Conflict Free Diamonds: Really?

For those of us who love diamonds but want only to deal with conflict free diamonds, recent news from Zimbabwe is of concern. It is a good time to review the Kimberley Process and ask whether you can be sure where your diamond comes from!

The Kimberley Process is an alliance of industry, civic and government officials set up to stop the flow of so-called blood diamonds. The process regulates the sale of rough diamonds on an exchange. All lots of diamonds must be Kimberley certified. Only Kimberley certified diamonds are sold in the United States and some 70 other countries that are members of the Kimberley Process.

The Marange fields in Zimbabwe were discovered in 2006. De Beers obtained a concession to mine these fields but let this lapse, due perhaps to the political crisis in Zimbabwe. A frenzied diamond rush ensued by starving and impoverished miners desperately seeking relief from the country’s ongoing humanitarian crises. A thriving black market followed with an estimated 15,000 to 20,000 illegal artisan miners working the land and illegally selling their diamond finds to dealers outside the country.

Marange diamonds are mostly of lower quality (providing for industrial diamonds), but about 5% are gem quality and the mine field could yield up to 1.7 billion US$ in annual earnings representing more than a third of the entire gross national product (GNP) of Zimbabwe. The mine is state-owned and the income goes directly to support Robert Mugabe as the mines are overseen by his party, ZANU-PF, and guarded by an army that reports to him.

Herein lies the problem. Zimbabwe’s Diamond Fields were appropriated forcefully by Mugabe’s people using extreme cruelty. Currently, the diamonds are sold on the black market by his associates including Zimbabwe’s armed forces and the riches support him, his army and his party. A Human Rights Watch report charged that the military killed more than 200 miners and used the push to seize the Marange fields. Moreover the party, ZANU-PF, has used the money from diamonds — smuggled out of the country or illegally sold through the Reserve Bank — to reinforce its hold over the security forces, which seemed to be slipping last year as the value of soldiers’ pay collapsed with soaring inflation. In Dec 2009 there were riots by disaffected soldiers because of lack of pay. Army brigades are being rotated into the diamond fields, so more soldiers can profit from the illegal trade. Villagers from the area, some of them children, are being forced to work in mines controlled by military syndicates and have complained of being harassed, beaten and arrested, the report says.

The World Federation of Diamond Bourses, an umbrella group of 28 bourses in 20 countries, called on its members in April not to trade diamonds that originate in the Marange deposits in Zimbabwe. And now the issue is before the Kimberly Commission which supposedly assures us that diamonds are “conflict free”. To review how the Kimberly Process works here is a bit of history!

Following the resumption of the Angolan civil war by UNITA, a rebel group in Angola, the United Nations passed sanctions that remained ineffective. The UN then empowered Robert Fowler (a Canadian ambassador to the UN) to lead a panel of experts to investigate. UNITA used a number of channels to sell or barter diamonds for cash or weapons. In one such scheme, Joe de Deker, a former stockholder in De Beers, worked with the government of Zaire to supply military equipment to UNITA from 1993 to 1997. De Deker’s brother, Ronnie, was an arms dealer who allegedly traveled with him from South Africa to Angola, trading weapons originating in Eastern Europe. In return, UNITA gave Ronnie bushels of diamonds worth US$6 million. De Deker sent the diamonds to De Beer’s buying office in Antwerp, Belgium. De Beers openly acknowledges spending $500 million on legal and illegal Angolan diamonds in 1992 alone. UNITA made at least $3.72 billion, or 93% of all diamond sales, despite international sanctions.

The Fowler report led to a meeting of Southern African diamond-producing states in Kimberley, Northern Cape in May 2000 and later to the passing of United Nations Security Council Resolution 1295 and the establishment of the Kimberley Process.

In order for a country to be a participant, it must make sure that any diamond originating from the country does not finance a rebel group or other entity seeking to overthrow a UN-recognized government, that every diamond export be accompanied by a Kimberley Process certificate and that no diamond is imported from, or exported to, a non-member of the scheme. By restricting diamond revenues to government-approved sources, the Kimberley Process supports all governments, bad ones and good ones! It also denies revenues to all rebel groups, bad ones and potentially good ones fighting against a repressive regime! The Kimberly scheme is only a soft law and not legally binding. However, failure to comply has led to removal of the non-complying member countries in several cases.

The Kimberly scheme is essentially self-enforced. Supervision of the process is by the Chair, elected on an annual basis at a plenary meeting. This year we have a new chairing country: Israel. Peer review is conducted by a team of experts. They visit member countries and inspect implementation of the scheme. But all of this does not help when the offending party is a government itself, and not a rebel group. This is because the Kimberley Process was not set up to deal with governments like the one headed for many years by Robert Mugabe in Zimbabwe, arguably one of the most cruel and repressive governments on the globe.

As deliberations dragged on in Israel last week, Zimbabwe warned that it might export its diamonds without the approval of the United Nations-backed Kimberley Process. Moreover, there is a divide among the 70 countries that take part in the Kimberley Process. Some take the side of the Mugabe government, as summed up in a opinion piece by Stephen Gowans, and published in the official newspaper of the Zimbabwe government, The Herald, on June 30th 2010.

As reported on June 24th in the New York Times, “a sub-group of the Kimberley Process will try again next month to reach a compromise on Zimbabwe, said Eli Izhakoff, president of the World Diamond Council. He said it would be a very negative development if Zimbabwe traded its diamonds illegally, possibly undermining consumer confidence”.

We could not agree more! The designation “Kimberley Certified” risks becoming meaningless. Whether the perpetrators of violence are a rebel group or a repressive regime is of no concern to the customer. It is good to remember that ultimately the violent strife in Zimbabwe or elsewhere, is funded by the customer buying a diamond ring. Many will see Zimbabwe diamonds as “blood diamonds”.

Sources and further reading:
1) Zimbabwe’s Diamond Fields Enrich Ruling Party, Report Says
By CELIA W. DUGGER, Published: June 26, 2009

2) Diamond Find Could Aid Zimbabwe, and Mugabe
By CELIA W. DUGGER, Published: June 21, 2010

3) Zimbabwe Diamonds Fail to Get Conflict-Free Approval
By CELIA W. DUGGER, Published: June 24, 2010

4) Background: Zimbabwe’s Marange Diamond Mines, by Martin Rapaport.

5) Zimbabwe: Diamonds, When Regime Change is Forever.
Stephen Gowans, June 30, 2010, The Herald (Harare)
Published by the government of Zimbabwe

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One response to “Conflict Free Diamonds: Really?

  1. Marange field diamonds have been auctioned off. The U.S.-based Rapaport Diamond Trading Network, an industry diamond price and information provider, responded to the auction sale by vowing to expel any member that knowingly trades gems from two Zimbabwean mines in the Marange field.

    Meanwhile Kimberly certification is still pending. Apparently they want demilitarization of the Marange field. Thats good.

    My latest sources:
    http://www1.voanews.com/zimbabwe/news/South-Africa–100559529.html
    http://www.washingtontimes.com/news/2010/aug/18/traders-wash-hands-of-zimbabwe-blood-diamonds/

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