Extractives

Rough Business - Diamonds and Conflict

Commentary, 13 September 2010

By Ian Smillie, Chair, Diamond Development Initiative

Photo: Shawn Blore/Partnership Africa Canada

The campaign to halt ‘conflict diamonds’ began in the early part of the 2000s, several years before Leonardo DiCaprio’s Blood Diamond film, and long before Naomi Campbell and Mia Farrow testified at the war crimes trial of former Liberian President Charles Taylor. So people might be forgiven in thinking that the problem has been solved.

Those of us who worked to create the Kimberley Process Certification Scheme for rough diamonds (KPCS) certainly thought the industry was well on the road to recovery when the KPCS came on stream in 2003. And at first it was. The KPCS covered 75 countries and all aspects of mining and trading rough diamonds. Each participating country passed binding legislation requiring that all exported diamonds carry a Kimberley Process (KP) certificate indicating that the government could track the diamonds back to the mine, or to the point of import. And no participating country would allow any rough diamonds to be imported without a KP certificate from the exporting country. This was backed by a detailed data base covering all rough diamond production and trade, and a regular peer review mechanism. Russia was in. Canada was in. South Africa, Congo (both), Angola, China, the United States, Mexico, Brazil and every country in the EU: All in.

So what could possibly go wrong? Plenty, as it turned out. At first, it worked well. The diamond wars mostly stopped (except in Côte d’Ivoire), and official diamond exports in the three countries most affected by war – Angola, Sierra Leone and DRC – skyrocketed, along with tax revenues. Everywhere, an unregulated industry, badly infected at the margins by criminality, went legit. In fact the industry, led by diamond giant De Beers, became as much involved in establishing the KP as the NGOs that had lobbied so hard for it.

But when “anomalies” – as KP participants like to call them – appeared, some governments were unwilling to get tough with miscreants. Huge fluctuations in production went unexplained – a 600% increase in Guinea, for example, over a two-year period when the government was riven by coups and counter-coups. Lebanon re-exported more gem diamonds than it imported, a trick worthy of David Copperfield or Penn and Teller. On paper, Venezuela stopped exporting completely, although NGO and media reports showed that mining and smuggling were rampant. The Kimberley Process dealt with it by accepting Venezuela’s pledge to stop exporting, which it had already done – on paper. Nothing changed, so by endorsing the official Venezuelan position, the KP simply endorsed smuggling. The body created to stop diamond smuggling, now actually condoned it.

Then, in 2008, Zimbabwean armed forces shot and killed some 200 illicit diamond miners. This was accompanied by mass arrests, beatings and other human rights abuse. Add to that the illegal seizure of commercial mining leases and unbridled smuggling, and the KP had a problem in Zimbabwe that you’d think it couldn’t avoid. But for two years the KP has done little more than talk about Zimbabwe. Studies, investigations and monitoring reports have corroborated extensive media investigations of government collusion and venality. The logical option – suspension or expulsion from the KP – has been blocked by South Africa and other friends of Robert Mugabe. And in return for unrequited promises from Mugabe’s henchmen, Zimbabwe has been allowed by the KP to continue exporting. Calls for the inclusion of respect for human rights as a basic KP standard have been opposed by Russia, the European Union, South Africa and others. And the KP’s decision-making process, which requires unanimity on everything – large or small, ensures that nothing will change.

I tell these stories and others in my new book, Blood on the Stone: Greed, Corruption and War in the Global Diamond Trade. One might think that the situation is hopeless, or that the world can perhaps do without the Kimberley Process, now that the diamond wars have ended. On the latter point, the absence of war is misleading. The cost of UN peacekeeping in Côte d’Ivoire, DRC and Liberia last year alone was close to three billion dollars. And it is obvious from what is happening in Venezuela, Zimbabwe and elsewhere, that there is a large criminal element ready, willing and able to take industry back to the chaos and illegality of the 1990s.

The Kimberley Process would have to be reinvented if it failed, but it doesn’t have to fail. Its foundation – its legal status in 75 jurisdictions – is strong. But it needs an independent third-party monitoring system. It needs to replace its ridiculous decision-making arrangement with something that is adequate to the challenges faced by a vulnerable industry. And it needs to act quickly, sanctioning countries that fail to comply.

Hundreds of thousands of people died in Africa’s diamond wars. The challenge now is to prevent them from recurring, and to get diamonds to a place where they can be an engine of growth in the 15 African countries where they are mined, instead of a scourge.

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