US embassy cable - 03HARARE1070

UNCLAS HARARE 001070 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S and AF/EX 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR 2037 DIEMOND 
PASS USTR FLORIZELLE LISER 
TREASURY FOR ED BARBER AND C WILKINSON 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ECON, ETRD, EINV, PGOV, ZI 
SUBJECT: Economy Slides Further 
 
 
1. (SBU) Summary:  Zimbabwe's free-falling economy has 
taken a turn for the worse.  Fuel, electricity and even 
bank notes are becoming scarcer.  Business leaders who 
laid hopes on the GOZ's economic reform process a few 
months ago are increasingly joining the Movement for 
Democratic Change (MDC)'s call for a "final push."  End 
Summary. 
 
De-Industrialization Continues 
------------------------------ 
2. (SBU) Incredible as it sounds, Harare's fuel lines 
have grown longer, often reaching 4 kilometers.  In many 
rural areas, motorized transport is dying out, leaving 
Zimbabweans to hike as far as 30 kilometers for food 
purchases or donations.  There are workers whose monthly 
salary will not cover a single disposable razor from 
South Africa.  The Reserve Bank lacks funds for imported 
ink and paper to print new bank notes.  Several banks 
have stopped servicing cash withdrawals.  Others are 
limiting withdrawals to US$ 35 or stacks of Z$ 50 notes 
(worth about 2 U.S. cents each/bring a shopping cart). 
Even parastatal Air Zimbabwe is toying with no longer 
accepting newly-worthless Zimdollars. 
 
3. (SBU) Other than the export and financial sectors, 
which are still above-water, the business community is in 
deep despair.  Even the GOZ's relaxing of most price 
controls last week failed to inspire optimism. 
Businessmen cite the GOZ's corruption, botched 
normalization of fuel prices and inability to rescue an 
imploding infrastructure.  (The 
Transportation/Communications PermSec told us most of the 
National Railway of Zimbabwe's locomotives are sidelined 
due to lack of spare parts.)  Business reps now consider 
the GOZ incapable of guiding economic reform and are 
gradually joining the MDC's calls for a "final push" that 
would end Robert Mugabe's 23-year rule. 
 
Comment 
------- 
4. (SBU) This seems to represent a sea change in business 
attitudes over the past months.  The latest 65 percent 
devaluation of the Zimdollar was a painful blow for many, 
who have now abandoned hope that the GOZ can liberalize 
economics but ignore politics.  While they would not 
welcome additional 2-3 day stayaways, businessmen seem 
willing to swallow even an indefinite stayaway if it ends 
this ordeal. 
 
Sullivan