Zimbabwe and the future of the Kimberley Process.

At the recent November meeting of the Kimberley Process (KP) in Jerusalem, Israel, no decision was taken on Zimbabwe’s demand to sell diamonds from its Marange fields legally on the international diamond market. Zimbabwe is understandably upset and   threatens the future of the KP

For most of us it is difficult to remember what gave rise to the conflicts in Angola, Liberia and Sierra Leone.

Most of us however, remember vividly the brutality that characterised these conflicts and the role diamonds played in financing them. It is in reference to these conflicts that the graphic term “blood diamonds” was coined.

Instigated by the brutality of these conflicts, the Kimberley Process  was established approximately seven years ago. The purpose of the KP, in a nutshell, is to prevent the production and trade in blood diamonds and use of the proceeds to finance conflict and war.

The KP is a sincere attempt to promote ethical conduct and honesty in the diamond industry. Many would say it is a pipedream considering the conspicuous lack of ethical behaviour and honesty in the diamond trade that is so well documented.

Advocates of this view will point to the diamonds of Marange as a case in point.

Failure in Jerusalem

The future of the KP is in jeopardy. KP members could not agree at their meeting earlier this month in Jerusalem to allow Zimbabwe to sell diamonds from its controversial Marange diamond fields legally on the open market.

There is a strongly held view that the alleged killings in 2006 and later of up to 300 illegal local miners at Marange by security forces and the present inhumane conditions under which mining is conducted, justifies that the Marange diamonds  be defined as blood diamonds.

This view causes controversy.

Zimbabwe has been denied the right to sell diamonds from Marange and only after intervention, serious negotiations and concessions was Zimbabwe in recent months allowed to sell diamonds at two controlled auctions.

The understanding was that the matter would receive priority attention at the KP meeting in Jerusalem starting on 1 November 2010.

Priority attention was given to the matter but no conclusive decision was reached.

Vagueness of the term

The effectiveness of the KP is based on the assumption that all the players in the international diamond industry underwrite the notion that it is wrong to deal in blood diamonds and that the practice should be stopped.

The main obstacle to the long-term success of the KP is that the term blood diamonds is vaguely defined and  open to different interpretations.

It is this vagueness that triggered a heated debate about whether the diamonds produced at Marange constitute blood diamonds or not. Potential buyers agree with the Zimbabwe government that the Marange diamonds are not blood diamonds.

The Zimbabwe government and its supporters argue that the diamonds from Marange are not, for the time being at least, used to finance conflict and are therefore not blood diamonds.

The government of Zimbabwe objects that by prohibiting the selling of its diamonds, the country and its people are unjustly and wrongly penalised.

Not so, say those holding the opposing view.

Critics of the Zimbabwe government prefer to point to the brutal killing of illegal miners at Marange and the inhumane and slave-like conditions under which people are forced to work with constant harassment by security personnel and soldiers.

There are also allegations of large-scale smuggling and that diamonds are used by the Zanu-PF party of President Mugabe to purchase and stockpile weapons for use, if necessary, during the elections planned for Zimbabwe in 2011.

It is also claimed that certain senior Zanu-PF office-bearers aspiring to succeed President Mugabe have interests in the Marange diamond fields and are using their proceeds to build up their own arms caches for use in the envisaged power struggle that is almost certain to follow.

This, critics say, is evidence strong enough to define the diamonds from Marange as blood diamonds and therefore not suitable for the legitimate international diamond market.

The KP at the Crossroads?

There is a growing perception that the diamonds from Marange have brought the KP to the crossroads and might even decide the destiny of the KP.

KP membership is voluntary and its protocols are not enforceable.  The KP can thus only be effective if all involved in the international diamond trade uphold the protocols. This is “a big ask” as confirmed by the outcome of the KP conference in Israel.

When the question was put to the vote most KP members -- with the exception of a few, noticeably Canada and Australia, also firm opponents of the Mugabe Presidency -- felt that Zimbabwe has fulfilled its obligations and should be allowed to stay on as a KP member. This will also allow Zimbabwe to sell its Marange diamonds on the international market.

With consensus a precondition the Jerusalem conference closed without a final decision and only a promise to pursue the issue urgently.

Zimbabwe reacted with indignation.

Minister of Mines Obert Mpofu, himself accused of having personal and family interest vested in Marange, accused the detractors of “playing politics”.

The Minister’s threat at he Jerusalem meeting that Zimbabwe will not accept a negative decision  and that Zimbabwe will sell diamonds without any conditions caused consternation. He also reiterated that  Zimbabwe would not cancel a recently concluded deal with the Indian Surat Rough Diamond Consortium (SRDSIL) to supply them with US$100 million worth of Marange diamonds every month.

Consequences

Should a decision from the KP be forthcoming and Zimbabwe is exonerated a backlash is almost certain from those, especially human rights groups, demanding tested and approved compliance to the KP  by Zimbabwe.

Absolving Zimbabwe could also be interpreted as caving-in under pressure and it  will be extremely difficult to recover the lost credibility.

The damage would be irreparable if evidence is later delivered that Zanu-PF did indeed pay for weapons and bankrolled the alleged training of “storm troopers” to subdue the opposition during next year’s election with diamonds from Marange.

The classical catch-22 situation confronts the KP.

It is to be expected that the reaction of the Mugabe government, should a decision be slow in coming or go against Zimbabwe, will be challenging to say the least.

There is little doubt that Zimbabwe will go ahead and sell its diamonds with the assurance that willing buyers will not be in short supply. India, China and buyers from the West and the Middle East will always be on hand.

India is ambitious to establish a leading global diamond polishing and jewelry industry and the   Marange diamonds hold the key. India has already declared that it will buy Zimbabwe diamonds to the tune of  US$100 million a month irrespective of any KP decision.

The same attitude is to be expected from China. Not only is it alleged that the Mugabe government pays for Chinese-manufactured weapons with Marange diamonds but China’s stated policy of turning a blind eye to the internal politics of its allies and economic partners is well-known.

By the same token not all diamond dealers from Antwerp, Israel, the US and elsewhere in the West will reject a lucrative deal from Zimbabwe.

The diamond fields at Marange are among the biggest and most productive in the world worth billions. Zimbabwe has cautioned that if pushed to the limit it will flood the international diamond market forcing down the diamond price. Such a deed would be devastating and it must be assumed that everything possible will be done to prevent such an eventuality.

The diamonds of Marange have dealt Zimbabwe a strong hand and the way it is going to play this hand will have a profound influence on the future  of the KP.

But, the diamond industry like any other industry has its founders and historical powers and forces which make the rules. This is normal in any industry and any new player must play by the rules  set by the old players. As one commentator explains: ”Just like in soccer you cannot have own rules different from what Fifa dictates. No matter who you are, whether you are Diego Maradona or Lionel Messi, you play by the rules.”