MAC: Mines and Communities

Who's to blame for "blood diamond" regulation failure?

Published by MAC on 2012-10-23
Source: Statements (Al Jazeera)

Anglo De Beers put in the frame

The Kimberley Certification Process (KP) was ostensibly designed to keep "blood diamonds" off global markets.

Not only has it failed to do so, but it is actively promoting the human rights atrocities it pledged to wipe out.

At least that's the view of  Khadife Sharife and Nick Meynen expressed in a strident denunciation of the KP published on 15th October 2012.

The authors cite recent "developments" in Zimbabwe to back their argument.

Sharife and Meynen also claim that the world's largest purveyor of diamonds, De Beers, actively corrupted the application of the Kimberley Process to Angola, at a time when De Beers was majority-owned by Anglo American.

Pointing out that "a large part of the diamond market is pure luxury consumption made at a heavy social and environmental cost...", they conclude:

"This structural and global injustice needs fixing at different levels: from informing blind consumers to overhauling the KP completely."

KP - or just PR?

A similar opinion was expressed last December by  Zimbabwean activist (and MAC co-editor) Gilbert Makore, when he anticipated the KP certification scheme's breakdown in his home country (see below).

Mr Makore called for it to "become more vigilant, more pro-active, and more insistent that its standards be enforced..."

Otherwise, he warned, the KP would "morph" into a "PR management tool for diamond producing countries, a failure giving a semblance of success".

For earlier article on MAC, see: Zimbabwe: Scientific Report shows Water Pollution by Marange Diamond Companies

Blood diamond" regulation system broken - but where to look for blame?

By Khadija Sharife and Nick Meynen

Environmental Justice Organisations, Liabilities and Trade (EJOLT) project

15 October 2012

Ever since the international approval of Zimbabwean diamonds for export, the international regulatory system to prevent ‘blood diamonds' from entering the market is broken.

By allowing Zimbabwe to export diamonds mined from the Marange mine, the former chair of the Kimberley Process (KP) - Mr. Mathieu Yamba Lapfa Lambang from the Democratic Republic of Congo - has prompted a global "human rights" outcry with KP members such as Canada, the EU, and the US, claiming there was "no consensus".

However, these countries neglect that even when you take the Zimbabwean rot out, the whole KP apple still looks like a totally rotten apple. There are many reasons for that, which have nothing to do with Mugabe or his friends, rather with the vested interests of a giant Western corporation and with blind consumerism. But let's start with the most obvious villain.

Officially approved blood diamonds

China (the world's fastest growing diamond consumer market) and India (which cuts and polishes 11 of 12 stones) have given green light to exploit diamonds from the Marange mine, which was described by Zimbabwean Finance Minister Tendai Biti as "the biggest find of alluvial diamonds in the history of mankind".

With potential revenues pegged at $1-1.7bn annually, the support of neighbouring governments like South Africa, another major diamond producer, is almost guaranteed.

That Zimbabwe's diamonds are mined under the direct surveillance of the country's vicious military and controlled by brutal lifetime dictator Robert Mugabe is not in question. After the discovery of Marange's diamonds in 2006, the government security forces took the mine by force in 2008, killing up to 150 small-scale miners in the process, by shooting from helicopters.

Ever since, mass looting by political and military elites has occurred, accompanied by violent displacement and human rights violations. Wikileaks has shown the involvement of Mugabe and his wife, and the rot goes to the Head of the Central Bank, army general Constantine Chiwenga and many others.

Farai Maguwu - Zimbabwe's most famous human rights activist - was arrested as an enemy of the state in 2010, allegedly for ‘endangering national security' by holding information pertaining to the Zimbabwean military's gross human rights violation at Marange's diamond mines.

Maguwu's arrest came about when the Kimberley Process's appointed monitor, Abbey Chikane, arranged for Maguwu to meet him at a place and time coordinated by Chikane, who happens to be a former South African diamond business magnate. He basically duped the activist.

But why did Chikane unilaterally seek to approve KP diamonds from Zimbabwe - without having a mandate to do so? And why was he not removed from his position for doing so? Similarly, why did the KP monitor endanger Zimbabwe's primary whistle-blower, and do so with basically no repercussions from within the KP?

Was the KP system - propagating that less than one per cent of global diamonds constitute "blood" minerals - built for the purposes of eliminating corporate and state-sanctioned exploitation, or normalising and sanitising it?

The KP and the imaginary world of good governments and bad rebels

Ian Smillie, an important founder of the KP, who disengaged from the Kimberley Process in 2009, has said: "we have seen more and more examples of how criminals and diamond dealers and smugglers and even governments have been able to bypass, subvert and ignore the KPCS with almost complete impunity."

