Diamonds embargo: Biti's letter to US Treasury
16/01/2012 00:00:00
by Tendai Biti
Biti furious as US sanctions hit budget
The following is a letter by Zimbabwe's Finance Minister Tendai Biti to the United States Treasury, expressing his disquiet with a decision to impose a ban on diamons from Marange:
19 December 2011
Charles Collyns
Assistant Secretary of Treasury
MBANDA DIAMONDS AND MARANGE RESOURCES
I refer to the decision taken by the United States Treasury on the 9th December 2011 placing the above companies on the list of proscribed and sanctioned companies.
I want to place it on record that we as Ministry of Finance, writing on behalf of the government of Zimbabwe, find your measures contrary to the spirit of engagement and harmful to the generality of Zimbabweans.
As you are aware, I have been consistent in my lobby for Zimbabwe to be allowed to sell its diamonds but under and in compliance with the Kimberley Certification Scheme.
Pursuant to this, I was pleased when the United States of America shifted its position and supported Zimbabwe in Kinshasa on 1st November 2011 and a compromise was reached allowing Zimbabwe to sell its diamonds under the Kimberley Certification Scheme.
Zimbabwe is a poor fragile economy and therefore it must be allowed to sell and benefit from its resources. In my budget, there are capital projects of US$600 million which are totally dependent on diamond revenues.
Diamonds have been sold illicitly and illegally from Zimbabwe. There have been challenges of accountability and lack of transparency when Zimbabwe was outside the Kimberley Certification Scheme. Selling under Kimberley Process Certification Scheme would therefore, take away any opaqueness or illicitness.
Being part of the Kimberley Process Certification Scheme would allow Zimbabwe to benefit from the expertise of the KPSC.
We have challenges of policing and monitoring the large area of almost 120,000 hectares where these diamonds are found.
There is also the fundamental issue of expertise which we do not have, but the KPSC has, and we could benefit from.
The decision to proscribe Mbanda and Marange is self-defeating and negates the Kinshasa decision.
The two companies and Zimbabwe should have firstly been allowed to put their case forward before the punitive action was taken. Due process of the law is guaranteed ion Amendment 14 of your Constitution.
Secondly, to the extent that normalcy had been restored by the Kishasa compromise, the two companies ought to have been given space and a chance to operate under the new regime of compliance.
The two monitors, Mr Abbey Chikane and Mr Mark van Bostael, would have provided regular updates to the KPSC.
If there was to be non-compliance, then the issue would be discussed and remedial measures or penalties taken within the KPSC.
Thirdly, the US decision undermines the KPSC and its chairmanship of this body. A member must act in good faith. One cannot in one forum act in one manner and then unilaterally undermine the collective decision taken at the common forum. It would also be curious to find out the motive of your decision against the two companies.
Your decision will not stop the mining that is a sovereign issue covered by international law. More importantly, it will not stop the sale of diamonds.
All it does is encourage more opaqueness and underwriting of the diamond industry.
As I said before, this is a self-defeating and retrogressive position one which I hope was not taken to placate powerful interests who were against the Kinshasa agreement.
I trust that you shall urgently review this position.
I will be in the United States between 23rd December 2011 and 7th January 2012 and I would be happy to discuss this issue further.
Yours faithfully,
Hon T. Biti, MP
Minister of Finance
Cc His Excellency, the President, Cde R. G. Mugabe
Cc The Rt Hon Prime Minister M. Tsvangirai
Cc Hon Dr O. Mpofu, Minister of Mines
Cc Ambassador Charles Ray
Cc Assistant Secretary Johnie Carson
Cc US State Department
Cc Kimberley Process Certification Scheme
Labels: ABBEY CHIKANE, DIAMONDS, MDC, SANCTIONS, TENDAI BITI, TRADE SANCTIONS, ZDERA
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Biti attacks US government
Sunday, 15 January 2012 05:20
Kuda Bwititi
Finance Minister Mr Tendai Biti has attacked the US government for placing mining companies Mbada Diamonds and Marange Resources under sanctions, describing the move as self-defeating and went on to make a dramatic U-turn by accepting that the illegal sanctions were affecting the generality of Zimbabweans.
