The Kimberley Process: Has It Stopped the Conflict Diamond ...



The Kimberley Process: Has It Stopped the Conflict Diamond Trade?

John Koh

EDGE term paper

Fall 2003

Conflict in Africa has been notoriously protracted and difficult to resolve. Part of this intractability may be attributed to “conflict” or “blood diamonds” – diamonds that fuel African wars by providing rebel groups with an illicit source of funding. Such diamonds are concentrated mostly in central Africa.  A quick glance at some statistics provides some insight into the magnitude of this problem. According to the industry, the African war zones at the centre of the original controversy accounted for no more than 4 per cent of global supply. But the whole sector was tainted, an $8bn (£4.7bn) annual business in uncut diamonds, produced by more than 20 countries across the world, supplying a $50bn-plus retail trade. (The Financial Times, 2003) Rough diamonds valued at approximately US$370 million in 1999 and $170 million in 2000 passed through rebel territory in this region.  Angola’s rebel movement, the União Nacional para a Independência Total de Angola (UNITA) controlled the export of approximately $300 million in rough diamonds in 1999, a figure which fell to around $100 million in 2000 (Cilliers and Dietrich 2000). The main rebel groups in the Democratic Republic of Congo (DRC) do not mine the diamonds themselves, although they maintain control over the trade by taxing and regulating artisan miners who sell the diamonds to foreign dealers operating in towns such as Kisangani, Goma and Gbadolite.  The diamond trade in eastern and northern Congo, much of which may completely bypass rebel taxation, is estimated to be worth $70 million a year or more.

In view of this issue, talks began in May 2000 in the city of Kimberley, South Africa over possible means by which the illegal trade in diamonds could be halted. What started out as a consultative process became a negotiating process that culminated in the adoption of the Kimberley Process Certification Scheme (KPCS) at a Ministerial Meeting in Interlaken, Switzerland in November 2002. According to the official website[1], “(t)he Kimberley Process is an international initiative aimed at breaking the link between legitimate trade in diamonds and conflict diamonds... The KPCS sets an international benchmark for national certification schemes to be implemented by each Participant country through national legislation.”

However, analysts have expressed skepticism about the impact of the process, which some African non-governmental organizations have derided as a “toothless watchdog, chained to a kennel.” (Business Day, January 28, 2003) Jakkie Celliers, director of South Africa's Institute for Security Studies and author of a book on blood diamond trade, said the Kimberley Process was a step in the right direction, but would ultimately have a limited impact. Advocates of the Kimberley Process, however, have held out optimistic views of its potential significance. Chairman of the Kimberley Process Abbey Chikane proclaimed that “(w)e are very optimistic that the Kimberley Process is going to make a difference in the industry and definitely reduce trade in conflict diamonds.” (Ibid) It has been nearly a year since the KPCS has been implemented – a good time, perhaps, to assess what the process has achieved and where it has failed. It is also useful to try to determine what it could potentially achieve and where it could potentially fail. To this end, this paper will conduct a preliminary assessment of the successes and failures of the process itself, paying particular attention to how it has affected the illicit diamond trade in the DRC, Sierra Leone, and the Central African Republic. Looking further, any intrinsic flaws in the KPCS will be examined, which will provide the basis for recommendations as to what (if anything) needs to be done in order for the Kimberley Process to realize its mission.

What Exactly Does the Kimberley Process Involve?

Before any further discussion can take place, it is necessary to first outline the mechanics of the Kimberley Process. All participating countries must provide every diamond with a government-backed certificate of origin; countries outside the agreement are not allowed to sell to big markets such as the US and Europe, or trade with diamond-processing countries such as Belgium, India and Israel. As of 31 March 2003, 58 countries have adopted and ratified the Kimberley Process. In essence, these countries have agreed that they will only allow for the import and export of rough diamonds if those rough diamonds come from or are being exported to another Kimberley Process participant. Shipments of rough diamond exports must be transported in tamper-resistant containers and must be accompanied by a government-validated Kimberley Process certificate. In addition, the World Diamond Council proposed that the industry create and implement a System of Warranties for diamonds. Under this system, which has been endorsed by all Kimberley Process participants, all buyers and sellers of both rough and polished diamonds must make a written guarantee on all their invoices that their diamonds “have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations resolutions.” (World Diamond Council 2003) Hence, the success of the Kimberley Process hinges on a combination of national legislation and industry self-regulation.

