
Comment 
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4. (U) By allowing the parallel to overrun the official 
exchange rate by 23-fold, then restricting domestic prices 
to artificially low levels, the GoZ is inadvertently 
promoting an informal economy.  The government generates no 
revenue through these illegal exports and squanders precious 
hard currency by subsidizing fuel consumption for non- 
Zimbabweans.  With no tempering of policy, the GoZ is 
heading for ever-worsening deficiencies of forex and fuel. 
 
Sullivan