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Diamonds and Human Security - Annual Review 2009

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The Kimberley Process: Too Important to Fail, Too Important for Pretense

By all indications, and from the evidence gathered for this year's Diamonds and Human Security Annual Review, the Kimberley Process (KP), designed to halt and prevent the return of "conflict diamonds", is failing. The cost of a collapse would be disastrous for an industry that benefits so many countries, and for the millions of people in developing countries who depend, directly and indirectly on it. A criminalized diamond economy would re-emerge and conflict diamonds could soon follow. The problems can and must be fixed.

Accountability is the primary issue. There is no KP central authority. The "chair" rotates annually and has virtually no responsibility beyond a convening function. Problems are shifted from one "working group" to another; debates on vital issues extend for years. "Consensus" in the KP means that everyone must agree; a single dissenter can block forward movement. Nobody takes responsibility for action or inaction, failure or success; the Kimberley Process has no core body apart from its annual "plenary meeting" and thus nobody is held responsible for anything.

The Kimberley Process Certification Scheme (KPCS) has a peer review mechanism which reviews each member's compliance roughly once every three years. Some reviews are thorough and recommendations are heeded. In many cases, however, recommendations are ignored, and there is little or no follow-up - this has been the case in the past with DRC and Angola. And, as this Annual Review notes, some reviews are completely bogus. In 2008, a bloated, nine-member team visited Guinea, a country beset by corruption, weak diamond controls, and almost certain smuggling. The team spent less than two hours outside the capital and its report remained unfinished for almost 11 months. A team visited Venezuela in 2008 but its makeup, agenda and itinerary were dictated entirely by the Venezuelan government. NGOs were barred and there were no visits to mining areas or border towns. Zimbabwe, rife with smuggling and gross diamond- related human rights abuse, consumed months of ineffectual internal KP debate. In the end, the KP agreed on a review mission, but only after being publicly shamed into action by NGO and media reports. The result is a lowest-common- denominator "consensus" and continuing inaction.

Other cases of flagrant non compliance have been ignored until they became media scandals: fraud and corruption in Brazil; Ivoirian conflict diamonds smuggled through neighbouring countries; 100% of Venezuela's diamonds smuggled out of the country. In two of Africa's largest diamond producers - Angola and DRC - internal controls are so weak that nobody can be certain where exported diamonds really come from. In addition, production and trade statistics from Lebanon, Guinea and the Republic of Congo (Brazzaville) raise serious questions. In most cases problems are detected by NGOs or UN expert panels because the KP has no central capacity for study and research. Procrastination is the default position.

Elaborate measures were taken in 2008 to allow Venezuela to remain a KP participant - despite its flagrant non-compliance - on the understanding that it would suspend exports and imports until it had regained control of its diamond industry. This effectively endorsed a situation in which all diamonds were being smuggled out of the country. This Annual Review describes a second Partnership Africa Canada investigation in May 2009, which found that Venezuelan diamonds are still being openly mined and smuggled. The KP continues, however, to accept the official Venezuelan position. As a result, for more than four years, the KP has implicitly sanctioned Venezuelan diamond smuggling.

The Kimberley Process and the KPCS were created to watchdog the diamond industry. Instead, the KP has become a talk shop, with civil society acting as watchdog of the industry and the Kimberley Process itself. Industry leaders are largely supportive of positions taken by civil society, and several governments are as frustrated as NGOs with the lack of gravitas and urgency in the KP. But industry does not lead, and few governments push hard for serious reform.

The Consequences of Failure

Before 2003, about 25% of the world's diamond trade was in some way illicit. Diamonds, completely unregulated, were used for money laundering and tax evasion, for drug running, gun running, sanctions-busting and terrorist financing. Many diamond producing countries earned no revenue from diamonds, and for others diamonds were only a source of strife and war.

The Kimberley Process was created to change this, and it has made a difference. Today, conflict diamonds represent a tiny part of world trade. Hitherto underground diamond economies have come into the light. Sierra Leone, which exported less than $2 million worth of diamonds legally in 2000, now exports between $100 and $150 million annually, earning the concomitant tax revenues. There have been similar positive changes in other countries.

All of this will quickly wither if the KPCS fails. A return to the freebooting diamond economy of the 1990s will reopen the door to a criminalized diamond trade and to conflict diamonds in the same fragile countries where they have already destroyed countless lives.

The KPCS is too important to fail, and it is too important to too many countries, companies and people to be a sham. It does not need to be redesigned; its provisions need to be enforced. But it requires an independent, proactive, effective and efficient core body of expertise that can analyze problems and act quickly to correct them, applying meaningful sanctions where necessary. Participants must be held accountable, and the KP must move swiftly to deal with cases of obvious non-compliance.

The Annual Review has gained a wide readership in recent years among governments, industry, civil society, academia and the media. Many of our readers have influence, and even the power to push for changes that are so obviously needed in the Kimberley Process. We hope you will add your voice to ours.