In short, the KPCS is an attempt to design a system that will certify that:

• conflict diamonds do not enter the legal trading system between the point of mining and first export from a producing country

• diamonds are not tampered with between their dispatch from a producing country and their first arrival in a country where they will be cut, polished or traded

• countries that cut, polish and trade in rough diamonds have adequate controls and procedures to ensure that conflict diamonds cannot enter their trade (ActionAid 2002)

Success and Failure: the Democratic Republic of Congo, Sierra Leone and the Central African Republic

Failure in the Democratic Republic of Congo (DRC)

In theory then, the Kimberley Process appears to be a sound step towards eliminating illegal trading in rough diamonds. However, the experience of the DRC with the process appears to show that theory does not always hold up so well in practice. Plagued by civil war in the north east region of the country, efforts by the DRC to clean up its diamond sector are being undermined by extensive smuggling through the neighboring Congo Republic. Diamond exports represent the DRC's major source of income. Unfortunately, it is estimated that of the US$800 million a year exported annually, half is smuggled out principally through Congo Republic, and sold chiefly in Antwerp. (Muller, 2003)

Although Congo Republic has complied with Kimberley Process regulations by producing certificates of origin for diamonds that leave the country, authoritative industry sources, including De Beers, claim it has never been a diamond producer and certainly hasn't produced the US$200 million worth according to the last production figures it published in 2001. The DRC has not issued one KP certificate of export to the Congo Republic, said the report. Congo Republic is considered an important smuggling route for diamonds from DRC, Angola, and to a lesser extent, the Central African Republic (CAR). Export data for August published by the Democratic Republic of Congo reveal that, while the quantity of diamonds rose, their overall value fell substantially. This implies that the country's output of higher-value gems is evading the controls of the Democratic Republic of the Congo's Centre for Evaluation, Expert Analysis and Certification of Precious Minerals (CEEC). However, there are no up-to-date export figures from Congo Brazzaville to verify these suspicions. In 2001 the country traded $223m worth of diamonds, mostly from Angola and the Democratic Republic of Congo.

Despite numerous requests, Congo Republic officials declined to answer inquiries. The Canadian officials charged with collating global diamond statistics for the Kimberley Process would also not discuss the scale of trading out of Brazzaville. Even the Diamond High Council in Antwerp, where most of the world's rough diamonds end up, and where several diamond industry officials say Democratic Republic of Congo gems traded illegally through Brazzaville, Uganda and Rwanda are still heading, refused to reveal statistics on trade out of Brazzaville. “This secrecy is one sign that the Kimberley Process is failing to bring about the promised transparency.” (Wallis, The Financial Times, 2003)

In view of this smuggling problem, Global Witness, a key campaigner for the worldwide implementation of the Kimberley Process underlined the importance of having Non Government Organizations (NGOs) set up a monitoring mission to verify compliance with Kimberley Process regulations. According to Alex Yearsley at Global Witness, “there are stories that Congo Republic has some alluvial up at the border, but the government is not cracking down on smuggling. It encourages it with lower export tax at 2 per cent.” (quoted in Muller, , 2003) The DRC has a 6 per cent export tariff and the CAR 12 per cent. There are also serious questions about the low level of values at which Congo allows goods to be exported, so not only is the tax lower but calculated on a lower figure.

Smuggling appears to be only part of the DRC’s woes. Recently, international pressure groups have found evidence that companies may have profited from conflict in the DRC. “The Security Council can no longer ignore clear evidence linking the exploitation of resources to the war in the Congo," said the groups, which included Human Rights Watch and Oxfam International. "It must insist that member states hold the companies and individuals involved to account, including companies based in western countries.” (Turner, The Financial Times, 2003) In an October 2002 report, the panel alleged that 85 companies involved in Congo breached international norms, including the Guidelines for Multinational Enterprises of the Organization for Economic Co-operation and Development (OECD). Those companies include De Beers, the giant diamond conglomerate, Das Air, Avient Air and Oryx National Resources.

