Source: the Standard
Report by Financial Times
International sanctions have targeted President Robert Mugabe’s inner circle and the country’s economic pillars such as the diamond industry, revenues from which have allegedly been used to finance the ruling party and the security forces.
But the country has found a crucial route to global markets.
Over the past five years Dubai — known for its relentless pursuit of new markets and willingness to deal with all manner of regimes — has become a significant conduit for legal Zimbabwean exports of rough diamonds.
“Dubai was our saviour,” said Christopher Mutsvanga, chairman of the Minerals Marketing Corporation of Zimbabwe, which is under US sanctions.
According to the latest available figures, Dubai imported US$408 million worth of Zimbabwean diamonds in 2011, up from US$1,7 million in 2008.
While it is not illegal for Dubai to buy them, some gems from Marange fields — which account for the vast majority of Zimbabwean stones — are tantamount to “conflict diamonds”, human rights activists say.
With the diamond fields allegedly under the control of the military — which is loyal to Mugabe’s Zanu PF party — his opponents say profits are siphoned off to fund the security forces, which have been repeatedly accused of human rights abuses.
For his part, Obert Mpofu, Mines and Mining Development minister, says sanctions are “politically-motivated” and the measures of “former colonisers”.
Most rough stones that arrive in Dubai are re-exported for polishing, mainly to the manufacturing centre of India. Other destinations include Belgium, China and Thailand.
In 2011 the Kimberly Process, a co-operative system between 80 states to certify that diamonds are not contributing to conflict, approved Zimbabwean gems for sale.
One of its founders, Global Witness, which campaigns against the abuse of natural resources to fund repressive regimes, then withdrew from the process, saying it had become an accomplice to diamond laundering.
Global Witness say there is not enough oversight of the provenance of stones arriving in western markets.
The pressure group says Dubai has become a popular staging post for such “tainted goods,” allowing companies to avoid scrutiny in western markets by re-exporting gemstones via the Emirates.
“Dubai is crucial,” says Emily Armistead of Global Witness. “It is not covered by sanctions and so it’s an easy route for diamonds to pass through and avoid these restrictions.”
Global Witness says its investigations have revealed links between some joint-venture diamond mining companies and the military, police and intelligence organisations loyal to Mugabe.
“Global Witness’ investigations point to a serious risk that diamond revenues could be used to fund violence in this year’s election,” the advocacy group said this year.
Officials in Dubai say they did not import Zimbabwean gems when the Kimberly Process restricted Marange gem trade. They also deny claims made several years ago by its former chief executive that the Dubai bourse had turned a blind eye to “conflict diamonds”.
The trade with Zimbabwe comes as Dubai’s share of the global gem business has risen.
Larger volumes from bigger producers such as Russia, Botswana and Angola has pushed the value of the diamond trade in Dubai from negligible rates in 2005, when the emirate set up its diamond bourse, to US$39 billion in 2011.
The diamond bourse is located in Almas Tower, the region’s tallest commercial tower, part of the fast-growing Dubai Multi Commodities Centre (DMCC), which boasts five new corporate registrations a day.
Mpofu says the government is setting up an office at the DMCC to boost exports further.
The DMCC plans more incentives to boost the trade in gems.
“Dubai has a clear African strategy,” says Peter Meeus, chairman of the Dubai Diamond Exchange, home to 600 diamond companies. “We are here to assist African states to trade here,” says Malcolm Wall Morris, DMCC chief executive.
This year, the EU suspended most sanctions after the country’s voters approved a new constitution, limiting presidential powers and paving the way for elections. —Financial Times
For Zimbabwe’s cash-strapped government, diamond sales should be an important source of revenue.
However, Tendai Biti, the finance minister and member of the MDC-T, which shares power with Zanu PF, regularly complains about the murkiness of the industry and the small amounts it contributes to state coffers.
Biti has battled for increased transparency in the management of diamond revenues without success, underscoring the limited powers of MDC members of the dysfunctional unity government that took office in 2009.
Last year, the country exported US$760 million worth of diamonds—its second-biggest export earner after tobacco —while the government’s official take was US$84 million.
Opposition politicians fear the diamond money will go towards keeping the security forces on Mugabe’s side and could be used to help to fund the Zanu PF political campaign.