The Kimberley Process of certification of diamonds, initiated a decade ago at the behest of the global diamond trading industry to screen conflict and blood diamonds (diamonds used by rebel groups to fund their conflict against legitimate governments, or endangering lives to mine diamonds) has remained largely a paper tiger. It has not been able to meet the objectives for which it was set up, that is, to prevent the entry of conflict or blood diamonds into normal diamond trade and their sale worldwide. Either the KP certification process or the global diamond industry needs to be thoroughly overhauled.

The entire purpose of the certification was to deter illegal diamond sales to finance armed conflicts. Since 2003, the Kimberley Process has been a voluntary system with compliance from industry, government, and non-government monitors.

The diamond industry largely polices itself in markets globally, but the international convention doesn’t work well. Global Witness, the London-based NGO that created the KP system, quit in 2011 following complaints that the certification process had been captured by the industry it was designed to regulate.

Major concerns

According to the World Diamond Council and KP, “…less than 1 per cent of the world’s diamonds are conflict diamonds”. Global Witness estimated that conflict diamonds represented as much as 15 per cent of the world’s total diamond supply in the mid- to late-1990s.

Nations where conflict diamonds and illegal money-laundering are of major concern are Guinea, Lebanon, Ghana, Sierra Leone, Ivory Coast, Venezuela, Guyana and Liberia.

These nations contribute an estimated 15 per cent of rough diamond supply (conflict diamonds) to the world. These statistics, however, fail to illustrate the human cost of wars that have claimed millions of lives, the widespread human suffering and devastation, as well as the economic destruction due to these practices.

The KP certification process has been rocked among other things by the smuggling of such stones by armed rebels across borders after illegally mining them and also by periodic heists of diamonds in transit from established suppliers to cutting centres worldwide (in China and India particularly).

From there they are exported to the West, particularly the US and Europe.

Diamonds were stolen in broad daylight by armed men beating the toughest security measures at one of the busiest airports in Belgium in the most recent heist.

Since the diamonds are insured, they are not such a big loss to the exporters or importers who recover their costs through pay-ups on their premia on insurance cover.

What is of concern is that such diamonds find their way into the hands of war-lords, terrorists, smugglers and rebels and finally to cutting centres, mixing with normal diamonds. In the process, the KP process is made impotent. The Brussels airport diamonds going missing should fall under the Kimberly Process rules, which cover “rough” or uncut diamonds, not finished ones.

The stolen diamonds were rough. Till date no one knows where the rocks went or where they have re-appeared.

Time to overhaul

The stolen diamonds go to finance rebellions by terrorists or armed rebels in countries, particularly in Africa, where indentured labour is worked under the most inhuman conditions, violating all laws on human rights, to mine the diamonds.

NGOs worldwide are calling for an overhaul of the KP system or replacing it altogether with the participation of concerned political regimes and the diamond industry so as to make it difficult for such diamonds to find their way to the rest of the world.

Although Customs authorities in India have seized such diamonds in Navsari, they say it’s impossible to tell the conflict or blood diamonds from the legal ones once they are mixed together.

The ineffectiveness of the Kimberley Process has been debated at several international fora. At the International Diamond Conference at Victoria Falls in Zimbabwe last year, Shamiso Mtisi from the Zimbabwe Environmental Law Association (ZELA) pulled up politicians and the industry for skirting issues of accountability and transparency in the diamond trade and mining process and the concerns of local communities such as environmental pollution.

Partnership Africa-Canada reported that diamond proceeds enriched only a few people, and directly attacked the Zimbabwe Minister Mpofu and top military and ZANU PF chiefs. The report claimed hundreds of millions of dollars went missing and billions diverted since 2008.

The report quoted the Finance Minister Tendai Biti as saying that only $46 million was submitted to the treasury when $600 million was expected.

It also claimed that some $ 2 billion of diamond sale proceeds were siphoned off by influential people in power.

Zimbabwe has amazing potential as a diamond producer with the capacity to produce between 110 million to 160 million carats of diamonds annually, making it one of the top five diamond producers by volume in the world.

What is not clear is: Where is the diamond money actually going?

What’s at stake

A perfectly implemented and well-enforced Kimberley Process would not only have benefited Africa, it would have discouraged the stealing of diamonds since the absence of KP certificates would render them worthless.

So what’s at stake today is the credibility of the Kimberley Process.

Is it serving the purpose for which it was founded – to detect blood or conflict diamonds and prevent them from being misused for armed conflicts?

Also at stake are human rights violations such as engaging slave labour and proceeds from diamond sales not reaching the community to which it belongs but being spirited away by an elite few.

Only a transparent and effective KP can help prevent this. Or a totally new systemto safeguard the interests of genuine players and those who actually mine and ‘make’ the stones.

(The author is former Economics Editor of PTI. He is now researching the diamond industry.)

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