Can KP Stay Viable?

140 95 Rapaport News

RAPAPORT… The annual intercessional meeting of the Kimberley Process (KP) ended in an impasse in Tel Aviv, Israel, on June 24, when members could not come to agreement on whether KP certification should be extended to diamonds from Zimbabwe’s Marange diamond fields in light of alleged human rights abuses of miners in the area. In failing to reach consensus, KP members effectively rejected the report of Abbey Chikane, KP monitor to Zimbabwe, who had recommended that the embargo on Marange diamonds be lifted and they be cleared for export with KP certificates because the mines had met KP’s international standards.

KP Chair Boaz Hirsch of Israel, who declared the impasse after marathon meetings over two days and nights failed to produce an agreement, called for the discussion to continue at a minisummit of major KP stakeholders to be held in conjunction with the World Diamond Council (WDC) annual meeting scheduled for July 14 to 15 in St. Petersburg, Russia.

Commenting on the failed attempt to reach agreement in Tel Aviv, Hirsch said, “This situation is unprecedented in the Kimberley Process meetings but all parties are committed to further engagement. The KP is based on a partnership between government, the diamond industry and the civil society. Deliberations will continue in order to find a consensus-based resolution.” Pending consensus, the embargo remains in place.

Faced with the KP impasse on certifying its diamonds, Zimbabwe threatened to walk away from the organization and sell its rough diamonds on its own without certification. The country has a right to voluntarily suspend itself from the organization, but doing so would revoke its right to export its diamonds legally.

Continuing Controversy

The closed-door meetings of KP stakeholders in Tel Aviv were held against a backdrop of headline-making statements from KP members on both sides of the dispute, including various nongovernmental organizations (NGOs) who have been outspoken stakeholders in KP since its inception in 2003. A member of NGO Global Witness, insisting that human rights abuses in Marange are continuing, said “We’re not in a rush to leave the KP but we might have to.”

A number of NGOs joined in calling for Zimbabwe’s suspension from the KP, Chikane’s suspension as KP monitor, a continuation of the embargo on Zimbabwean diamonds and the immediate release from police custody of NGO activitist Farai Maguwu. Maguwu has been monitoring conditions in Marange and was expected to participate in the discussions in Tel Aviv until he was arrested and jailed by Zimbabwean police in the days leading up to the meeting. In other news, Martin Rapaport, chairman of the Rapaport Group, held a three-day fast outside the Tel Aviv conference doors to protest the KP’s “aiding and abetting of human rights abuses.”

In November 2009, a Joint Work Plan (JWP) was adopted by the KP to solve the issues surrounding the mining operations in Marange so that diamonds from the area could become KP-certified. The intercessional meeting was expected to decide if the JWP had been successfully implemented or whether continued monitoring of the mining area was needed. In light of the admitted ineffectiveness of the KP in combating the abuses, the KP members were also expected to discuss how to strengthen the organization, especially its enforcement powers, and how to protect the integrity of its certification program.

Launched to end the illicit trade in rough diamonds that was funding rebel conflicts in places like Sierra Leone and Angola, the KP was, in its early years, generally considered successful in establishing worldwide certification procedures for diamonds that reduced the presence of so-called “conflict diamonds” in the market. But recent widely publicized human rights abuses by governments against mining populations — especially those alleged in Zimbabwe — and reports of illegal diamond smuggling have harmed the reputation of the KP and, by extension, the diamond industry.

JCK Panel Reviews KP Issues

A panel discussion during the JCK Las Vegas show in early June reviewed the inherent problems in the structure of the KP that restrict its enforcement powers, as well as ways in which the organization could improve its reputation and performance in policing diamond traffic worldwide and in certifying diamonds.

Acknowledging that the KP has flaws, panelists outlined many of the reforms that have been suggested, such as expanding the definition of conflict diamonds to include provisions to address human rights violations, implementing a better decision-making process within KP to avoid the problems of consensus rule, achieving greater transparency in reporting on diamond trafficking issues and establishing more continuity in leadership by installing a dedicated administrative staff to run the organization.

One problem is that all KP decisions are made by consensus so even if a motion has almost universal popular support, one or two member votes against it will keep it from passing. Cecilia Gardner, president and chief executive officer (CEO) for the Jewelers Vigilance Committee (JVC) and general counsel for JVC and the WDC, believes that, despite the KP’s initial focus exclusively on conflict diamonds, governments violating human rights in diamond-producing areas also should be considered in violation of KP standards. “We’ve worked closely with NGOs to integrate human rights goals into the Kimberley agenda, and we’ll continue this process,” she stated during the panel discussion at JCK.

Brad Brooks-Rubin, special advisor for conflict diamonds for the U.S. State Department, noted that there are many human rights issues that must be addressed by the KP, regardless of whether the violators are rebel armies or governments. He added that, in the past, other countries facing KP compliance issues, such as Ghana and Brazil, responded well to efforts to get them to make changes. That has not been the case with Zimbabwe.

Noora Jamsheer, a member of the United Nations (UN) panel of experts on Cote d’Ivoire, explained that once there is political instability in any diamond-producing country, the issue of diamonds — and the profits from their sale — always comes up. The Cote d’Ivoire, for example, remains under UN sanctions on exporting diamond rough. Yet the government seems stable, she reported, although it is still divided and elections have not yet occurred.

“KP was and remains essential to maintaining consumer confidence,” Matt Runci, CEO of Jewelers of America, told the JCK audience, noting that distinctions must be made to address current and future situations where diamonds, as an accessible form of wealth, can be used to terrorize people.

Structure Blocks Decisions

Attendees at the Las Vegas discussion questioned if KP’s consensus-based process has been too slow to address situations like Zimbabwe, under scrutiny since 2007 for alleged violence by the government in taking control of diamond fields. Eli Izhakoff, president of the WDC, admitted to being impatient in regard to Zimbabwe. But he noted that consensus doesn’t always come easy. “We’ve worked very hard to bring all these diverse interests together. We have to work within the system that we have. The success of KP is that it is a process than can be adapted. Now, more than ever, the time is right for people to move and make the right decision.”

The engagement of all parties is vital and “the KP is flexible enough to deal with a wide range of issues,” said John Hall, general manager of corporate relations for Rio Tinto, which operates a mine in Zimbabwe. “It is always better to be at the table than not — to keep talking and looking for solutions. The approach taken by KP is the right one.”

Although the KP is the only international certifying organization for the diamond industry, the panelists in Las Vegas stressed that the KP cannot deal with these issues alone. Runci emphasized the importance of managing realistic expectations. “The Kimberley Process is not a panacea for all the situations in the diamond supply chain that pose some risk for continued consumer confidence,” he said. Noting that KP progress is contingent upon all the players in the supply chain doing their part, Runci advised that “Everyone has a responsibility to remain accountable to their stakeholders and clients — leaving it up to groups like KP and WDC is not enough. Together, we can make effective change.”

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