The final report covers those companies' responses to the allegations, placing them in five categories. Those categories list companies' cases as resolved (I), partially resolved (II), or requiring further investigation at national level (III, and IV). A final category (V) deals with companies which did not respond. NGOs took issue with the process that led the panel to determining how companies or individuals were assigned to categories, including those deemed "resolved". NGOs fear the report may not have received adequate follow-up. "None of the governments participating in the OECD has yet investigated the conduct of any of the companies listed. Instead several governments have pressured the panel to remove the names of companies registered in their jurisdictions or to declare that such cases have been resolved," the NGOs said. (quoted in Turner, The Financial Times, 2003) The report also calls for a monitoring mechanism to oversee an arms embargo in the east of the country. According to the report, "serious consideration" should be given by the Congolese authorities to breaking up and selling off Congo's large state-owned mineral resource enterprises, such as the Gecamines copper company, and diamond concern MIBA. The Kimberley Process offers no recourse to either of these suggestions, which may indicate an oversight in the process.

In fact, Charles Wyndham, a diamond valuer, believes that the involvement of Congo Republic and other non-producing countries in the Kimberley Process is encouraging rather than eliminating incentives for smuggling. (Wallis, The Financial Times, 2003) This is because it gives non-producing countries the chance to launder and legitimize illicit gems. This is no trivial issue: it is becoming increasingly clear that the criminal gangs and political elites that derived their power during the civil war from their control of mines, trade, timber and taxes are adapting their strategy to the new diamond regime. Politicians, traders and warlords from various factions are flocking to Kinshasa. For example, Rwanda-backed former rebels control an area with an estimated $70 million of annual diamond production. In addition, there are reports that the Rwandan government has allowed diamond-polishing plants to be set up in Kigali, the capital.

The problem now for western policymakers is whether to draw attention to such activities and risk derailing a fragile peace. Groups such as Human Rights Watch say officials at the UN's Department of Peace Keeping were nervous that any publicity-generating complaints about the role neighboring countries still play in arming Congolese militias and trading Congolese minerals could damage one of the UN's trickiest and most expensive peacekeeping operations. But the obvious danger remains that the disparate factions committed officially to Congo's peace process will continue funding their movements, armed or otherwise, by illicit means and that this will undermine efforts to pacify and reunite the country.

A controversial contract covering most exports from the Democratic Republic of the Congo's principal diamond company shows up the murky side of the business and some of the obstacles to greater transparency. The contract, pushed through by the government secretly this year is between the state-controlled MIBA group and Emaxon, a Canadian-registered company. MIBA is 80 per cent owned by the government. The remaining 20 per cent is held by Sibeka, a Belgian company in which De Beers, the leading force in the diamond industry, is a shareholder. Under the deal, Emaxon received rights to export 88 per cent of MIBA's production over a four-year period in return for loans to MIBA worth $15m. Eugene Ndongola Diomi, the mines minister representing the unarmed opposition in the country's transitional unity government, is highly critical of the contract. He says a clause allowing Emaxon a 5 per cent discount is "prejudicial to the interests of the state". The deal was approved in apparent contravention of an undertaking by MIBA to inform creditors of any changes in export arrangements. It has since emerged as a bone of contention between factions in the power-sharing government appointed in July as part of efforts to end Congo's five-year war.