Minister Biti added that the two mining companies "should have firstly been allowed to put their case forward before the punitive measures were taken".
However, analysts have lambasted Minister Biti, saying instead of calling for the lifting of sanctions on the two mining companies, he should have also called for the lifting of sanctions on the Zimbabwe Mining Development Corporation (ZMDC) because of its partnership with the two companies in the mining of diamonds in Chiadzwa.
Mbada Diamonds is a joint venture company between Grandwell Holdings owned by some South Africans and ZMDC.
In the past, Mr Biti and his MDC-T party have tried to downplay the illegal economic sanctions, labelling them "restrictive measures" targeting only top Zanu-PF individuals and not the general populace.
In a letter to the US Assistant Secretary of Treasury, Mr Charles Collyns, Mr Biti pleads with the Americans to scrap the embargo, saying capital projects worth US$600 million proposed in his budget depended totally on diamond revenue.
He said the decision to proscribe the two companies was "self-defeating" and went against the KPCS decision to give Zimbabwe the green light to sell its diamonds. He said the move by the US government was "contrary to the spirit of engagement and harmful to the generality of Zimbabweans".
"Zimbabwe is a poor fragile economy and, therefore, it must be allowed to sell and benefit from its resources," said Mr Biti in the letter dated December 19 2011.
"In my 2012 Budget, there are capital projects of US$600 million which are totally dependent on diamond revenues.
"Diamonds have been sold illegally and illicitly from Zimbabwe. There have been challenges of accountability and lack of transparency when Zimbabwe was outside the Kimberley Process Certification Scheme.
"Selling under the KPCS would, therefore, take away any excuse for opaqueness or illicitness. Being part of the KPCS would allow Zimbabwe to benefit from the expertise of the KPCS. We have challenges of policing and monitoring the large area of almost 120 000 hectares where these diamonds are found."
Minister Biti indicated it was unfair for the Americans to take punitive action without considering the firms' side of the story.
He also accused the United States of undermining the KPCS by acting against companies that complied with the diamond grouping's requirements.
". . . The US decision undermines the KPCS and its chairmanship of this body. A member must act in good faith. One cannot, in one forum, act in one manner then unilaterally undermine the collective decision taken at the common forum."
Minister Biti also indicated the US was pursuing ulterior motives.
"It would be curious to find out the motive of your decision against the two companies. Your decision will not stop the mining that is a sovereign issue covered by international law.
"Most importantly, it will not stop the sale of diamonds. All it does is to encourage more opaqueness and underwriting of the diamond industry . . . this is a self-defeating and retrogressive position; one which I hope was not taken to placate powerful interests who were against the Kinshasa agreement."
An economist in the Ministry of Finance who refused to be named for fear of victimisation said Minister Biti should have also called on the US to lift sanctions on the ZMDC.
"As things stand, the minister is calling on the US government to remove a foreign company, Mbada Diamonds, from the sanctions and not calling for the removal of the local company ZMDC which has a 50-50 partnership with Mbada Diamonds. What message is he trying to send here?
"Surely, as Minister of Finance he should know that ZMDC is the arm of Government responsible for mining the diamonds in this case and it's not a secret that Mbada Diamonds was placed on sanctions because of its partnership with ZMDC. So how does he call for the lifting of sanctions on Mbada Diamonds and leave ZMDC out?" said the economist.
Political analyst Dr Lawton Hikwa said though commendable, the minister's stance reeked of insincerity.
"It has dawned on the Finance Minister that his portfolio has been negatively affected by the sanctions, hence, his call for the lifting of the embargo.
"His position, therefore, smacks of hypocrisy because he does not recognise the need to call for the holistic lifting of the sanctions.
"The sanctions must be lifted omnibus and Mr Biti should not call for the lifting of the sanctions for diamonds alone.
"It is a fact that the sanctions have hurt the economy in a big way."
