Zimbabwe wins a Pyrrhic diamond victory at the Kimberley Process

Jun 30, 2011

There should be triumphant celebration over the announcement by the Kimberley Process' chairman that Zimbabwe can now sell its Marange diamonds on the open market. But the lack of consensus within the KP for the decision means that they will continue to carry the taint of being 'dirty' in important diamond markets.

Zimbabwe got the support of many countries at last week's KP meeting in Kinsasha, but because of the messy manner of the 'victory,' the country is not any closer to getting full value for its Marange diamonds on the world market than it was before the meeting.

Soon after the DRCongolese current chairman of the KP announced the decision, the Canadian and US governments issued statements making it clear they disagreed with it. Influential NGOs monitoring the issue followed up with their own statement urging diamond markets to avoid the Marange diamonds.

While Zimbabwe has flexed its muscle as a significant new diamond producer, it has now come up against the reality that in the globalised capitalist economy, the most important decisions about the value of minerals are made far from where they are produced. That is in the major trading centers and principal end-products markets, which are both still principally in the western countries with which the Mugabe government is engaged in an on-going spat with on many levels.

This is not an issue that can be resolved by defiant sloganeering to the effect that Zimbabwe will sell its diamonds regardless of the KP's official stance. There will certainly be no shortage of buyers of the Marange diamonds, but significant opposition to them in the final-destination markets will mean they will earn the country a fraction of what they should. The Indian processing industry that is hungry for Zimbabwe's diamonds and supported KP certification for them counts the West as a significant market for its products. Even if China and India were able to absorb all of each year's Marange diamonds in their local markets, where issues of KP certification are not as important as in the West, they would be able to get them by offering lower prices, knowing that Zimbabwe's marketing options were severely limited.

So there is no way that Zimbabwe can claim that the continuing controversy over the Marange diamonds is not important.

The continuing western opposition to KP certification of the Marange diamonds is said to be over concerns that human rights abuses by the Mugabe government against the local communities have not been addressed, nor the issue of ensuring that diamond revenue benefits the country as a whole rather than just the politically well-connected. The Mugabe government predictably denies the accusations of abuses, but it argues from a weak point because of its long overall record of brutality against the citizens. To the government the stance of western countries at the KP is just another manifestation of their war of attrition against the Mugabe government over many other issues.

Yet the government could have bolstered its case by showing that it was taking the concerns about human rights and a fair deal for the people of Marange from the diamonds seriously, even while continuing to resist a direct role for a KP they fear is stacked against them. Instead their reaction has been more indignation at westerners expressing these concerns than at showing how they are being dealt with. It as if the annoyance at the westerners is the excuse to deny there being any issues of concern at Marange.

If the Mugabe government had come to the table with the position, "We have heard the complaints and fears, and here are the concrete steps we have taken," they would have been in a much stronger position to counter the western charges of the diamonds being dirty or bloody.

By only trying to deflect the concerns with bluster and propaganda, alleging all kinds of conspiracies against it, the Mugabe government has only succeeded in making the sections of global opinion it should be trying to win over suspect the charges against it are true. As a result Zimbabwe could end up with a KP certificate, but one that in real world diamond-marketing terms is not worth the paper it is written on. The same countries that might push Zimbabwe to defy the lack of consensus at the KP to sell its diamonds are likely to then use the resulting perception of them being controversial to underbid for them.  

It will be interesting to see what the Mugabe government's next move will be. If it is not a clever, well thought out one that takes into account harsh market realities, Marange's diamonds may enter the world as cheap, soiled stones, at tremendous loss to Zimbabwe.    


Post a Comment