Reports obtained by the Financial Times allege "systematic undervaluation and theft of diamonds" at MIBA costing tens of millions of dollars annually. Industry experts and western government officials have corroborated these reports. The reports allege that a criminal syndicate has been siphoning off high value gems within MIBA. They also point to serious shortfalls in the application of Kimberley Process recommendations at MIBA. The transcript of a taped OSS presentation to Joseph Kabila, the Democratic Republic of Congo's president, talks of a "Byzantine paper trail" deliberately obscuring vital data and "ghost packages" created by "separation and falsification of data during the initial weighing process". The ghost shipments were not recorded in official MIBA data. The reports suggest that some Belgian suppliers to MIBA and at least one other Belgian diamond interest have turned a blind eye to theft. There is concern within the Democratic Republic of Congo over smuggled gems being used to fund armed opposition groups in the central province of Kasai - where there has been a surge in ethnic nationalism - as well as high-level politicians in Kinshasa, the capital. War and mismanagement have led to a decline in Congo's official copper, gold and other mineral exports. Diamonds, long used by the country's rulers as a private source of cash, now account for more than 60 per cent of official export earnings. Diamond industry officials estimate that MIBA has potential annual revenues of more than $170m. According to 2000 estimates by FINAM, a Belgium-based group representing MIBA creditors, systematic theft of gems cost the company 30-50 per cent of its revenues that year. Nigel Morgan, former OSS operations director, says of OSS's findings: "This has got everything to do with whether the Kimberley Process is going to be made to work, or whether it will simply be a fig leaf for a diamond industry which gets up to the same old tricks."

Mixed Success in Sierra Leone

While it appears that the Kimberley Process is floundering in the DRC, it has had a much more positive effect in Sierra Leone – although that success has come with some unforeseen costs. The KPCS has allowed war-ravaged Sierra Leone to experience greater prosperity with a sharp rise in export earnings. In 2002, revenues from the export of diamonds amounted to only $21 million. In the first three months of 2003 alone, that level of earnings has already been reached, with export revenues hitting $23.8 million at the end of March. (Mac Johnson, AFP, 2003) If this trend continues, export earnings are project to exceed those of 2002 by 300 per cent. The contrast is even greater when figures from previous years are examined. In 2000, diamond exports brought in $10.1 million in earnings, while in 1999, a paltry $1.2 million. What is more important than this spectacular rise in export earnings, however, is the fact that the Kimberley Process has succeeded in halting the ability of rebel groups to fund their activities through the sale of diamonds. The rebel group Revolutionary United Front (RUF) was able to prolong the bloody conflict that razed Sierra Leone until January 2001 through the smuggling and sale of diamonds, which funded the purchase of weapons. Mineral Resources Minister Mohamed Swarray-Deen remarked that the Kimberley Process had helped to legitimize the industry in his country. “It has returned the diamond industry back to the community which is rightly the main beneficiary. It was originally hijacked by a few greedy and corrupt people.” (quoted in MacJohnson, AFP, 2003)

However, the success of the Kimberley Process in halting rebel involvement in the diamond trade does not paint a complete picture. It is suspected that other powerful interests have stepped in to keep both illegal mining and smuggling alive. In an interview with Agence France-Presse (AFP), Lebanese diamond merchant Ansa Farouk said that “other individual powerful interests have stepped in to keep both illicit mining and smuggling alive. They have their contacts in Conakry and Monrovia (the Guinean and Liberian capitals) and where the diamonds go to after this, I cannot say. There are lots of mafia-like movements involved.” (MacJohnson, AFP, 2003) More significantly, David Crane, the US prosecutor for the Special Court on Sierra Leone, set up in January 2002 to try those accused of war crimes, recently said he had uncovered evidence that al Qaeda was operating in west Africa, chiefly to buy diamonds. “Diamonds fuel conflict, and diamonds fuel the war on terrorism,” Crane said, specifically naming Liberian President Charles Taylor as a guilty party. “Charles Taylor is harboring terrorists from the Middle East, including al Qaeda and Hezbollah, and has been for years... he is a player in the world of terror and what he does affects lives in the United States and Europe.” (MacJohnson, AFP, 2003)

Another issue that taints the relative success of the Kimberley Process in Sierra Leone is the rampant use of child miners by unscrupulous mining companies. In order to cut production costs and increase profits, children aged between 10 and 15 years of age are paid 50 cents a day and live in dismal surroundings. Thus while conflict may have been stemmed, the quality of life, especially for these child miners, may in fact have worsened.

