EUROPEAN foreign ministers will on Monday discuss lifting sanctions against the country following President Robert Mugabe's announcement that a referendum on the new constitution would be held mid next month.
The EU sanctions expire on Wednesday and a decision on the way forward has been delayed because of a disagreement between Britain and Belgium over lifting a ban on gold and diamonds mined in the country.
According to the UK's Telegraph newspaper, crisis talks between British and Belgian diplomats went on into the weekend over Belgium's insistence that the state-run Zimbabwe Mining Development Corporation (ZMDC), a major diamond and gold mining company, should be struck off the sanctions list.
If agreement cannot be found, the EU's current sanctions against Zimbabwe, targeting 112 individuals including President Mugabe and 11 companies, will expire.
The row over gold and diamond mining is the only barrier to lifting measures targeting around 20 Zimbabweans covered by an assets freeze and travel ban to be removed from the list.
Rights groups claim violations continue at the Marange diamond fields but Belgium, home to Antwerp, the world's largest diamond trading centre, has insisted that conditions have changed and sanctions on ZMDC are no longer justified.
Britain is concerned that it is too early to lift the key economic sanction before elections and that allowing the lucrative diamonds trade could be used to fund Mugabe's Zanu PF party.
Global Witness, a human rights campaign group, has warned that diamond revenues could be used to fund violence in this year's election.
"The Belgian government is claiming concern for the Zimbabwean people; however its true interests are closer to home in the diamond markets of Antwerp," said Emily Armistead, a spokesman for the group.
The constitutional referendum, set for March 16, will lead to new elections to end the coalition government between Mugabe and long term rival Morgan Tsvangirai, currently Prime Minister.
Despite deep divisions over policy between Zanu PF and Tsvangirai’s MDC-T party, the coalition government has been credited with helping ease political tensions and nursing the country’s economy back recovery.
Both Mugabe and Tsvangirai have also repeatedly called on supporters to ensure a peaceful vote and to desist from the violent clashes experienced during the inconclusive 2008 ballot.