July 15, 2010

Country given clearance to sell diamonds

Zimbabwe has been given the green light to sell its controversial diamonds, after the international diamond trade monitor, the Kimberley Process, thrashed out an agreement with the Mines Ministry. Negotiators from the Kimberley Process reached a deal with the Zimbabwe government that will let the country export diamonds from Chiadzwa diamond fields, while agreeing to a strict regime of monitoring and supervision. The deal was announced at the World Diamond Council meeting in Russia.
"I want to assure everyone that Zimbabwe means business," said the Mines Minister Obert Mpofu. "We will adhere, we will comply. We will not let you down." While diamond exports will resume, the plan calls for several review missions to visit the region and assess compliance with a plan formulated by the Kimberley Process in 2009. The agreement was reached after two days of reportedly heated negotiations, which broke down several times. One hour prior to the agreement, some negotiators believed a deal was dead. The mood among World Diamond Council members is now said to be "jubilant", as many feared Zimbabwe make good on threats to sell its diamond without Kimberley Process certification.

An estimated $1.7 billion worth of diamonds mined from Chiadzwa is apparently stockpiled, waiting to be sold as soon as certification from the Kimberley Process is given. However, Mines Minister Mpofu and Robert Mugabe had both threatened to sell the stones, regardless of certification, likely striking fear into the hearts of industry experts. Some analysts have argued that such threats would not be taken lightly as the industry depends on strict control of diamond prices. A flood of illegal diamonds onto the market would throw this control into turmoil.

Officials from the Kimberley Process had previously failed to reach agreement on whether to certify diamonds from Chiadzwa, ending a meeting in Israel last year with no deal. Certification, to say that stones are 'conflict free', is needed to allow legal international diamond sales. But with rampant rights abuses ongoing at Chiadzwa, it is widely feared that certification will only serve to further fund abuse.

Finance Minister Tendai Biti meanwhile has proposed a future 'Diamond Act' to ensure that the profits from sales of Zimbabwe's diamonds go towards benefiting the country. Biti was speaking during his Mid Term fiscal policy review in Parliament on Wednesday, where he said that the country's economic stability rested on the sale of diamonds. Biti, who has been calling for the Kimberley Process to certify the diamonds, said on Wednesday that a parliamentary approved 'Diamond Act' could end corruption at the diamonds fields. He said that the government had agreed that all alluvial diamond mining would have to be undertaken by the state, and that all revenue would have to go into the national treasury. "There is consensus in government that there has to be a new Diamond Act that says alluvial diamond mining in Zimbabwe be conducted by and through the state," he said in his budget speech.

The new law would theoretically ensure that all income from diamond sales would immediately be transferred to the national coffers, which so far has not happened. Biti revealed that earlier this year the state's mineral corporation had sold $30 million worth of Chiadzwa diamonds, of which the treasury has no record. He has previously stated that no money from the mines was coming into government coffers, despite the state supposedly owning a large percentage of the firms currently mining the diamonds fields. Biti also said that the current mining licenses had been issued fraudulently.

The Finance Minister told Parliament that all diamond sales must be conducted transparently and under full parliamentary scrutiny. He said that until now, the management of Chiadzwa had been marked by secrecy. Biti said the new diamond measures would go a long way to resolving the country's desperate economic plight Gabriel Shumba, from the Zimbabwe Blood Diamonds Campaign, said that Biti is in an "impossible situation." Shumba said he applauds efforts to end corruption at the diamond fields. But he argued that calling for certification before abuses end, "is putting the cart before the horse." "Tendai Biti is in a very difficult situation, because he knows that the diamond wealth can sort out the country," Shumba said. "But how can he assure that abuses and corruption will end? That needs to be done first." (SW Radio Africa, London)

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