The Central African Republic: A Test for Kimberley

The Central African Republic (CAR) is proving to be a much more complicated test of the Kimberley Process than the DRC or Sierra Leone. In March 2003, President Ange-Felix Patassé’s government was deposed by a coup d’etat led by General François Bozize, the CAR’s ex-chief of the military. The significance of the CAR to the diamond producing world should not be underestimated – it is the 10th largest diamond producing country in the world, generating about $100 million in diamond export revenues a year. (Global Witness, 2003) While the move was condemned by the African Union in March, it also raises important questions in terms of the implementation of the Kimberley. What is to be made of the CAR’s status in Kimberley until such a time when the new authorities in Bangui are internationally recognized? Some might argue that a total ban on CAR diamonds would be necessary until the new regime in Bangui (CAR’s capital) is deemed legitimate; others could argue that such steps are unnecessary using the principles of international law.

From a legal standpoint, it appears that whether or not Bozize’s government is legitimate does not affect its standing in international contracts between states. According to the Institute for Political and International Studies, international law provides for a procedure to recognize states, but not governments. Diplomatically, this may be a different matter, but it is almost inevitable that some states will begin to deal with a new government of a recognized state, such as Bozize in the CAR. These diplomatic relations are generally determined by an adherence to one of two theories: some states apply a theory of effectivity, by which a new regime is recognized by merit of its real control of the state, while others apply the theory of legitimacy and only commence diplomatic relations once the regime is deemed to uphold certain norms such as constitutional law. Neither appears to affect the applicability of contracts concluded between states, such as the Kimberley Process, because a new government is bound by these obligations despite illegally deposing the previous signatory. Whether a new government obtained power through legal means, and whether or not it is constitutional, has little bearing on this matter. The government that has de facto control over the state is the government that will show up for Kimberley meetings. (IPIS Research, 2003)

On the other hand, if KPCS participants accept Bozize’s government and its ability to uphold the principles of the Kimberley Process, it essentially means that they are placing their trust in an illegal military government. This acceptance may set a dangerous precedent for other rebel groups in diamond producing countries. The larger issue at stake, however, is the degree to which the Kimberley Process places faith in its participants’ ability to monitor themselves. Even if the CAR’s status in the Kimberley Process remains unchanged, other participants may call for more efficient monitoring of internal controls within Bangui.

Given these circumstances, then, the steps that KPCS officials have undertaken are signs that the process is credible and practical. Following the coup in March, the CAR was removed from the list of Kimberley Process participants for several weeks while KPCS officials debated their course of action. It was reinstated as a participant after CAR authorities provided assurances they could implement the Kimberley Process and agreed to let a review mission evaluate the country's national diamond control system. Consequently, a review mission, tasked with establishing if the CAR was meeting KPCS requirements, was sent in June 2003. The review mission was hosted by CAR's Ministry of Mines, and comprised of government officials from several Kimberley Process countries, a diamond industry representative and Global Witness (an international NGO) representing civil society. The mission met with relevant government authorities responsible for implementing the Kimberley Process as well as conducted on-site visits of diamond production and trading sites. While the results of the review have not yet been released, this review mission is a strong sign that the Kimberley Process provides for effective and credible monitoring of its participants.

Intrinsic Flaws in the Kimberley Process

Excessive Respect for State Sovereignty

Many NGOs have argued that the most glaring weakness of the Kimberley Process is its excessive respect for state sovereignty. The process is highly reliant on self-verification on the part of participant countries. At this stage, there are no means by which KPCS authorities can take action against countries that do not conform to Kimberley Process regulations. Part of the problem is that the process is no more binding than an economic contract. Unlike the United Nations, KPCS officials cannot send peacekeeping forces to participant countries.

Lack of Independent Monitoring

This excessive respect for state sovereignty highlights the importance of having independent monitoring of all national control systems. This is seen as a necessary prerequisite without which the system cannot be credible or effective. While the Kimberley Process has addressed some concerns – such as process monitoring, stricter membership criteria, participant co-ordination and collection of accurate trade and production statistics – the most important concern is still to be resolved. The outstanding issue of an independent monitoring body will be discussed at the Kimberley Process's next plenary meeting, to be held in South Africa in November 2003. It appears, at least, that KPCS officials view this issue with equal urgency. Chairman of the KPCS board Abbey Chikane stated that he “would be very happy to announce such a development.” (quoted in Innocenti, The Financial Times, 2003)

