Zimbabwe Diamond Sanction Lifted: Is The EU Rewarding Mugabe For A Rigged Election?

The European Union is facing growing criticism for its decision this week to lift sanctions against one of Zimbabwe's major diamond producers, just weeks after longtime President Robert Mugabe, 89, won a national election that observers say was deeply flawed.

The EU announced Tuesday that the Zimbabwe Mining Development Corporation, or ZMDC, would be removed from its list of sanctioned entities, pending formalization by foreign ministers. ZMDC’s operations on behalf of the government, which include five joint-venture mines in the diamond fields of Marange, yielded exports worth $685 million last year, according to Zimbabwe's Herald, a state-owned newspaper.

Critics of Zimbabwe's ruling party, The Zimbabwe African National Union-Patriotic Front, or ZANU-PF, argue that lifting the sanctions amounts to rewarding an administration with a proven record of corruption. In recent years, millions of dollars in diamond revenues have disappeared from official records, indicating large-scale graft.

President Mugabe, who has ruled the country all 33 years of its independence and handily won a July election against opposition candidate Morgan Tsvangirai, has failed to effect broad-based economic growth despite Zimbabwe's abundant mineral wealth. Mugabe is also accused of practicing disastrous fiscal mismanagement, suppressing dissent and backing violent attacks against opposition supporters. Under his rule, development has progressed slowly; infrastructure is in shambles in many parts of the country, and more than half the population lives in poverty,

One of the strongest proponents of lifting the ZMDC sanctions is Belgium, a global diamond-trading hub. There, the processing and exchange of precious stones is concentrated in the northern town of Antwerp, whose streets are lined with diamond-cutters and jewelry shops. Belgium's gemstone industry has weakened over the past few years, with more and more stones being shipped to low-wage locales -- including India and China -- for cutting and polishing.

Increasing numbers of desperate Antwerp businessmen have even turned to shady measures like tax fraud and money-laundering to keep their operations afloat, making partnerships with the similarly corrupt institutions of Zimbabwe all the more alluring.

This week's decision can actually be traced all the way back to February, when EU foreign ministers agreed to take ZMDC off its blacklist should the election prove credible. The move was meant to encourage a fair and transparent vote. When polling ended and the international community largely agreed to abide by the results, Belgium argued that Zimbabwe has passed its test -- but not everyone is so sure. Zimbabwe's opposition has called the vote a fraud, and international observers have noted serious irregularities in the polling.

Some, including Global Witness, charge that Mugabe used existing diamond revenues to pay for a campaign of suppression ahead of the vote this summer. "The EU has rushed its decision to delist ZMDC before the dust has settled on Zimbabwe’s flawed elections," said Global Witness Senior Campaigner Emily Armistead. "Our research indicates that ZANU-PF and the military have siphoned revenues from ZMDC’s diamond ventures and that this may have financed the alleged rigging of the recent poll."

But Zimbabwe's opposition party, the Movement for Democratic Change, or MDC, has responded positively to the news. The MDC has long accused the ZANU-PF of using sanctions as an excuse for the faltering economy, arguing that corruption and poor policies are more to blame. "The proposed lifting of sanctions will remove the excuse by President Mugabe's government that they are failing to govern because of sanctions. They were blaming everything on sanctions, including their own corruption," said an MDC spokesman, according to Agence France Presse, though he added that "we hope the diamond revenues will not be used to sponsor violence and other fraudulent activities."

Belgian officials estimate that the lifting of the sanction will increase Zimbabwe’s tax revenues to the tune of $400 million annually. EU and US sanctions against Zimbabwe, which were first implemented in 2002 and 2003, are targeted -- they freeze the assets of selected institutions and individuals, but do not prohibit trade. Indeed, bilateral exchanges between Zimbabwe and the EU were worth $875 million last year. Total exchanges between Zimbabwe and the U.S. amounted to $110 million. The sanctions are meant to give Brussels and Washington some leverage over Harare; people and companies are removed from the lists in order to reward anti-corruption efforts. Earlier this year, for instance, the U.S. removed two Zimbabwean banks from its sanction list while the EU removed 81 people and eight institutions. The move was meant to commend the May 22 passage of a new constitution limiting Mugabe's powers.

The ZMDC decision was met by a lukewarm reception from Mugabe supporters; ZANU-PF officials have long argued that all sanctions are illegal and should be lifted. Critics like Global Witness, on the other hand, are disappointed with the EU and hope that individual consumers will take it upon themselves to avoid funding Zimbabwe's government. "The EU should have given more time to investigating these claims before lifting sanctions," said Armistead. "Now it will be left to European consumers and jewelry companies to ensure that Zimbabwe’s tainted diamonds are not sold in our shops.”