A Digest of debkafile Round-the-Clock Exclusives in Week Ending March 31, 2005:

Zimbabwe – Hell in Paradise

26 March: Amid rampant unemployment (est. 70%), repression, unbridled lawlessness, hunger, intimidation and an unchecked, untreated AIDS epidemic, Zimbabweans go to the polls Thursday, March 31. So secretive, brutal and repressive is the quarter-of-a-century old regime of President Robert Mugabe, 81, and his all-powerful ZANU PF party, that no one believes in the official figure of 5.6 million registered voters for 120 seats in parliament. Thirty are handpicked by the president.

Roman Catholic Archbishop Pius Ncube of second largest town of Bulawayo called Sunday, March 27, for peaceful Ukraine-style street protests to overthrow the ruler, because Thursday’s election was certain to be rigged. Opposition leader Morgan Tsvangirai, head of the opposition Movement for Democratic Change, the MDC, predicts that widespread crop failure and drought in the once thriving country could leave seven out of 12 million Zimbabweans hungry before the end of the year.

debkafile‘s special correspondent reports: The anti-torture group “Redress” says that no free elections are possible in the current climate of fear. Mugabe’s anti-Western and anti-White rhetoric has increased as polls approach. Today, Zimbabwe is mortgaged to the hilt, its ruler believed to have signed over to Qaddafi most of the country’s high-value assets: a stake in or ownership of its refineries, the Mozambique-Zimbabwe oil pipeline, the Harare Sheraton, Victoria Falls hotels, some 20 large ranches and mansions and even the famed Hwange national game reserve.

There are stories that poachers are killing off the game in this and other reserves out of desperation for food. With inflation at a rampant 700%, bread is priced out of reach of the poor.

Delivering the Easter Mass at Bulawayo’s St. Mary’s Cathedral, Bishop Ncube urged worshippers to remain hopeful. “Somewhere there will come a resurrection for Zimbabwe.”

Markets at Crossroads

30 March: The US dollar ended the first quarter of 2005 with renewed vigor across the board of the foreign exchange markets. debkafile‘s financial analyst judges that the markets have reached an interesting crossroads. We now see the US currency building up the expected head of steam. The United States 10-year government bond yield has begun moving up towards 5 percent and over, while equity markets are going in the opposite direction, flagging now and expected to mark time in the near future.

Rallying fast during the last two weeks of March, the US currency gained about 4% against all major currencies. This trend was the result of the change in the market’s estimation of American interest rates. The continuous rise in the short-term rate (which the Federal Reserve put up again by 0.25 % on March 22), coupled with the Fed Chairman Alan Greenspan’s inflation warnings for the future, bumped up the yield on 10-year American bonds to 4.60%.

The first to get hurt were emerging markets. Dollar recovery continued to thump the major currencies, mainly the euro. But the United States is still weighed down by huge deficits that balloon month by month. This structural fault line in the American economy offsets any over-enthusiastic predictions for the currency’s upward swing.

Equity markets in the United States, as in the rest of the world, appear to lack the bounce for breaking through ceilings and in the last two weeks this immobility has turned into downward trends. The continuing war in Iraq and the anticipated threat from Iran both have a negative effect on both stock markets and the dollar.

In summary, the markets may be said to stand at a crossroads. The determinants for the near future are the behavior of the bond markets – further rises in yields – and fluctuations in the American and world equity markets, where we forecast consolidation and possible decline.

Israeli markets

For the last few months, foreign banks and foreign financial institutions have been aggressively building up their investments in Israel’s markets, buying local equity (mainly big bank stocks) and Israeli shekel bonds, selling dollars and trading for shekels in the local foreign exchange market. In contrast to other emerging markets, Israel was hurt only minimally by the last sell-off in those markets. But now, the Tel Aviv stock exchange is steadying and appears to be heading for some consolidation and possible decline. Trouble on Israel’s political or security scene will have an untoward effect on the local equity market and is likely to drive some foreign investments to exit the country, further weakening the shekel against the dollar.

Sharon‘s Payouts for Gaza Pullout

30 March: The fourteen months since Ariel Sharon unveiled his unilateral disengagement have been for him a personal hurdle race to knock over the political and military opposition to his plan by fair means or foul. In the process, he trampled several values and mores that most Israelis had taken for granted. Critics were punished by the wrecking ball, champions and cronies lavishly rewarded with jobs and handouts from the same 2005 state budget that denies medicines to cancer victims, cuts retirees’ pensions, slashes child support, invalid and jobless allowances and pauperizes small businesses and the former backbone of the economy, the middle class.

Wednesday, March 30, the Knesset finally turned against these tactics. More than 70 MKs out of 120 stalled when asked to confirm three new ministers, two from Likud, and five deputy ministers whom Sharon had decided to reward for standing by his battle to force the evacuations through.

In pushing his disengagement through, Sharon has shown no mercy to critics. He axed the chief of staff and Shin Beit chief whose combined efforts contained the nearly five-year Palestinian terror war and were on the way to vanquishing it; before that, he broke up a government coalition that had the largest majority of any in Israel’s history – only to join forces with the opposition party, turn his back on the majority of his own Likud party and freeze the anti-disengagement dissenters out of every legitimate political avenue of protest.

The outcome that may now be unavoidable is a brutal, violent confrontation between the men in uniform and the citizens they are trained and geared to protect. Meanwhile, the media have been harnessed to drip poisonous snippets of “news” to discredit the anti-evacuation campaign and demonize the movement.

Not surprisingly, this movement for lack of strong pragmatic leadership is in danger of being pulled toward militancy by wild fringe groups who want more action.

Oddly enough, the human rights group Betzelem, which focuses almost exclusively on cases of abuse against Palestinians, is the only NGO to point out the settlers’ rights. While denying the legality of the settlements, Betzelem notes that they were not established by private individuals but by successive Israeli governments which therefore bear full responsibility for upholding their occupants’ human rights. The rights group terms Palestinian attacks on these settlers “war crimes” under international law. Betzelem contends that since the government’s disengagement plan is opposed by large parts of the Israel public, their democratic right to protest is enshrined in international and Israeli law. Therefore, the scope of their resistance may not be restricted.