At present, however, the Kimberley system has no independent monitoring mechanism to assess performance or compliance by any of the member countries. This shortcoming in the process is magnified by the fact that it does not cover polished stones or diamond jewelry – which account for the bulk of all US diamond imports. And it does not currently address diamonds that continue to fuel conflict in countries like the DRC or diamonds that finance the activities of groups like al Qaeda. Furthermore, in an effort to assure consumers their diamonds are “clean,” the industry had agreed to track the gems from the moment they are mined to their destination in retail stores through an auditable “chain of warranties.” However, the industry's recently revealed “warranty” consists solely of an “affirmative statement” that diamonds are from “legitimate sources;” that they are “conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds.” (World Diamond Council, 2002) Nicky Oppenheimer, Chairman of De Beers Corp underscored this point when he remarked that: “transparent verification of both government and industry procedures is essential to the credibility of the certification scheme in the eyes of the world...the industry wholeheartedly supports the NGOs' objectives in securing a credible system of monitoring.” (quoted in Amnesty International, 2003)

Diamond Identification: Mission Impossible?

Like any other document, KPCS certificates can be falsified or forged. However, unlike fake passports or driver’s licenses, it may be even more difficult to identify if a diamond carrying a KPCS certificate is a conflict diamond or not. Some geoscientists argue that chemistry and physics can help to identify conflict diamonds. Like a fingerprint, unique characteristics such as composition or microscopic structural imperfections could indicate the origin of a diamond. Diamonds entering the market could be tested to determine their origin, and gems found to come from conflict zones under U.N. sanctions could be confiscated. While such identification process would greatly bolster the efficacy of the Kimberley Process, scores of difficulties abound to make this ideal virtually unattainable.

Firstly, the uniformity of gem-quality diamonds poses a very large problem. Many other precious stones have relatively complex structures that are more amenable to identification. For example, emeralds are composed of beryllium aluminum silicate with traces of chromium. The ratios between these two components are produced by different geological processes. Small differences in impurities and chemical makeup of these gems readily betray their origin. Diamonds, in contrast, are relatively pure, and all are created under similar conditions. Identifiable impurities crop up in parts per million, per billion, or even smaller concentrations, making it next to impossible to distinguish among the gems’ geographic sources.. The more valuable the diamond is, the harder it is to identify. According to Peter Heaney of Pennsylvania State University, “Consumers want diamonds to be pure with no . . . imperfections,” he notes, but these are exactly the characteristics that might help mineralogists determine the gems’ origin. (quoted in Pickrell, Science News, 2002)

Secondly, techniques that would require slicing the gem or affecting its physical appearance in any way would clearly not be feasible to diamond exporters. This seriously limits the scope of testing techniques. Moreover, testing techniques developed so far are so time-consuming and complex that it would be highly impractical to apply on a large scale to the millions of diamonds that are being mined. Added to the fact that these techniques are applied to each individual gem, one at a time, and one can clearly see that the costs of implementing any such identification scheme are potentially staggering. Finally, James E. Shigley of the Gemological Institute of America points out a more basic reservation about the possibility of identifying diamonds by their origins. “Diamonds don't come from conflict countries, they come from the center of the Earth,” he says. Consequently, they're more likely to reflect conditions in Earth's mantle than any that define political boundaries. Furthermore, he says, many of the characteristics of rough diamonds, such as overall shape, surface markings, and some mineral inclusions, are systematically removed during cutting and polishing. This makes identification of jewels even more difficult than that of the rough diamonds that researchers have used in their analyses. (quoted in Pickrell, Science News, 2002)

It appears, however, that all hope is not lost. In July 2003, a team of Belgian scientists developed a method by which they could accurately determine the origin of a diamond. A result of a joint project at the research center of the Antwerp Diamond High Council and the University of Ghent, the researchers found that they were able to obtain a unique chemical image of each diamond by drilling a microscopic hole in it with a laser beam. This drilling releases elements in the diamond that can be analyzed. Since diamonds are extremely pure carbon products, very small quantities of atoms from sub-microscopic inclusions can be traced. However, even this breakthrough method of gem identification runs into serious implementation problems. It requires an extensive, comprehensive database of diamond samples from mines the world over – including diamonds from conflict mines. This process could take several years to complete, and would require the complete cooperation of mine owners in submitting samples. Thus while trying to establish a scientific method for determining the origin of a diamond is a worthwhile avenue for further research, the Kimberley Process must continue to rely on less concrete means of verification. This means that the monitoring of participants’ compliance takes on even greater importance.

