Global Risks Forecast

The serious risks of complicity in Zimbabwe have been highlighted by the reported decision by the Kimberly Process Certification Scheme to recommend Zimbabwe's suspension from the process. A KPCS team witnessed human rights violations during a July 2009 visit, while the cash-strapped national unity government has offered little indication it is ready to comply with minimum standards

Event

Media sources have reported that a minimum six-month suspension of Zimbabwe’s import and export of rough diamonds has been recommended in an interim report by the Kimberley Process Certification Scheme (KPCS), which aims to end the trade of rough diamonds that fuel conflict. However, NGOs have criticised KPCS for inaction despite evidence of human rights violations by the military in the Chiadzwa diamond area. Its own delegation observed violations during a July 2009 visit. Mines Minister Obert Mpofu said on 30 July 2009 that the suspension would worsen Zimbabwe’s critical economic situation by curtailing a revenue source.

Significance

Following its field visit to Marange in early July 2009, the KPCS indicated that military intervention in Marange would have to desist if Zimbabwe was to continue trading with the KPCS. The Kimberley Process is a joint initiative by governments, civil society and business to end the trade of conflict diamonds. The certification scheme comprises 49 members which represent 75 countries (including EU member states).

In the interim report, which was apprently leaked to the media, the KPCS detailed “direct involvement of the military in illegal mining and related activities that we observed ourselves” in the Marange district where the Chiadzwa fields are located. It recommended the appointment of a special envoy to document alleged violations by security forces and a tripartite body of government, industry and civil society to monitor compliance with KPCS. Liberia’s Deputy Prime Minister Kpandel Fayia led the KPCS field team that wrote the July 2009 report. He compared the “senseless violence” of the Liberian civil war, partly funded by conflict diamonds, to victim accounts of military abuses from the Marange region.

Overdue action?

The suspension recommendation is overdue, according to NGO Global Witness. It has been among those that have criticised the slow pace of the regulatory process in dealing with violations (see our related article) and in particular the alleged violations reported to be occurring in Zimbabwe in October 2008 (see our related article).

In April 2009, the World Federation of Diamond Bourses (WFDB) ordered a ban on the trade on diamonds from the Chiadzwa fields in Marange. This followed a report February 2009 by NGO Partnership Africa Canada (PAC) on alleged violent military intervention into illegal diamond trading in Marange. In June 2009, Ian Smillie from PAC resigned as a civil society representative to the KPCS, citing the failure of the regulation process. One of the Kimberley Process's original architects, Smillie claimed KPCS had failed to control illegal smuggling of diamonds. KPCS had, he argued, effectively condoned diamond smuggling in Venezuela, which had continued to illegally trade diamonds despite promising to suspend the practice in 2008 in order to implement minimum standards. There is evidence of diamond smuggling elsewhere, including a World Diamond Council report in 2008 claiming Zimbabwean diamonds were being smuggled across the border to South Africa.

Also in June 2009, a report by Human Rights Watch (see our related article) detailed allegations of involvement by military and government officials in diamond mining and recommended Zimbabwe’s suspension from the KPCS. The government has consistently denied the allegations.

Suspension not automatic

Because there must be meetings with the government to implement the suspension, it would take at least two months to impose, according to Global Witness. The ban would be imposed for a minimum of six months, or until Zimbabwe was judged to meet minimum standards. Despite the punitive economic consequences that a ban and any subsequent delay would entail - KPCS accounts for 99.8% of global diamond production - the government has given little indication compliance would ensue with any rapidity.

The state-controlled Herald newspaper claims that the government admitted non-compliance with KCPS in a 14 July response to the interim report. However, it has made no efforts to improve the situation. Mines Minister Obert Mpofu said in early July that the military would remain in Marange until a suitable investor had been identified which could provide the necessary security. He also described the recommendation as “confrontational”, claiming that there had been insufficient time following the KPCS report to respond. Allegations of human rights abuses were again denied.

The national unity government is likely to lobby the KPCS to eschew a ban. Mpofu has said that exclusion from the KPCS would be a severe economic blow to the country at a critical time. However, whilst the army continue to control diamond output from Marange, the revenue being generated (an estimated US$200m per month), is not being used for social purposes. HRW’s report alleges that it is paying off senior military staff and officials from President Robert Mugabe’s Zanu-PF party. Suspension from KPCS could have serious political repercussions for an already shaky coalition.

Forecast

In a 31 July 2009 statement, Global Witness notes that it is unprecedented for the details of interim report to emerge in the media. It suggested that the field team were convinced that the urgency of the situation warranted an interim report, but may also have been concerned to safeguard the KPCS's reputation.

Rights groups continue to campaign for the definition of conflict diamonds to be widened to include those mined where gross human riots violations occur. Presently, Zimbabwe’s diamonds do not meet the technical specifications for conflict diamonds. They will also continue calls for stronger action from KPCS member states, to restore the regulatory reputation of the body. KPCS acknowledges the potential economic effect of suspending trading, and is faced with a dilemma in suspending Zimbabwe from trading. However, the report highlights the serious risk of complicity for those doing business with Zimbabwe. Without further action, this could tarnish KPCS members.

Related Maplecroft Risk Indices - Zimbabwe

Please click below to find out more about Maplecroft's Risk Indices and related maps, which quantify intrinsic country risk across a range of non-financial issues.

Poverty and Development

Extreme risk

Low risk

Index: 3.4

0

10

Security Forces and Human Rights

Extreme risk

Low risk

Index: 1.2

0

10