Namibian‐De Beers state‐firm relations: cooperation and conflict

Abstract

This article argues that state‐firm relations are an increasingly important fact of international relations. Using a version of the obsolescing bargain model, it empirically examines the relations between Namibia and De Beers, particularly the bargaining that has occurred since independence. The authors conclude that Namibian independence markedly altered both the bargaining power and interests of the two sides. Independence gave Namibia the ability to create more effective legislation and economic structures to limit and guide its domestic diamond industry. At the same time changes in the international diamond world, particularly the growing challenge from Russia, weakened De Beers’ bargaining power and increased its need to solidify its African base. Once Swapo became the government, its interests also changed markedly. Before independence Swapo viewed the mining of its diamonds as an unmitigated form of exploitation by De Beers. After independence it needed De Beers’ technology, investments and access to international markets to provide the state with export revenues and its people with salaries. The changes in bargaining power and interests have brought about numerous, subtle, but still significant, changes in Namibian‐De Beers relations. While the 1994 Namibian‐De Beers agreement provided the most visible evidence of this change, as predicted by the obsolescing bargain model, the terms of the relationship have continued to evolve. To support these conclusions the authors found evidence of change in each of five major issue areas: ownership, marketing, revenues, employment and production. For now it means that the principal objective of Namibian diplomacy in the 1990s is going to be the promotion, through our missions abroad and by all other means, of economic development of the country. It also means identifying and going after sources of investment, trade, soft loans and joint ventures on the basis of marketable, positive development and opportunities being created in Namibia for both the local and private sectors. Foreign policy statement of the Republic of Namibia, March 1990.1 Part of the secret is that we respect confidences. We don't talk much. And we have been able to convince governments that the system works, and it is in their interest and ours that it continues to work. Peter Leyden, De Beers Senior Executive, 1981.2