UPDATE 2-EU eases Zimbabwe sanctions, gives pledge on diamond firm
* EU seeks to encourage political reforms in Zimbabwe
* Mugabe's ZANU-PF party rejects move as insufficient (adds detail, reaction)
By Adrian Croft
BRUSSELS, Feb 18 (Reuters) - The European Union eased sanctions on Zimbabwe on Monday to reward it for political reforms and also agreed to lift sanctions on a state-run Zimbabwe diamond mining company if the country holds fair elections.
A spokesman for Zimbabwe President Robert Mugabe's ZANU-PF party criticised the EU's step, saying in Harare that the partial lifting of sanctions was "outrageous and preposterous".
The EU imposed the penalties in 2002 in protest at human rights abuses and violations of democracy under Mugabe's rule.
It reviews the sanctions annually and in recent years has eased them to encourage reforms being pursued by Zimbabwe's four-year-old coalition government, in which Mugabe shares power with his political rival, Prime Minister Morgan Tsvangirai.
EU foreign ministers, meeting in Brussels, suspended a travel ban on six unnamed members of the Zimbabwe government and removed 21 unnamed people and one company from the list of those subject to travel bans and asset freezes.
The ministers hammered out a compromise on whether to remove from the same list the state-run Zimbabwe Mining Development Corporation (ZMDC), which operates five diamond mines in Zimbabwe's rich Marange fields.
Belgian Foreign Minister Didier Reynders said ministers had agreed the EU would lift sanctions on ZMDC within a month of the Zimbabwe election unless all member states agreed "the election have not been peaceful, transparent, credible or they have reasonable grounds to believe ZMDC has been involved in activities undermining democracy during the election."
Tsvangirai said this month he expected presidential and parliamentary elections in July.
Belgium, home to the world's biggest diamond trading centre in Antwerp, had pushed for ZMDC to be freed from sanctions but countries such as Britain, Zimbabwe's former colonial ruler, had opposed its immediate removal from the list.
PATH TO ELECTIONS
The EU said its decision followed agreement between political parties in Zimbabwe on a draft constitution and the announcement of a March referendum on the constitution.
"This step forward ... adds further momentum to the reform process and paves the way for the holding of peaceful, transparent and credible elections later this year," a EU statement said.
ZANU-PF spokesman Rugare Gumbo criticised the EU's move.
"Our position is that the partial lifting of the ban on either individuals or companies is outrageous and preposterous," he told Reuters in Harare.
"We don't accept any conditional lifting of these illegal sanctions. We don't expect it to be piecemeal, that is nonsensical as the sanctions are illegal anyway. This is mischievous and it does not answer the question of why they were put in the first place," he said.
Prior to Monday's decision, 112 individuals, including more than 20 ZANU-PF members of the government, and 11 companies were on the EU sanctions list.
An EU diplomat declined to identify those officials suspended from the travel ban, but did name the company removed from the list as Divine Homes.
The EU said last year ZMDC was "associated with the ZANU-PF faction of government". The sanctions ban financial transactions with the firm from Europe and freeze any assets it may have in Europe.
The Marange diamond fields have been notorious for violence, with New York-based Human Rights Watch alleging in a 2009 report that Zimbabwe's military killed more than 200 people in a takeover of the fields in late 2008.
Belgium argued that the situation in Marange has completely changed and sanctions on ZMDC were no longer justified.
Global Witness, an organisation which campaigns against violence and corruption linked to minerals, said last week it opposed Belgium's move to lift sanctions on ZMDC. (Additional reporting by Ethan Bilby, Justyna Pawlak in Brussels, MacDonald Dzirutwe in Harare; Editing by Mark Heinrich)