Zimbabwe’s Sanctions

140 95 Rapaport News

RAPAPORT… Zimbabwe’s President Robert Mugabe paid his first visit to the Marange diamond fields this week, just as U.S. Deputy Assistant Secretary of State for African Affairs Susan Page was about to arrive in Zimbabwe for a four-day visit. Coincidence or not, the two excursions are intrinsically connected.

Although not the main purpose of her visit, part of Page’s mission is to address Zimbabwe’s participation in the Kimberley Process (KP) and the African country’s opposition to the U.S. attempts to be appointed as the KP vice-chair this year and as the subsequent 2012 chair.

As far as Mugabe’s visit is concerned, it is not clear what took him so long. What is certain, however, is the message he gave the international diamond community via journalists covering the event: “No one will tell us what to do with our resources,” The Herald quoted him as saying. “By fully exploiting the mineral resources we have in the country, we will be telling the world that we do not deserve the sanctions imposed on us.”

This is nothing new. Indeed, his message was in line with the one emanating from Zimbabwean officials over the past year, particularly since the failed KP Jerusalem plenary meeting in November. The country’s representatives have consistently said that the government will sell its diamonds whether the KP likes it or not. And they clearly mean what they say, given reports that about $174 million worth of diamonds were sold during January and half of February. And by now, that figure is probably higher.

While payment from these sales has reportedly been received, albeit with a few million dollars unaccounted for, it is not clear whether these goods have left the country — monitoring production, sales and exports has become a challenging task, to say the least, since Abbey Chikane’s KP monitor position was discontinued at the end of 2010. As one high-ranking KP official told Rapaport News, “With all its faults, critics and even inconsistencies, the monitor at least gave us a foot in the door to observe activity between Marange and Harare.”

Mugabe’s message was also consistent with his general focus these days. Following his Marange trip, the President held a rally in Harare to launch the “Sanctions Do Kill” campaign which aims to collect “millions of signatures” of citizens who blame Zimbabwe’s economic decline on the Western travel and financial restrictions inflicted on Mugabe and his inner circle. Significantly, Prime Minister Morgan Tsvangirai, head of the Movement for Democratic Change (MDC), the coalition partner with Mugabe’s Zimbabwe African National Union-Patriotic Front’s (ZANU-PF), boycotted the anti-sanctions rally, reasoning that his attendance would have legitimized Mugabe’s failure to respect their power-sharing agreement.

Mugabe, meanwhile, also called on Zimbabweans to boycott the products of foreign-owned companies that operate in the country, elevating concerns that the government plans to make good on its threats to nationalize these businesses. Based on his speech in Marange, “indigenization” would certainly not exclude Western diamond mining companies operating in the country. Reports that the government has increased exploration fees for diamonds to $1 million will also do little to encourage potential investors.

It appears that the Zimbabwe government does not differentiate between the political and economic sanctions imposed by Western governments and the embargo placed on it by the KP. While the debate within the KP has focused on the technical issues surrounding compliance, the Marange debate is, in fact, rooted in the same political and ethical factors motivating the general economic sanctions. With or without KP certification, it remains illegal for U.S., European Union (EU) and U.K. citizens to trade in Marange diamonds due to sanctions imposed by their respective governments on the Zimbabwe state companies which own all or part of the various Marange concessions. 

For now, talks between the KP and Zimbabwe remain in limbo and there appears to be a great deal of confusion as to where the negotiations are heading or where they are now. A spokesperson for KP chair Mathieu Yamba from the Democratic Republic of the Congo (DRC) would only say that a statement clarifying the status of the negotiations would be sent out in the coming days. Who knows; he may be waiting, and hoping, for feedback from Page’s visit.

In spite of any expectations held for U.S. diplomacy, it seems unlikely that Zimbabwe will budge at this stage. Apart from being able to sell its diamonds anyway, Mugabe appears content to play the sanctions card for his own political gain and the Marange controversy may serve as a useful tool in that strategy. While he may drum up support with the promise of diamonds for the people and by the people, the people continue to fall victim to his failed economic policies and political calculations. Given his thirty-year track record, they ought to remember, as should the KP negotiators, that it’s not the sanctions that are killing Zimbabwe, but the government policies which made them necessary. 

The writer can be contacted at avi@diamonds.net.

This article is an excerpt from a market report that is sent to RapNet members on a weekly basis. To subscribe, go to www.rapnet.com or contact your local Rapaport office.

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