The Chinese Solution

Miners at the Marange mind in Eastern Zimbabwe. / AP

Some twelve miles north of Harare, the Zimbabwean capital, a state-of-the-art military-intelligence college – with a price tag of $98 million – is set to rise in this impoverished country.

Plans call for it to have an Olympic-sized swimming pool, a world-class hospital for the country’s political elite, entertainment venues and training centers to teach specialized military operations and intelligence gathering.

And how is this broken, and increasingly broke, country paying for it?

With diamonds. Diamonds that are coming from one of the richest strikes in the past century. In 2006, diamonds were found in a wide swath of land on the country’s eastern border, called the Marange (Ma-RAN-gay). This treasure trove is estimated to hold diamonds valued at up to $200 billion and is so vast that it could be mined for the next 80 years.

Marange diamonds are paying for the military college, which initial reports said would be named the “Robert Mugabe National School of Intelligence” after the country’s embattled 87-year old president. The college is seen by many – inside and out of Zimbabwe – as the latest way that diamonds are helping prop up the Mugabe regime, one that has plunged the country into poverty and made it an international pariah over its human rights abuses.

One of the purposes of the college is to train recruits for the country’s Central Intelligence Organization (CIO), Zimbabwe’s internal security agency. Mugabe has used the CIO and Zimbabwe’s notorious military to perpetuate violence and silence opposition through fear and intimidation. Mugabe, who has held office for over three decades, has said he plans to call for new elections before next March.

He may well need the grip of his military loyalists to maintain power in a nation becoming increasingly fed up with his tenure. Mugabe was last elected in 2008, in a disputed race that was marred by violence and resulted in a power-sharing government with the opposition Movement for Democratic Change (MDC) party.

More than politics, however, the military college is also a sign of the growing financial ties between the Mugabe regime and China, which holds lucrative contracts to extract diamonds from the Marange fields and which is building the military college as part of that deal. A ground-breaking ceremony for the college was held last July.

China has been pouring money into Zimbabwe – investing in cement, platinum, agriculture, mining, steel and, increasingly, in diamonds. Last year, Zimbabwe’s trade with China totaled $520 million and even Mugabe’s mansion in the exclusive Borrowdale section of Harare sports midnight-blue Chinese roof tiles.

Even more, just last week, the Kimberly Process Certification Scheme, which regulates the global sale of diamonds, allowed Zimbabwe to begin to export Chinese-mined diamonds from the Marange.  Zimbabwe officials said that two million carats of diamonds already mined had been stockpiled, while the country awaited permission to export them to feed China’s expanding appetite for both industrial diamonds and ones that will be turned into jewelry for China’s growing middle and upper class.

“Building an intelligence school is at the bottom of the list of what Zimbabwe needs,”‘ said Alan Martin, research director at Partnership Africa Canada, an Ottawa-based human rights group. “The country has far more pressing needs that that.

China's President Hu shows the way to Zimbabwe's President Mugabe during a welcoming ceremony in Beijing. / REUTERS

“We don’t know the full terms and details of the relationship between Zimbabwe and China and diamonds,” he added. “But we do know that it is benefiting the country’s military and political elite while the rest of the country is plunged further into poverty.”

Under terms of a deal signed in June, Zimbabwe is borrowing $98 million from the Export-Import Bank of China to build the military college and will pay off the loan with diamonds taken from Marange. The Marange diamonds will be mined by a joint venture between China and Zimbabwe.

The joint venture is called Anjin Investment, and is an arrangement between Zimbabwe and Anhui Foreign Economic Construction Group, a public construction company under China’s Ministry of Construction. Anjin is one of a handful of mining concessions in Marange – others were given to Mugabe cronies and some of these have since collapsed amid reports of fraud and mismanagement.

Little is known about the Anjin joint venture – the company structure and other details are subject to strict non-disclosure agreements. One detail that has not gone unnoticed is that Anjin has been exempted from a Zimbabwean law requiring that foreign companies be 51 percent owned by local Zimbabweans. This exemption has prompted outcry by Mugabe opponents.

“We are talking of a law which says 51 percent of any business transaction must be for Zimbabweans,”‘ said Shepherd Mushonga, a member of the MDC opposition in Parliament in an interview with CNN last June. “But in this deal, Chinese have become Zimbabweans.”

The Marange diamond fields have been the site of exploitation of workers, human rights abuses and corruption since the Zimbabwean military seized control of them in 2008 and pushed out local poachers. A lengthy diplomatic cable from the U.S. Embassy in Harare which was made public by WikiLeaks, contained reports of forced labor in the diamond fields involving men and boys as young as 11 years, who were beaten and pushed to work extended hours. In one incident in 2008, 200 workers were killed by the Zimbabwean military, according to the embassy cable, as it took control of the area.

Zimbabwean media has reported of forced relocations by Anjin of families living near the diamond mines after the government decided that the area would be off-limits to human settlements. Some 300 families were removed from the area last year to make way for Anjin, according to the Zimbabwe Independent newspaper, with some put into abandoned farms or former tobacco barns.

