FINANCE Minister Tendai Biti has blasted the decision by the United States to slap two diamond mining companies with sanctions as it emerged that his 2012 budget could likely take a US$600 million hit because of the measures.
The United States treasury department added Mbada Diamonds and Marange Resources to the list of companies sanctioned under its Zimbabwe Democracy and Economic Recovery Act (ZIDERA) in December last.
The companies were apparently punished for partnering the state-owned Zimbabwe Mining Development Company (ZMDC) which was already on the US sanctions list.
Another diamond mining company operating in Marange, the Chinese-owned Anjin, which was also recently given KP approval to export its rough diamonds, was not included on the list
Now Biti has written to Assistant US Treasury Secretary Charles Collyns, blasting the move as "self-defeating", especially after the US backed the lifting of the Kimberly Process ban on Marange diamonds.
"The US decision undermines the KP 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,” Biti said in the letter, extracts of which were published on Sunday.
He went on: "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."
Presenting his 2012 budget statement in November last year, Biti said he had revised his revenue projections to about US$4 billion on the back of an anticipated US$600 million boost from diamond sales.
Biti said the extra revenue would be used to finance key infrastructure projects as well as the constitutional referendum and general elections expected this year.
“The precarious position that we find ourselves in is that failure or delay in the realisation of the anticipated diamond revenues will delay projects implementation,” Biti said then.
He also repeated the warning in his letter to Collyns.
"Zimbabwe is a poor fragile economy and, therefore, it must be allowed to sell and benefit from its resources," he said.
"In my 2012 Budget, there are capital projects of US$600 million which are totally dependent on diamond revenues.”
The US slapped Zimbabwe with sanctions more than a decade ago, accusing President Robert Mugabe and his Zanu PF party of electoral fraud and human rights abuses.
The Zimbabwe government says the sanctions are unjustified and needlessly worsening the plight of ordinary people by undermining the country’s economic recovery.