Professional Documents
Culture Documents
John Koh
Fall 2003
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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. Angolas rebel movement, the
Unio Nacional para a Independncia 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
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
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Switzerland in November 2002. According to the official website1, (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
However, analysts have expressed skepticism about the impact of the process, which
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.
1
www.kimberleyprocess.com
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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
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
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
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
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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
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
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
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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
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
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,
PolishedPrices.com, 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.
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Smuggling appears to be only part of the DRCs 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,
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and diamond concern MIBA. The Kimberley Process offers no recourse to either of these
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
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
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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
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
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
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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."
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
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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.
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.
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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,
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
Patasss government was deposed by a coup detat led by General Franois Bozize, the CARs
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
implementationoftheKimberley.WhatistobemadeoftheCARsstatusinKimberleyuntil
suchatimewhenthenewauthoritiesinBanguiareinternationallyrecognized?Somemight
arguethatatotalbanonCARdiamondswouldbenecessaryuntilthenewregimeinBangui
(CARscapital)isdeemedlegitimate;otherscouldarguethatsuchstepsareunnecessaryusing
theprinciplesofinternationallaw.
Fromalegalstandpoint,itappearsthatwhetherornotBozizesgovernmentislegitimate
doesnotaffectitsstandingininternationalcontractsbetweenstates.AccordingtotheInstitute
forPoliticalandInternationalStudies,internationallawprovidesforaproceduretorecognize
states,butnotgovernments.Diplomatically,thismaybeadifferentmatter,butitisalmost
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inevitablethatsomestateswillbegintodealwithanewgovernmentofarecognizedstate,such
asBozizeintheCAR.Thesediplomaticrelationsaregenerallydeterminedbyanadherenceto
oneoftwotheories:somestatesapplyatheoryofeffectivity,bywhichanewregimeis
recognizedbymeritofitsrealcontrolofthestate,whileothersapplythetheoryoflegitimacy
andonlycommencediplomaticrelationsoncetheregimeisdeemedtoupholdcertainnorms
suchasconstitutionallaw.Neitherappearstoaffecttheapplicabilityofcontractsconcluded
betweenstates,suchastheKimberleyProcess,becauseanewgovernmentisboundbythese
obligationsdespiteillegallydeposingtheprevioussignatory.Whetheranewgovernment
obtainedpowerthroughlegalmeans,andwhetherornotitisconstitutional,haslittlebearingon
thismatter.Thegovernmentthathasdefactocontroloverthestateisthegovernmentthatwill
showupforKimberleymeetings.(IPISResearch,2003)
Ontheotherhand,ifKPCSparticipantsacceptBozizesgovernmentanditsabilityto
upholdtheprinciplesoftheKimberleyProcess,itessentiallymeansthattheyareplacingtheir
trustinanillegalmilitarygovernment.Thisacceptancemaysetadangerousprecedentforother
rebelgroupsindiamondproducingcountries.Thelargerissueatstake,however,isthedegreeto
whichtheKimberleyProcessplacesfaithinitsparticipantsabilitytomonitorthemselves.Even
iftheCARsstatusintheKimberleyProcessremainsunchanged,otherparticipantsmaycallfor
moreefficientmonitoringofinternalcontrolswithinBangui.
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
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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
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
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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
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:
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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)
Like any other document, KPCS certificates can be falsified or forged. However, unlike
fake passports or drivers 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
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
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
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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.
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
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
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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
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
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
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:
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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,
accountable for how revenues from the oil, gas and mining industries are managed and
Initiative. The Initiative was announced by UK Prime Minister Tony Blair at the World Summit
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
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transition countries. However, the lack of accountability and transparency in these revenues can
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
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receive South African aid in the forms of hired scuba divers and mining equipment to mine the
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
national and international diamond mining associations. Much has been done already. With
greater commitment to an effective Kimberley Process and greater overall transparency, the
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References
November 4 2002
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8. Cilliers, Jakkie and Dietrich, Christian Angolas War Economy: The Role of Oil and
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27. http://www.dfid.gov.uk/News/News/files/eiti_guide_b.htm
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28. www.publishwhatyoupay.org
29. www.kimberleyprocess.com
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