No third-party monitoring is foreseen, internal control mechanisms are weak and technical shortcomings and corruption are everywhere. But the main reason for the failure of the KP is much deeper than lack of implementation. It's a structural flaw.

According to the KP, "Conflict diamonds means rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments". That excludes governments like Mugabe's as being a conflict actor.

This definition was largely structured around two cases: Angola's brutal opposition movement UNITA under Jonas Savimbi and Sierra Leone's civil war-for-resources, facilitated and backed by neighbouring Liberian warlord Charles Taylor.

But what if governments use rough diamonds to finance human rights abuses? The current chair - US ambassador Gillian Milovanovic - has set in motion a process to change the definition of a conflict diamond because "Ultimately, diamonds depend on the associations of purity and connection to positive and desirable images".

But the outcome of this process is unlikely to change the course of the KP, which is still very busy undermining the legitimacy it once created.

Global Witness, one of the founding NGOs for the KP, has withdrawn itself from the process at the end of 2011, citing the case of Marange as the most obvious evidence that the whole system is broken.

A ten-year long global coalition of NGOs - Fatal Transactions - with a long history in fighting against blood diamonds has also disbanded itself. However, the need to debunk the clean diamonds myth is not less than ten years ago, rather to the contrary.

A corporation bigger than governments

Between 1992 and 1993 alone, De Beers, which controls 70 per cent of the rough diamond market, was known to have purchased between $300-500m in diamonds from UNITA - the Angolan rebels.

The Fowler Report claimed that in 1999, around the time Global Witness began drawing attention to the subject, De Beers ceased purchasing diamonds directly from UNITA's leader Savimbi or via potential third parties. The combination of a democratic South Africa and the loss of De Beers' direct support destroyed UNITA's political and financial foundation.

What we learn from this example is that the biggest actor in the conflict is not the rebel group or a government but a Western company. And the only way it was held from financing a conflict was through a combination of a democratic revolution and international pressure in the aftermath of investigations by pressure groups like Global Witness. But what happens when there's no democratic revolution going on?

De Beers later just bought diamonds mined during Angola's dictatorship, now using the certificates produced by the KP. One single western company with almost 7 billion US $ revenues in 2009 can make or break corrupt and violent regimes, but no government can force it to stop buying from bad regimes - thanks to the KP that sanctions these flows.

In that sense, the KP seems designed not to keep blood diamonds off but on the market.

De Beers simply seized the initiative as a means of distancing the company's diamonds, which adorn engagement rings, from association with the images of drugged-up child-soldiers trained to use bush knives to hack off the arms and legs of terrorised people. But if the diamond trade is as bloody as ever and regulation doesn't seem to work, - is there another way to address the problem?

Manufacturing demand

While people may want diamonds, nobody actually needs diamonds for personal use. This much was admitted by the advertising firm NW Ayers, retained by De Beers, who created perhaps the world's most potent luxury goods slogan: "Diamonds Are Forever". According to Ayers, "We are dealing with a problem in mass psychology. We seek to ... strengthen the tradition of the diamond engagement ring - to make it a psychological necessity".

In 2000, Advertising Age magazine named "A Diamond Is Forever" the best advertising slogan of the twentieth century. Diamonds are used for industrial process as well, but a large part of the diamond market is pure luxury consumption made at a heavy social and environmental cost in places like Zimbabwe and many other countries. This structural and global injustice needs fixing at different levels: from informing blind consumers to overhauling the KP completely.

This article for EJOLT is an update and reframing of an earlier article on blood diamonds by Khadija Sharife for Al Jazeera:

Zimbabwe: A Lost Opportunity for the Kimberly Process?

Gilbert Makore 

6 December 2011

The jury may still be out on that.

The Zimbabwe diamond mining situation presented an opportunity for the Kimberley Process (KP) to save itself and that window may still be open.

The Kimberley Process Certification Scheme (KPCS) was created in 2003 with a view to regulate the international trade in rough diamonds. The KPCS was formed through the initiative of governments, private companies and NGOs who came together to address the impact of diamonds in causing and fuelling conflicts in Africa.

The KP represented a breakthrough initiative and was lauded globally. In its first few years of existence it achieved success. While the KP did not stop the flow of blood diamonds, it certainly reduced and in some cases stemmed that flow.

The Scheme made a palpable impact in stemming the flow of conflict diamonds in Angola, Sierra Leone and Liberia. It is without doubt that the KPCS made it difficult for organized under-ground criminals to peddle high volumes of diamonds. An often stated statistic is that ‘From almost nothing five years earlier, Sierra Leone exported $142 million worth of diamonds in 2005'.

Then things started to go wrong.... The Kimberly Process failed to address the situation in Venezuela. The country remained a member of the KP despite the fact that it was not complying with the KP minimum standards and had stopped reporting to the KP in 2005.

