* No new definition for "conflict diamond" - yet
* Special monitoring of Zimbabwe production to end
* China volunteers to take larger role
By Andrew Quinn
WASHINGTON, Nov 30 (Reuters) - The global Kimberley Process (KP) initiative set up to stem the flow of so-called conflict diamonds on Friday confirmed that Zimbabwe had fully met its standards for exporting the gems, following a meeting that exposed deep continued divisions in the group.
Non-governmental organizations, which have frequently criticized the KP process, said its inability to agree on expanding the definition of what constitutes a "conflict" diamond highlighted a broader unwillingness to take a firm line on the global diamond trade.
"For us this really means that the Kimberley Process is no longer the first word on conflict diamonds," said Alan Martin of Partnership Africa Canada, one of the non-governmental groups that take part in the process.
"We're going to be looking to other forums such as the OECD (Organization for Economic Cooperation and Development) to begin a more honest debate on this issue."
Zimbabwe, which was allowed to export diamonds under the KP mandate last year, had nevertheless been placed under a special year-long monitoring program amid repeated charges of human rights abuses and smuggling at its diamond fields.
Partnership Africa Canada in November issued a report saying that at least $2 billion in diamonds from Zimbabwe's Marange fields had been stolen by people linked to President Robert Mugabe's party amid fears it is building up a war chest for elections expected in 2013..
Zimbabwe's state mining firm said the gems were sold transparently.
Gillian Milovanovic, the U.S. diplomat who chaired this year's session of the process, said on Friday that Zimbabwe had made the required improvements and that the monitoring would lapse.
"Zimbabwe put in a significant good faith effort," Milovanovic said. "Now they are fully compliant with the Kimberley Process."
Both Zimbabwe and the definition of what a "conflict" or "blood" diamond is have long shadowed the Kimberley Process, founded almost a decade ago with a mandate to stop illicit diamond sales from financing rebel campaigns against U.N.-recognized governments.
Last year a disagreement over Zimbabwe, where human rights groups estimated that at least 200 small-scale miners were killed when security forces seized the fields at Marange, came to a head when a divided KP concluded that it had no mechanism to stop Zimbabwe's diamond sales.
Global Witness, a pressure group and founding KP member, pulled out of weeks later, saying its inability to hold elected governments to account was a fatal flaw.
Activists had hoped that this year's session would agree to expand the definition to take account of violence perpetrated by government forces or security personnel, which could dramatically expand its remit.
Milovanovic said the KP had been unable to reach consensus on this issue, although it had agreed to continue discussing it.
Martin of Partnership Africa Canada said it was disappointing that the KP had been unable to develop a new definition and criticized the group's reluctance to insist that producers are transparent about their diamond revenues as a key good governance requirement.
"It's a deprivation of obviously the public finances but also the public good. And by not acting I think the KP is turning a blind eye to this criminality which is becoming increasingly apparent," he said.
Milovanovic underscored that there were limits to the speed with which the KP can move, as well as to the number of issues it can take on.
"The Kimberley Process is not all things to all people, but that doesn't mean it is not doing a decent job," she said.
South Africa will take over as the KP chair next year, and Milovanovic said that China had volunteered to serve as deputy chair - a step which could see Beijing, which is working hard to cement ties with resource-rich African nations, take over the full chairmanship in 2014.