Zimbabwe: Diamond Sales and a Possible Successor to Mugabe

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Zimbabwean Mines and Mining Development Minister Obert Mpofu, speaking at a meeting of the Kimberley Process Certification Scheme (KPCS) in Tel Aviv late June 23, said he will sell 3 million carats of diamonds stockpiled from the country’s Marange fields. The KPCS, the world’s largest international diamond trade regulatory body, currently bans the sale of Marange diamonds due to alleged human rights abuses committed by Zimbabwean security forces in attempting to retain control of the Marange area.

Mpofu’s announcement came as the KPCS stalled on approving a recommendation that its monitor for Zimbabwe made in May that the ban be lifted. By appearing to defy the KPCS, however, Mpofu might have just given the body cause to retain the “blood diamonds” label making the sale of Marange diamonds illegal. However, this will not affect the ability of the country’s ruling Zimbabwe African National Union-Patriotic Front (ZANU-PF) to maintain its control over the fields, nor will it prevent smuggling into neighboring Mozambique, from where the diamonds are exported to the world. The main question is which of the ZANU-PF elite will benefit the most from Mpofu’s decision. The pervasive presence of Zimbabwean security forces around Marange indicates that the sale of these stockpiled diamonds could help Zimbabwean Defense Minister Emerson Mnangagwa finance his undeclared leadership bid and outmaneuver his chief political rival, former Zimbabwean army commander Solomon Mujuru.

Zimbabwe: Diamond Sales and a Possible Successor to Mugabe

The exact size of Zimbabwe’s diamond reserves is unknown, though it is widely believed that if its resources were managed better the country could become one of the world’s top diamond producers (it currently ranks 13th). Also unknown is the amount of diamonds in Marange. African Consolidated Resources, the mining company that held rights to the fields before being kicked out by the military in December 2006, claims that if properly managed Marange could put out 3 million carats a month for 14 years. A KPCS estimate from 2008 placed the possible value of the diamonds there at roughly $150 per carat. Although these are estimates, it is clear that Marange is a potentially lucrative source of revenue in a perpetually cash-poor country. Hence, the government deploys security forces to the area to retain control over the trade of diamonds from the fields.

The Marange fields are in eastern Zimbabwe, near the city of Mutare on the border with Mozambique. Although the ownership structure of the fields is opaque — two joint ventures operate under agreements with the Zimbabwe Mining Development Corporation — it is clear from the heavy presence of Zimbabwean soldiers and police, who strictly control access to and movements around the fields, that the owners and beneficiaries are well-connected with ZANU-PF top brass. Mnangagwa is both defense minister and chair of the Joint Operations Command (JOC), Zimbabwe’s supreme state security organ, and directly controls the deployment of security forces across the country. It thus seems logical that he could profit from the planned export of the stockpiled Marange diamonds.

Meanwhile, the Zimbabwean government is considering holding a national election by the end of 2011. ZANU-PF will almost certainly ensure that the Morgan Tsvangirai-led Movement for Democratic Change (MDC) is powerless to oppose it. President Robert Mugabe has not said whether he will run for another term — and it is not clear ZANU-PF would select him to run for re-election. Though he is president and commander-in-chief, Mugabe is not the only decision maker within ZANU-PF. The key decision-making structure in Zimbabwe is the JOC, which includes the chiefs of Zimbabwe’s armed forces branches, the Central Intelligence Organization and the Central Bank. Mnangagwa’s leadership of the JOC gives him an immense amount of power behind the scenes.

Given the widespread disgust among Zimbabwe’s neighbors and the international community after the country’s disputed 2008 elections, ZANU-PF could determine that a leadership change is needed to help end Zimbabwe’s near-pariah status. But ZANU-PF will not yield to its civilian coalition partner MDC because of a lingering fear that MDC politicians might try to prosecute ZANU-PF members for possible crimes against humanity committed during Mugabe’s rule.

Determining Mugabe’s successor within ZANU-PF has been an undeclared competition for a few years; the two main rivals are Mnangagwa and Mujuru (the latter rules from behind the scenes and through his wife, Joyce, who is Zimbabwe’s first deputy president). In most other countries, aspiring politicians canvass party and public supporters with promises of public initiatives and private trade-offs. In Zimbabwe, public promises are the domain of the MDC, which is powerless to implement them. It is strictly the rough-and-tumble support-buying within ZANU-PF that will determine whether Mugabe remains and who succeeds him. With a government that is pretty much broken on all grounds — politically and economically — would-be Mugabe successors need access to a very lucrative source of financing in order to buy the support of the ZANU-PF machinery.

Zimbabwe: Diamond Sales and a Possible Successor to Mugabe

In his statement, Mpofu spoke only of diamonds from the Marange fields. Diamonds from the country’s River Ranch fields, whose ownership falls under Mujuru’s influence, have not been cited for KPCS attention. Mpofu’s statement gives Mnangagwa’s undeclared ambitions a fresh boost, and although Mujuru has avoided the KPCS’ attention, the recent occupation of the Inyanga Downs Farm that he owns could indicate that Mujuru is losing any favor he might have held among the ZANU-PF power brokers.

Should the sale of 3 million carats of diamonds from Marange occur — which could net the beneficiaries at minimum tens of millions of dollars to a few hundred million dollars, depending on the quality of the diamonds and any discounts needed to facilitate the transaction — Mnangagwa could quickly meet his campaign financing needs.

https://www.stratfor.com/analysis/20100624_zimbabwe_diamond_sales_and_possible_successor_mugabe

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