Lack of Statistics

A final problem is the lack of progress in collection and analysis of statistics - an important tool for detecting conflict diamond trading. Many governments have failed to submit the required statistics, calling into question their commitment to the Kimberley Process. NGOs will argue that governments that have not submitted their statistics before the Plenary Meeting should be suspended from the Kimberley Process Certification Scheme.

What Needs to be Done?

It is clear that the Kimberley Process has still a long way to go before it achieves the lofty goals set out by its creators. Given its failings and flaws, what needs to be done in order for the process to be an effective means by which trade in conflict diamonds is halted? The following is a list of recommendations:

First, the Kimberley Process certification scheme for rough diamonds must make provision for regular, independent monitoring of all national diamond control systems. Without this, it will create false consumer confidence and the appearance of integrity where none can be assured. Such false confidence will do nothing to stop conflict diamonds where they still exist, and it will do nothing to prevent their return where controls are weak and predators are strong.

Second, the United Nations Security Council must, as a matter of priority, address the issue of conflict diamonds in the DRC. It should embargo all unofficial diamond exports from the DRC, and insist that the Kimberley Process develop a more rigorous approach to statistics and monitoring.

Third, civil society organizations should take an active role in promoting the Publish What You Pay campaign. This, initiative, founded by NGOs such as Global Witness and Oxfam, is aimed at helping citizens of resource-rich developing countries hold their governments accountable for how revenues from the oil, gas and mining industries are managed and distributed. Together with Kimberley’s certification scheme, consensus on basic corporate transparency in developing countries can be reached, and corruption can be diminished.

Fourth, governments should actively support the Extractive Industries Transparency Initiative. The Initiative was announced by UK Prime Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg, September 2002. Its aim is to increase transparency over payments by companies to governments and government-linked entities, as well as transparency over revenues by those host country governments. Revenues from oil, gas and mining companies, in the form of taxes, royalties, signature bonuses and other payments should be an important engine for economic growth and social development in developing and transition countries. However, the lack of accountability and transparency in these revenues can exacerbate poor governance and lead to corruption, conflict and poverty.

Fifth, mining contracts that were acquired through bribery or military action prior to implementation of the Kimberley Process should be nullified and considered void, while contracts entered into during the implementation of the process should be monitored and regulated. For example, to counter UNITA's previous monopoly on Angola's diamond industry, the Angolan diamond corporation, Endiama established a partnership with the powerful South African diamond corporation, De Beers. In an effort to protect their joint diamond ventures De Beers and Endiama hired hundreds of South African mercenaries to guard their legitimate diamond enterprises against UNITA attacks. However, De Beers simultaneously aimed to buy up the illegally produced gems before they left the country. In 1995, De Beers bought $80 million worth of diamonds. From 1992 to 1993, however, De Beers bought $500 million to $800 million worth of diamonds from UNITA to maintain its grip on prices, despite having contracts with the Angolan government. An additional attempt by Endiama to halt UNITA mining operations took place in August 1995 when it signed a mining agreement with a Brazilian mining firm. The company, Odebrecht Mining Services (OMS) was given mining rights to the rich Luzamba area in the Cuango Valley. Although the OMS/Endiama deal was legitimized, the UNITA elements were too powerful to remove, and the OMS was forced to strike deals with UNITA. UNITA has been supported covertly by several additional mining firms from South Africa and Israel (Gordon 14). Up till 1997, the Brazilian based OMS had been unsuccessful in signing a mining rights agreement with UNITA. UNITA, with assistance from its foreign mining companies, had increased its mining operations in the Cuango Valley. UNITA continues to receive South African aid in the forms of hired scuba divers and mining equipment to mine the river-bed of Cuango Valley more effectively.