In the meantime, rumbling excavators have moved in to mine the precious gems. SW Radio Africa reported that soldiers were brought in by Anjin last May to evict the final holdouts.

“China has shown to be very amoral on who it does business with,” said Martin of Partnership Africa Canada. “It is doing business with countries with severe human rights abuses. The fact is that with Anjin, you have a military-to-military deal that is not benefiting the Zimbabwean people.”

Both Mugabe and Chinese officials visiting Zimbabwe have praised the Anjin venture.

Last April, in an interview with the Herald, the state-owned newspaper, Mugabe said that “relations between us and China started when we were fighting colonialism and after independence we consolidated the relationship. The dimension of co-operation in defense and security is probably the longest and most consolidated of all the other dimensions.”

Chinese officials, including the China’s vice-prime minister Wang Qishan, have made the trek to Harare. “Since a Chinese company is involved in the diamond mining here in Zimbabwe,” Xin Shunkang, the Chinese ambassador to Harare, said in the Herald, “we will walk together because we want both countries to benefit.”

He added that “as the Chinese Ambassador to Zimbabwe, I will continue working hard to attract more investors to come and invest here because Anjin has done a lot in terms of social corporate responsibility.” He did not provide any examples, however, in his brief remarks.

There are real questions about who exactly is benefiting from the Marange diamond fields. Tendai Biti, Zimbabwe’s Finance Minister and a leader of the MDC opposition, has long complained that hundreds of millions of dollars from Marange operations have been missing and he has little idea of where the money has gone.

In the four years since the Zimbabwean military took control of the Marange diamonds fields, Biti has said that national treasury has seen nothing from it. He has called for greater transparency and disclosure about the sale of diamonds, clearer audit trails and new revenue sharing arrangements. Even more, he has expressed concern that the diamonds may be used to fuel violence during next year’s elections and advocates that they instead be used to help kickstart the country’s ailing economy.

Biti has also told the Zimbabwean parliament that the Anjin deal for the military college is “criminal” and that the country has more urgent needs than a military college.

Khadija Sharife, a South African investigative reporter, has found that key members of Mugabe’s inner circle, including Emmerson Mnangagwa, head of the Central Intelligence Organization, General Constantine Chiwenga of the Zimbabwe National Army and other top military personal are involved in the daily management of Anjin. Sharife reports in that “the Chinese run their own affairs in terms of staff management while the Zimbabwean military manages security-related issues.”

A dictator's best friend.

An investigation by the Daily Mail in London found that twice a week, huge cargo planes lift off from an air strip carved in the African bush filled with rough cut diamonds – and with no flight plans filed. The investigation found that comfortable barracks had been built for Chinese military officers working at the mines. Photos of the airstrip began to surface in January 2010.

One London-based human rights activist, who declined to be named because he will be traveling shortly to Harare, told 100Reporters that the role of the military in Anjin’s operations — and the operations of others in Marange – only props up Mugabe and his inner circle.

“You’ve got a brigadier general and former war veterans involved in Anjin,” said the activist. ” It’s a way for the Zimbabwe military to get their cut. Diamonds are the only real source of money for Mugabe that is out of the control of Tendai Biti. The money going to the CIO is under the control of the president’s office and not subject to oversight by the finance minister.”

Other Marange diamond mining concessions have been granted to companies whose officers include other Mugabe insiders, including one headed by Mugabe’s former helicopter pilot.

Anjin was hard at work mining diamonds and stockpiling them while the project awaited the approval for exports from the Kimberly process. Zimbabwean officials estimate that the Anjin mine and two others in the area could produce up to $3 billion each year.  That, of course, is good news for those with financial stakes in the ventures and those in the government who are connected to them.

One big fan of Anjin is Obert Mpofu, Zimbabwe’s minister of mines.

After visiting an Anjin facility last May, Mpofu told the state-owned Herald that “when Anjin Investments approached us, we saw a giant coming to invest in Zimbabwe.” He added that, “All of us are proud to see what has happened here within a short time. This is a success story for both Zimbabwe and China.”

It is not surprising that Mpofu would welcome more diamond concessions. He has recently been on a buying spree. He owns one of the tallest buildings in Bulawayo – York House. Mpofu reportedly owns a supermarket in Victoria Falls, eleven houses throughout the country, two cruise boats on the Zambezi River and he helped bankroll a luxury casino.

That’s not bad in a country where government ministers like Mpofu earn $350 a month.

Leslie Wayne

Leslie Wayne

Leslie Wayne, former senior editor at 100Reporters, is an award-winning business reporter, formerly at The New York Times. Ms. Wayne joined The Times in 1981 and has covered Wall Street, banking industry regulatory reform, municipal finance scandals and, most recently, the aerospace and military industries. Ms. Wayne has an M.B.A. in finance from Columbia Business School and was also a Knight-Bagehot Fellow in Business and Economic Journalism.