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Zimbabwe – EU lifts sanctions on diamonds

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On the last 23 September, under the pressure of the diamond industry, the European Union lifted its sanctions on diamond imports from Zimbabwe, the new giant.

zim3The atmosphere was euphoric in Antwerp after the “unanimous” decision of the EU 28 member states, which was published on the last 23 Septembre in the EU’s official gazette, to lift the ban on imports from diamonds produced by the Zimbabwe Mining Development Cooperation (ZMDC) parastatal and its partners: Canadile, Diamond Mining Corporation, Kimberworth Investments, Mbada et Marange Resources respectively.
Such ban was part of the sanctions package decided in 2002 by the EU Council which claimed that ZMDC financed directly, President Robert Mugabe and his ZANU-PF party and which cited as motivating factors political violence, human rights abuses and the failure to hold free and fair elections.  Already, in September, the Belgian government called for the removal of sanctions and some other EU countries supported it, despite the reluctance of the British government based on suspicions that diamond revenues from ZMDC and other companies were siphoned by ZANU PF and the military to finance the alleged rigging of the last 31 July presidential election. But diplomats from other EU states warned that the lifting would become “inevitable”, although the EU expressed its “serious concern” after the irregularities which took place during the poll in July 2013.
zim2Other factors plaid a role in the decision. In the absence of a “smoking gun » proving the electoral fraud, the Belgian foreign minister, Didier Reynders, stated in a press release that ZMDC “did not participate to the funding of the electoral campaign”. Reynders, a former Finance minister had been under pressure of the diamond industry in Antwerp, the world’s largest diamond polishing and trade hub, which is desperately seeking to preserve its leadership on the world stage, in front of new rival hubs such as Tel Aviv, Mumbai, Dubai and Hong Kong. In 2012, a 14 percent drop of the volume of rough diamond trade in Antwerp rang the alarm bell. The decision to lift the ban prompted immediately the Antwerp World Diamond Center to invite  its members to “an exclusive networking lunch in the presence of the local Zimbabwean diamond industry” which was scheduled to take place on the 25 October in Harare.

Control of the gem resources

The reason for  the industry’s enthusiasm is that the diamond mined ZMDC and its partners at the controversial fields of Marange, where in 2008, 200 people died in clashes between illegal diamond diggers and the army, account for nearly half of Zimbabwe’s output. Besides, in a few years, Zimbabwe became a giant on the diamond world scene, with a progression of the output from 44,000 carats in 2004 up to 12 million cts in 2012, according to Kimberley Process statistics which groups the main producing and importing countries, the industry and the NGO. zim5Moreover, Zimbabwe has now become the fourth producer in volume after Russia, the Democratic Republic of Congo and Botswana. In these conditions, it would have foolish for the EU to continue to deprive Antwerp to have access to the Zimbabwean production. Indeed, the rise of the production is far from finished. ZMDC forecasts that output should rise by 40% as against 2012 to reach 16.9 million 2013. A second reason for the lifting of the embargo on the Marange diamonds is that it is unilateral and not international. Indeed, at its plenary in Washington last November 2012, the Kimberley Process Certification Scheme decided to lift all monitoring on diamonds from Marange. In spite of challenges regarding transparency and accountability, the KPCS argued that it had no mandate to police how governments use their diamond revenues. One of the problems is that most KP member states and some NGOs do not have the same definition of “blood diamonds”’. The states and some main industry entities stick to the original definition that blood diamonds are stones which are sold to finance activities from rebel groups such as Sierra Leone’s Revolutionary United Front, whereas NGOs point out that the definition should encompass violence which is related to the control of the gem resources.
zim4The lifting of the EU sanctions was welcome as well by Indian diamantaires of the Surat area because it should soften the price of rough diamonds produced by large companies such as de Beers, Alrosa, Rio Tinto and BHP, reports the Times of India which reminds that small and medium diamond polishers from Surat ad stopped purchasing rough diamonds due to 20 per cent increase in their price since January 2013. Unsurprisingly however, the UK-based pro-governance NGO, Global Witness had a different reaction. “The EU has rushed its decision to delist ZMDC before the dust has settled on Zimbabwe’s flawed elections” deplored Global Witness’s Senior Campaigner Emily Armistead.
Market analysts also observe that any rate, the EU and US sanctions were not biting any longer. At the end of the day, the main victims were the Antwerp dealers and the Indian polishers, they say. Indeed, in 2012, Zimbabwe managed to export 3 million carats more than it produced, which means that ZMDC and other company sold stocks of gems which were accumulated during the previous years. However, companies which operate in the Marange area had to sell their goods at a 25 percent discount, because insurance corporations and banks were reluctant to have their name, associated with the Marange diamonds, explained last June a Zimbabwe Parliament Committee on Mines and Energy.

François Misser

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