The KP failed to address the situation in Côte d'Ivoire . The country remained a member of the KP despite the fact that it was not exporting diamonds as the area with diamonds was not under the control of the government. Conflict diamonds from the country found their way into the global market through illegal exports to other countries.

A UN Expert Group submitted a report to the UN Security Council in October 2006, stating that as much as $23 million in conflict diamonds has been finding its way out of Côte d'Ivoire and into the legitimate trade every year. It stated that much of the smuggling was being done through Ghana and onwards to Israel and Belgium.

The KP failed to address the fact that the diamonds coming into Lebanon are not the same gem quality as those that it exports.

These cases among others represented black spots on an otherwise noble and well set out initiative. In all these cases the KP was lethargic and sluggish in its response. In its own internal reviews and recommendations on how the initiative could be reformed and strengthened (give it more teeth) were made and sadly, ignored.

Then Zimbabwe ‘happened'. One of the biggest diamond finds of the last decade was discovered in Marange, in the eastern part of Zimbabwe. The story has been chronicled time and time again and there is no need to rehash it.

Suffice to say there were serious human rights violations as the government stepped in to ‘formally' mine diamonds. While there is no doubt that there has been a marked decrease in human rights violations in Marange, allegations and verified reported incidences still remain. Besides the issue of human rights, there are concerns over the secrecy surrounding the diamond revenues.

Is all the money being accounted for? Where is the money going? The Minister of Mines and Mining Development in Zimbabwe himself admitted that there are still leakages as some diamonds are still being smuggled outside the country. It is important to note that leakages and smuggling problems are not peculiar to Zimbabwe as a participant member of the KP.

The Kimberly Process became occupied with the situation in Zimbabwe. And this is where I believe that the Zimbabwe diamond mining situation in Marange presented an opportunity for the Kimberly Process.

Zimbabwe forced the KP to face (or ignore, depending on where you stand) is deficiencies. The Zimbabwean case revealed the failures of the KP. The opportunity, the Zimbabwean case presented, was to save the Kimberly Process' credibility which had already suffered from the missteps of years past.

The missteps and black spots in the Kimberly Process' record were mainly a consequence of the fact that the architecture (structure and processes) of KP is flawed. Decision making within the KP is by consensus. This means that all the participating members have to agree on any resolution. This presents major difficulties when parties are do not agree or are divided as the case of Zimbabwe clearly illustrates.

Participants have been known to block consensus resulting in watered down resolutions and statements that do nothing to effect the much needed reform in the global diamond mining industry.

Another potential fundamental flaw of the KP is that it is up to the participating country to invite a KP review mission. This is how Venezuela was able to remain a member of the KP for years while it was clearly not complying with the KP minimum standards.

Yet another flaw is that the KP does not place enough burden on the final retailers of ensure that their diamonds are conflict free.

When the KP was formed, its focus was conflict diamonds. The definition was adequate then but may not be now.

According to the KP - ‘conflict diamonds means rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments.' In some ways, the KP remained locked in that mode of fighting the trade in conflict diamonds. The KP failed to evolve to take into account some of the emergent challenges within the diamond industry.

The issue of human rights violations and other uses of diamond receipts besides funding rebel movements were not taken into account, hence the calls by various stakeholders for a change of the KP definition of ‘conflict diamonds.

While I agree that the KP could have done more to ensure that the country complies with the minimum standards and to the KP Workplan thrashed out in Swakopmund, I believe the KP as it is currently structured, cannot be expected to address the situation in Zimbabwe's diamond mining industry, particularly the Marange diamonds.

What is clear from the KP's handling of the Zimbabwean crises and other situations in other countries is that there is no substitute for internal controls.

Zimbabwe cannot, fortunately or unfortunately outsource the governance of its mineral resources.

The KP in its current form may never be able to address the emerging challenges in the diamond mining industry. What is needed is the reform of the KP and the strengthening of internal controls of participant countries.

The focus on the KP's failures (and success-the KP managed to suspend the membership of the DRC in 2004) should never redact from the efforts towards building and strengthening internal controls. The KP is still necessary. The complete collapse of the KP would almost certainly necessitate the creation of another international system to control diamond trade. The system remains relevant.

What is more important, however, is building the internal institutions and internal controls for transparency and accountability in-country.

The Zimbabwean situation remains unresolved completely and will continue to dog the KP. The KP could have taken this opportunity for internal reform. I believe that the opportunity for reform of the KP still remains.

The Kimberley Process can be an effective regulatory system for the eradication of conflict diamonds, but only if it's prepared to become more vigilant, more pro-active, and more insistent that its standards be enforced in participating countries. Without this the KP Process morphs into a dud. More dangerously, into a PR management tool for diamond producing countries, a failure giving a semblance of success.

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