Antwerp and the KP: A Rough Deal?

150 150 Rapaport News

With the biggest daily turnover of diamond imports and exports in the world, Antwerp has been a leader in implementing the Kimberley Process.

In 2000, Antwerp was the first to rally the diamond industry to launch the Kimberley Process (KP) and fight conflict diamonds. Antwerp helped set up the World Diamond Council (WDC), inviting Eli Izhakoff to be its chairman. Since then, the city disappeared from the limelight. Antwerp’s diamantaires, Diamond High Council (HRD) and KP representatives, however, have been working diligently to stamp out conflict diamonds.

In 1999, Charmian Gooch, director of Global Witness, a nongovernmental organization (NGO), started the ball rolling by bringing the conflict diamond situation to the attention of Stephane Fischler, Fischler Diamonds chief executive officer and secretary general of the International Diamond Manufacturers Association (IDMA). Today, Fischler says the industry can hold its head high as no other industry has done as much to end conflicts and develop Africa. “Antwerp has always been at the forefront of the KP, but maybe lacked a bit of public relations. However, we were busier resolving the issue than having it resolved. I don’t think anyone has done as much as Antwerp — especially Mark van Bockstael of the WDC, who contributed his unique skills, especially on the technical side of things,” comments Fischler.

A Rough Deal

As the center closest in proximity to conflict diamond areas, with the biggest daily turnover of diamond imports and exports, Antwerp had perhaps the toughest job of all implementing the KP.

Belgium and the U.K. are the European authorities’ KP watchdogs designated by the European Union (EU). According to Clive Wright, U.K. Government Diamond Office head, Belgium got a “rough deal” compared to other countries: “In the U.K., aside from De Beers, there are only a few small companies dealing in industrial-quality diamonds. Antwerp has 1,600 companies dealing gem-quality diamonds. In a few months, we issue the amount of certificates Antwerp must issue in a day. They are underestimated!”

Leslie Paesschierssens, who, along with Frieda Coosemans, is one of the Belgium government’s spokespeople for the KP, agrees that the KP certification system is extra work. Since February 12, 2003, Antwerp has delivered 20,000 KP certificates on exported diamonds and verified 7,000 certificates on imported goods!

Peter Meeus, HRD managing director, explains that industry self-regulation is more rigid in Antwerp than anywhere else because it falls under the jurisdiction of the European Commission (EC), whose regulations are somewhat stricter than those of the KP. The EC’s system specifies that a diamantaire’s books be audited, while in other countries this rule is not as explicit. Government-recognized independent auditors do most of the auditing in Belgium. “As a rough diamond center, if there are problems globally with conflict diamonds, they will be linked to Antwerp, so we have to be better than others,” says Meeus. “Now, if you are caught smuggling diamonds, your business and name are ruined — it is a huge risk that large diamond dealers are not willing to take.”

Concerns

There is no doubt that the aims of the KP are laudable, as is the manner in which the industry conducted itself to save its reputation, but in reality, how effective is it? According to one Antwerp diamantaire: “There are still conflict diamonds, but now they have a certificate. It’s the same goods, just a bigger part is kosher.”

Daniel Horowitz, IDH Diamonds managing director, points out that, on the one hand, the KP is costly, time-consuming and slows down the fluidity of the pipeline. On the other hand, it has not demonstrated effectiveness in controlling the circulation of diamonds. “I have no knowledge of reports assessing a decline of illicit diamond extraction or trade as a consequence of the Kimberley Process,” Horowitz says.

Alain Benyacar, BCB International owner, imports and exports rough from what he calls “risky sources” like Brazil, Guyana and the Congo. He criticizes how the KP gives countries an angelic conscience: “I disagree that countries have been accepted as KP participants without having adopted the internal legislation quickly enough.” Benyacar found himself unable to work in Brazil and Guyana when their membership was suspended until they met minimum KP requirements. They were reaccepted, but his 2003 results show evidence of the delays.

Meeus is adamant that real blood diamonds hardly exist anymore. He sees another problem that the KP has not addressed: “If one African country charges a 6 percent export tax on diamonds and another a 3 percent tax, they are asking for problems. We need the equalization of export taxes for smuggling to stop completely. This is something the Kimberley Process will have to address even though it is not a conflict diamond problem and interferes with national sovereignty.”

According to Paesschierssens, “The Kimberley Process certification scheme focuses on conflict diamonds and not in the first instance on fiscal and other fraud and tax problems, for example. Each country has to take up its responsibilities on these issues.”

Wright believes that while conflict diamonds constituted about 4 percent of the industry two years ago, it is currently only about 1 percent, due to peace in former trouble spots in Africa. Regarding the overall illicit trade in conflict diamonds, Wright indicates that the KP has a very specific brief. By the end of July 2006, the conflict diamond issue should be resolved. Personally, he feels the KP needs to keep going: “Should it be stopped, it is a sign that conflict diamonds can start up again.”

An EC member working closely on the KP issue points out that no one can stop all diamond smuggling, but the KP has made it very difficult to bring noncertified diamonds in. He feels that the KP should not surpass its initial mandate. Countries still have a lot to do to implement the KP, and next on the agenda is industry self-regulation. “It is premature to say if the Kimberley Process has worked and we need to follow it closely. However, all teething problems were resolved smoothly,” he says.

Commercial Interests

Rumors that certain, more privileged producing countries may be using the KP for commercial interests — as a way of saying “only our goods are conflict free” — is a concern.

“I would regret it if the Kimberley Process and its review missions were used to make the diamond trade problematic in Africa where diamond revenue is needed for development. We should not overfocus on individual mistakes in starting up the Kimberley Process and eliminate those countries, because in the end the people will suffer. I am afraid when I see especially Canadian sources pushing to investigate African Kimberley Process members; I cannot stop thinking that there might be commercial interests involved. This would be sad as then the Kimberley Process would be in contradiction to what it is meant to do.This is a transitional period where all are thinking of their own interests. I’m always scared when I see commercial interests posed as moral white knights,” comments Meeus.

Paesschierssens agrees that there are certain countries without internal conflict that are in a “comfortable position” and could benefit from the KP. As a world-trading center, however, Antwerp must tackle every import and export issue from countries confronted with internal problems and does not have such an advantage.

De Beers management was shocked at the implication that they were using the KP as a tool to promote their diamonds, claiming that the same could be said about BHP: “We don’t only want De Beers diamonds to be seen as conflict free, because we don’t want other players to fall foul, as this impinges on the image and success of the entire industry. It is interesting to see how the industry pulled together so quickly to address the issue. The pearl industry, for example, is still trying to deal with child labor.”

Leave a Reply

Your email address will not be published.