Richard Gleeson
Northern News Services

NNSL (May 17/99) - The territorial government appears resigned to negotiating with Diavik rather than arguing with the federal government.

Minister of Resources, Wildlife and Economic Development Stephen Kakfwi last week said he is determined to negotiate a settlement of the secondary diamond issue.

Three weeks ago Kakfwi's deputy minister publicly criticized Department of Indian Affairs and Northern Development's refusal to address secondary diamond industries in its environmental review of the proposed Diavik Diamond mine.

"I think one of the prerequisites for doing good business is having a good relationship with everyone involved," said Kakfwi on Thursday, "and we are very involved, as the elected representatives of the people of the Northwest Territories."

Kakfwi would not say whether or not the government is considering using the threat of exorbitant taxation, as it did when negotiating with BHP, to bolster it's bargaining position.

"If Diavik thinks just taking the diamonds is good business, we have a major difference to overcome," said Kakfwi.

Responding to questions from Yellowknife Centre MLA Jake Ootes earlier in the week, Kakfwi said he and his officials are currently attempting to negotiate a socio-economic agreement with the company.

The minister said formal negotiations of the agreement began "a few months ago."

Kakfwi noted Diavik has said it had no objection to selling rough diamonds to Northern manufacturers as long as it made good business sense.

Hay River Mayor Jack Rowe said the value-added dispute has served to highlight the need for the North to take control of its resources.

Rowe said his understanding is that the federal government's reluctance to compel Diavik to provide rough diamonds to Northern-based cutting, sorting and polishing companies is because it may violate international trade agreements they have signed.

"If this was a provincial government, they could consider those options because they are not signatories to those agreements," said Rowe.

Rowe said the standard for negotiation was set last year, when BHP agreed to sell 7,500 carats of diamonds a month to Northern companies.

A Northern Accord, said Rowe, would benefit both the territories and the companies who hope to do business here by defining clearly the rules, and the costs, of doing business in the North.