Finally, the diamond industry can and should endorse all of these recommendations. Endorsements can begin with apex bodies such as the World Diamond Council, the International Diamond Manufacturers’ Association, the World Federation of Diamond Bourses, the Confédération internationale de la bijouterie, de la joaillerie, de l’orfèvrerie, des diamants, perles et pierres (CIBJO), national diamond manufacturers associations, national diamond exchanges, national and international diamond mining associations. Much has been done already. With greater commitment to an effective Kimberley Process and greater overall transparency, the diamond industry could become a world leader in corporate social responsibility.

References

1. ActionAid Editorial, “Campaigners give cautious welcome to the launch of the Kimberley Process scheme to curb the trade in conflict diamonds,” ActionAid, November 4 2002

2. Agence France-Presse Editorial, “Conflict diamonds in focus” Agence France-Presse (AFP), November 5 2002

3. Amnesty International, “Diamonds Still Drip Blood: Coalition Calls for Immediate Reform of New Diamond Regulations,” November 4 2002

4. Amnesty International, “Kimberley Process still in process - Progress made, but key issues remain,” April 30 2003

5. BBC News Editorial, “Diamond Origin ‘Can Be Determined,” BBC News, July 25 2003

6. Belfast Telegraph Editorial, “UN says war in Congo is fuelled by foreign firms,” in The Financial Times, October 31 2003

7. Business Day Editorial, “'Blood Diamond' Crackdown to Begin,” Business Day, January 28 2003

8. Cilliers, Jakkie and Dietrich, Christian Angola’s War Economy: The Role of Oil and Diamonds, (eds) Institute for Security Studies, Pretoria, September 2000.

9. Dietrich, Christian, “Have African-based Diamond Monopolies Been Effective?” Central Africa Mineral and Arms Research Bulletin, edition 2, 18 June 2001

10. Global Witness Editorial, “The First Real Test of the Kimberley Process Is In The Central African Republic,” Global Witness, March 18 2003

11. Global Witness Editorial, “Kimberley Process undertakes first review mission to the Central African Republic,” Global Witness, June 11 2003

12. Global Witness Editorial, “Conflict diamonds: Kimberley Process at a turning point,” Global Witness, Oct 28 2003

13. Innocenti, Nicol Degli, “Africa's Diamond Trade Seen as No Longer So Rough,” The Financial Times,June 30 2003

14. Innocenti, Nicol Degli, “Strong support for 'conflict diamond' curbs,” The Financial Times, August 1 2003

15. Innocenti, Nicol Degli, “Compromise deal struck on conflict diamonds,” The Financial Times, October 31 2003

16. Institute for Political and International Studies, “Central African Republic: Hard Questions Ahead for Kimberley?” Antwerp, 26 March 2003

17. Lewis, Lloyd R. III “Angola diamond mining and war” Trade and Environment Database, case no. 32, June 14 1997

18. MacJohnson, Rod, “Blood diamonds" initiative a mixed success in war-scarred Sierra Leone,” Agence France-Presse (AFP), May 18 2003

19. Muller, Emma, “Diamond Smugling Through Congo Republic Makes Mockery Of Kimberley Process,” , July 10 2003

20. Muller, Emma, “Kimberley Process faces one of its biggest challenges,” Business Day, Oct 30 2003

21. Pickrell, John, “Scientists Struggle to Identify Conflict Diamonds,” Science News, August 10 2002

22. Smillie, Ian, “Motherhood, apple pie and false teeth: corporate social responsibility in the diamond industry,” Diamonds and Human Security Project, 2003

23. The Financial Times Editorial, “Comment: Crystal Clarity” The Financial Times, October 30 2003

24. Turner, Mark, “UN 'must seek inquiry into Congo war profits,'” The Financial Times, October 28 2003

25. UN Integrated Regional Information Network, “NGOs urge greater transparency of diamond control,” October 29 2003

26. Wallis, William, “Africa’s conflict diamonds: is the UN-backed certification scheme failing to bring transparency to the trade?” The Financial Times, October 29 2003

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