TheKimberleyProcess_HasItStoppedtheConflictDiamondTrade_

1、PAGE PAGE 23The Kimberley Process: Has It Stopped the Conflict Diamond Trade?John KohEDGE term paperFall 2003Conflict 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

2、 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 a

3、ccounted 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 $50bn-plus retail trade. (The Financial Times, 2003) Rough diamonds valued at approximately US$

4、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

5、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 Kisanga

6、ni, 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 million a year or more.In view of this issue, talks began in May 2000 in the city of Kimberley, South Africa over possible means by which the ille

7、gal trade in diamonds could be halted. What started out as a consultative process became a negotiating process that culminated in the adoption of the Kimberley Process Certification Scheme (KPCS) at a Ministerial Meeting in Interlaken, Switzerland in November 2002. According to the official website

8、, “(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 schemes to be implemented by each Participant country through national legislation.”How

9、ever, analysts have expressed skepticism about the impact of the process, which some African non-governmental organizations have derided as a “toothless watchdog, chained to a kennel.” (Business Day, January 28, 2003) Jakkie Celliers, director of South Africas Institute for Security Studies and auth

10、or 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 pr

11、oclaimed 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 w

12、here 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 i

13、llicit 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.Wha

14、t 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 a

15、re 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

16、import and export of rough diamonds if those rough diamonds come from or are being exported to another Kimberley Process participant. Shipments of rough diamond exports must be transported in tamper-resistant containers and must be accompanied by a government-validated Kimberley Process certificate.

17、 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 a

18、ll 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 Kimberley Process hinges on a combination of national legislation and industr

19、y self-regulation. 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 first export from a producing countrydiamonds are not tampered with between their dispatch from a producing country a

20、nd their first arrival in a country where they will be cut, polished or tradedcountries 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,

21、Sierra Leone and the Central African RepublicFailure in the Democratic Republic of Congo (DRC)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 n

22、ot 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 DRCs major source of income. Unfort

23、unately, it is estimated that of the US$800 million a year exported annually, half is smuggled out principally through Congo Republic, and sold chiefly in Antwerp. (Muller, PolishedP 2003)Although Congo Republic has complied with Kimberley Process regulations by producing certificates of origin for

24、diamonds that leave the country, authoritative industry sources, including De Beers, claim it has never been a diamond producer and certainly hasnt 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

25、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 the Democratic Republic of Congo reveal that, while the quantity of diamonds r

26、ose, their overall value fell substantially. This implies that the countrys output of higher-value gems is evading the controls of the Democratic Republic of the Congos Centre for Evaluation, Expert Analysis and Certification of Precious Minerals (CEEC). However, there are no up-to-date export figur

27、es from Congo Brazzaville to verify these suspicions. In 2001 the country traded $223m worth of diamonds, mostly from Angola and the Democratic Republic of Congo.Despite numerous requests, Congo Republic officials declined to answer inquiries. The Canadian officials charged with collating global dia

28、mond 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 worlds rough diamonds end up, and where several diamond industry officials say Democratic Republic of Congo gems traded illegally thro

29、ugh 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 transparency.” (Wallis, The Financial Times, 2003)In view of this smuggling problem, Global Witn

30、ess, 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 storie

31、s 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, PolishedP, 2003) The DRC has a 6 per cent export tariff and the CAR 12 per cent. There are also serious questions

32、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. 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 t

33、he 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, inclu

34、ding 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 Deve

35、lopment (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 re

36、solved (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 resolv

37、ed. 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 jurisdiction

38、s 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 aut

39、horities to breaking up and selling off Congos large state-owned mineral resource enterprises, such as the Gecamines copper company, and diamond concern MIBA. The Kimberley Process offers no recourse to either of these suggestions, which may indicate an oversight in the process.In fact, Charles Wynd

40、ham, 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 launde

41、r 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. Politician

42、s, 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

43、 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 UNs Department of Peace Keeping were nervous that any publicity-generating complaints about the rol

44、e neighboring countries still play in arming Congolese militias and trading Congolese minerals could damage one of the UNs trickiest and most expensive peacekeeping operations. But the obvious danger remains that the disparate factions committed officially to Congos peace process will continue fundi

45、ng their movements, armed or otherwise, by illicit means and that this will undermine efforts to pacify and reunite the country. A controversial contract covering most exports from the Democratic Republic of the Congos principal diamond company shows up the murky side of the business and some of the

46、 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 w

47、hich De Beers, the leading force in the diamond industry, is a shareholder. Under the deal, Emaxon received rights to export 88 per cent of MIBAs production over a four-year period in return for loans to MIBA worth $15m. Eugene Ndongola Diomi, the mines minister representing the unarmed opposition i

48、n the countrys 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 expor

49、t arrangements. It has since emerged as a bone of contention between factions in the power-sharing government appointed in July as part of efforts to end Congos five-year war.Reports obtained by the Financial Times allege systematic undervaluation and theft of diamonds at MIBA costing tens of millio

50、ns 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 shortfalls in the application of Kimberley Process recommendations at

51、 MIBA. The transcript of a taped OSS presentation to Joseph Kabila, the Democratic Republic of Congos 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 shipme

52、nts 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 armed opposition group

53、s 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 Congos official copper, gold and other mineral exports. Diamonds, long used by the countrys rulers as a

54、 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 gem

55、s cost the company 30-50 per cent of its revenues that year. Nigel Morgan, former OSS operations director, says of OSSs 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

56、 to the same old tricks.Mixed Success in Sierra LeoneWhile 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 gr

57、eater 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, A

58、FP, 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 import

59、ant 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 through the sale of diamonds. The rebel group Revolutionary United Front (RUF) was able to prolong the bloody conflict that

60、 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 bac