Friday, December 23, 2011

The Desperate Act of US Sanctioning Zimbabwe's Diamond Companies

USA: The desperate act of sanctioning Zimbabwe’s diamond companies

Friday, 23 December 2011 00:00
Zimbabwe Herald
Rangu Nyamurundira

Barely a month after the Kimberly Process Certification Scheme (KPCS) approved two of Zimbabwe's diamond mines, Mbada Diamonds and Marange Resources, to sell their diamonds, the United States of America has unilaterally added the two companies to its list of sanctioned entities.

The United States has acted unilaterally against Zimbabwe's diamonds despite the popular and majority decision by members of the KPCS, including Canada, China, the European Union, Ghana, South Africa, Brazil, United Arab Emirates, Namibia and India to support Zimbabwe's diamond industry and the sale of diamonds by Mbada Diamonds and Marange Resources.

The United States had made "a compromise" abstaining itself from voting against the two diamond companies. Yet now, to serve its own selfish national interests, the United States has unilaterally sanctioned the same two diamond companies.

Millions of Zimbabweans who have been anticipating that diamonds will restore their socio-economic rights must now question the motives of the United States in imposing sanctions against the very companies through which diamond revenues will reach them. There is no longer any legitimacy to the American argument that its sanctions have been for the sake of protecting human rights, when the same America now imposes sanctions against the very diamonds expected to guarantee millions of Zimbabweans their socio-economic human rights, including health care, education, livelihoods and shelter.

By targeting Mbada Diamonds and Marange Resources the United States will deprive the Government of Zimbabwe, a major shareholder in these companies, of diamond revenues guaranteeing the economic recovery and growth critical to securing their citizens' socio-economic rights.

A few days after sanctions were imposed against Mbada and Marange Resources Zimbabwe's Prime Minister, Morgan Tsvangirai, went on record stating that Zimbabwe's civil servants, hundreds and thousands of them, would only get an increment to their paltry salaries should diamond revenues increase in 2012.

The Minister of Finance also budgeted US$600 million or more to be derived from diamonds sales in 2012, which he anticipated to be used to improve the condition of service and welfare of civil servants.

The new bout of sanctions now targeting the sale of diamonds derived from Marange dashes hopes for improved socio-economic rights of thousands of civil servants and their families, amounting to millions of ordinary Zimbabweans. And still the United States would wish to have us, and the world, believe sanctions are for our own good. The United States of America's unilateral sanctions, dating as far back as 2002, have always been about exposing the people of Zimbabwe to as much extreme socio-economic hardships as possible, enabling America to manipulate their desperation to influence and determine the course of Zimbabwe's democratic process to further American interests.

The United States' targeting of Mbada Diamonds and Marange Resources may well represent its fear that diamond revenues from these companies will be the means through which the Government of Zimbabwe, which is a major shareholder, will bust sanctions that have debilitated the Zimbabwean people's exercise of socio-economic rights and laid hostage their exercising the free will that constitutes democracy.

Even more threatening to American interests is that the Zimbabwean government that will be credited for directing natural resources, including diamonds, to benefit the majority Zimbabweans will remain one still influenced by President Mugabe and his Zanu PF party whose policies remain a threat to American interests. Zimbabweans are after all waking up to the reality that it is because of the policies of Zanu PF that the Government of Zimbabwe is prioritizing Zimbabwe's natural resources to ensure greater benefit Zimbabweans and not foreigners.

An argument that we might hear being made to try and legitimize sanctions against Mbada Diamonds and Marange Resources is that sanctions are meant to stop the Government of Zimbabwe using the proceeds of their shareholding in these companies to finance human rights violations.

Should such arguments arise we need only remember that the KPCS process would not have granted the two companies the green light were their diamonds associated with human rights violations, conflict or ‘blood diamonds' as had been maliciously alleged by United States, some international and local non-governmental organisations.

If the United States was genuinely concerned about the abuse of diamond revenues would they not rather allow such diamonds to be freely sold on the open market making it easier to monitor revenues and enable Zimbabweans to bring their use to account?

Don't sanctions simply force diamond sales and transactions underground and to be shrouded in secrecy, to avoid revenues being frozen as they find their way home through banks in which American sanctions may have influence?

If sanctions are being imposed against Mbada Diamonds and Marange Resources under the pretext that the Government of Zimbabwe's shareholding in these companies will see revenues financing human rights violations, then we must also ask whether similar sanctions will soon be imposed against foreign and western companies in which indigenous Zimbabweans and the government will acquire a majority shareholding. Zimbabwe's indigenisation laws require that non-indigenous and western mining companies cede 51 percent of their shareholding to indigenous Zimbabweans, including government controlled designated entities.

Anglo-American's Unki Mine has already deposed of 10 percent of their shareholding to the Tongogara Community Trust constituted by indigenous Zimbabweans.

Part of the shareholding in foreign mining companies is most likely to be ceded to specified ‘designated entities' which include the Zimbabwe Mining Development Corporation, a government investment vehicle.

Is the United States government going to sanction its own companies or those of fellow western countries once they comply with indigenisation laws and sit at the same shareholders' table with the Zimbabwe Mining Development Corporation or some other state controlled designated entity?

After all it is the same Zimbabwe Mining Development Corporation which has shares in the now sanctioned Mbada Diamonds and Marange Resources.

Self preservation will not allow sanctions to be imposed against American or western companies in which indigenous designated entities will acquire shareholding.

After all the United States' government has always been about protecting the interests of its corporations investing abroad and sending back revenue to feed the American economy. Unfortunately Mbada Diamonds and Marange Resources are not western companies, so the United States loses no sleep over sanctioning them or undermining the value of their diamonds whose estimated billions of dollars in revenue it will not benefit a dime from.

Had the licenses been given instead to American companies we might not be talking about the sanctions against Zimbabwe's diamonds.

Mbada and Marange Resources are right to be confident that sanctions will not stop the mining of diamonds or their being sold, at least to those countries in support of Zimbabwe's diamond industry.

After all China and India will soon become the world's largest diamond markets.

However, Mbada and Marange resources must not underestimate the extent to which a calculated, consistent and malicious association of their diamonds with human rights violations can undermine their marketability and value on the international market.

While their diamonds will be bought it is more critical now that Mbada Diamonds and Marange Resources become more aggressive in marketing their diamonds in those markets prone to manipulation by United States' overbearing unilateral sanctions.

Zimbabwe's diamonds must remain competitive across the international diamond market to acquire and maintain their real value, and must not be confined and undervalued by unjustified sanctions.
The world's largest businesses and transnational enterprises, including companies in the extractive industry, now have to respond to an international market sensitized to the impact of their business activities on human rights, and manipulated by any perception of violations.

It is this negative perception which sanctions intend to create against Mbada Diamonds and Marange Resources, so as to manipulate and force as much of the international diamond market to boycott their diamonds. Mbada Diamonds and Marange Resources must now seriously contemplate measures to remedy and demystify any malicious association of their diamonds with human rights violations.

The successful efforts by the Government of Zimbabwe leading to the KPCS giving the green light to Mbada Diamonds and Marange Resources should not be an end to adopting broader and more focused commitment to ensure that Zimbabwe's diamonds remain competitive on the international market.

Rangu Nyamurundira is a lawyer and human rights consultant based in Harare, Zimbabwe. He can be contacted at

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