Dr Hikwa said all ministers should speak with one voice on sanctions.
"It seems we are having an ‘exclusive government' as opposed to an inclusive one.
"The element of inclusivity is, therefore, critically lacking when it comes to the issue of sanctions."
Another economist from the University of Zimbabwe said: "The minister should call for the removal of all sanctions against Zimbabwe and not to target a few companies. However, just the stance taken by the minister tells you that the sanctions are now in really trouble.
"It's clear that there is confusion now to the whole sanctions conspiracy as there are differences between those who called for the imposition of the sanctions and those who implemented them."
Last November, the KP gave all companies operating in Chiadzwa the green light to sell diamonds mined at the fields. The decision, taken at a special plenary in the Democratic Republic of Congo, was largely unpopular with Westerners who sought to block Zimbabwe from trading in the gems. Zimbabwe stands to rake in annual revenue of more than US$2 billion from the sale of diamonds. Barely a month after the plenary, the United States added Mbada Diamonds and Marange Resources to its sanctions list.
The US argued this was done to "clarify already existing arrangements". It said the punitive measures were not a result of KP meetings or decisions. Last year, secret US Embassy cables released by whistleblower website WikiLeaks revealed that Mr Biti was at one point at the forefront calling on the Americans to ratchet up pressure on Zimbabwe through increased sanctions. The minister, who is also the MDC-T secretary-general, also refused to sign the Anti-Sanctions Petition.
Labels: DIAMONDS, KIMBERLEY PROCESS, MDC, SANCTIONS, TENDAI BITI, TRADE SANCTIONS, ZDERA
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Brazil slaps trade sanctions on US over cotton dispute
By BBC News
Tue 09 Mar. 2010, 17:20 CAT
The Brazilian government has announced trade sanctions against a variety of American goods in retaliation for illegal US subsidies to cotton farmers.
The World Trade Organization (WTO) approved the sanctions in a rare move. Brazil published a list of 100 US goods that would be subject to import tariffs in 30 days, unless the two governments reached a last-minute accord.
It said it regretted the sanctions, but that eight years of litigation had failed to produce a result.
It said it would raise tariffs on $591m (£393m) worth of US products - from cars, where the tariff will increase from 35% to 50%, to milk powder, which would see a 20% increase in the levy.
US farm subsidies are condemned worldwide. This archaic practice must stop
Carlos Marcio Cozendey Brazil's foreign ministry
Cotton and cotton products would be charged 100% import tariff, the highest on the list.
The Office of the US Trade Representative said it was "disappointed" by Brazil's decision and called for a negotiated settlement.
Critics say the US has given its cotton growers an unfair advantage by paying them billions of dollars each year.
In 2008, the WTO ruled that subsidies to US cotton producers were discriminatory.
"US farm subsidies are condemned worldwide. This archaic practice must stop."
However some analysts say major changes to these subsidies would involve modifying agricultural legislation - a tall order for the US Congress against a difficult economic and political backdrop, says the BBC's Gary Duffy in Sao Paulo.
Our correspondent says the dispute, which began in 2002, is one of the few in which the WTO has allowed cross-retaliation, meaning the wronged party can retaliate against a sector not involved in the case.
He adds that it appears the Brazilian government has deliberately chosen a wide range of products in order to have maximum impact.
Safety net
Cotton producers in the US argue that the system of subsidies has changed since the WTO made its original ruling in 2005.
"The US has made changes in the cotton programme as well as the export guarantee programme," Gary Adams, chief economist at the National Cotton Council told the BBC, adding that US cotton production was now 40% to 45% lower.
Mr Adams said he believed that subsidies were still justified.
"We feel this is a very important financial safety net for producers," he said.
Steven Bipes of the Brazil-US Business Council urged the US to take steps to avoid what he called "damaging" retaliation by Brazil.
"The business community finds it extraordinarily important that countries, including the US, comply with its WTO obligations and otherwise negotiate to find common ground when there are disputes," he told the BBC.
Labels: BRAZIL, TARIFFS, TRADE SANCTIONS, USA, WTO
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