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Trade embargoes on Marange diamonds a damp squib?

03 december 2012

There is certainly no doubt that the Zimbabwe diamond conference, which was held recently in the resort town of Victoria Falls, ended with one consensus.

This was: sanctions on Marange diamonds must go.

The World Diamond Council (WDC) president Eli Izhakoff even pledged that he will engage the United States Treasury and the European Union to lift sanctions imposed on diamond companies operating in Marange.

Namibian Mines Minister Isak Katali also said the U.S can maintain sanctions on other Zimbabwean entities and individuals not companies mining in Marange.

His argument was why companies in Marange should be punished when they have met the minimum requirements outlined by the Kimberley Process.

The trade embargoes were put in place after reports, which alleged that diamonds from the eastern part of Zimbabwe were being used to prop up the political cabal of president Robert Mugabe’s party and the security chiefs.

Accusations of gross human rights abuses were also leveled against the government when its security personnel drove out illegal miners that had invaded the diamond fields in 2006.

Harare dismissed the allegations as false and malevolent.

Zimbabwe Mining Development Corporation (ZMDC) chairman Godwills Masimirembwa said it was amazing that the West never talked about human rights abuses when there was chaos in Marange as thousands of people from all over the world extracted the diamonds.

“We have the best production and security arrangements you can talk of. When the diamonds were being smuggled, there were no sanctions. The ZMDC and its partners are now suffering for restoring order in Marange,” he said.

“If one pays in US dollars, all the transfers go through the United States of America and that money, if meant for diamonds in Zimbabwe, will be frozen [by the Treasury's Office of Foreign Assets Control (OFAC)].

“It means you will not get your diamonds and we will not get our money. You have to appear like a crook to avoid detection.”

This article does not seek to find out whether the sanctions imposed against companies mining in Marange were justified or not.

Rather it seeks to establish whether the embargoes had in any way promoted transparency in the trading of the diamonds or not.

The answer to that question is that to some extent the sanctions have failed to stop the trading of the diamonds.

Many a times, including at the Victoria Falls conference, there were attempts to portray the “almighty” OFAC standing in the way of Marange diamonds.

Zimbabwe's mines minister Obert Mpofu even said that at least $30 million was trapped by international institutions under the anti-Marange diamond campaign.

However, if the Kimberley Process reported (data presented by Zimbabwean officials) that the country sold 7.7 million carats in 2011 worth $422.9 million, it shows that sanctions busting measures had been developed.

Surely no sane person could have expected Zimbabwe to sit on their laurels complaining bitterly while OFAC continued to wreak havoc with their diamond transactions.

Worse still, it is unthinkable that they would just stock-pile while waiting for the sanctions to be lifted.

Some delegates said that the U.S should do away with the sanctions as they were defeating the very same purposes they were intended for.

Their reasoning, which I subscribe to, was that sanctions give Zimbabwean officials an excuse not release sales figures, arguing that doing so will give the U.S an opportunity to harass their buyers.

Such a scenario is a good breeding ground for trade opaqueness.

However, if there is no hindrance, then there is no way Harare can refuse to do its business openly.

Former South Africa president Thabo Mbeki said the government of Zimbabwe must do everything possible to ensure the greatest possible transparency about all matters relating to the mining and marketing of diamonds.

However, as long as the sanctions are still in place that transparency he is calling for will never come forth.

So it is quite axiomatic that sanctions are not helping Zimbabwe as far as transparency is concerned.

If sanctions are lifted, no excuses will be put forward when diamond revenues take a knock.

Diamonds have been a source of economic prosperity in countries such as Botswana and Namibia.

The same can be said about Marange deposits should Zimbabwe is allowed to trade the gems freely and in a transparent manner.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished