After it had long become public knowledge that ‘blood diamonds’ were fuelling some of Africa’s most horrendous wars – most especially those of Angola, Democratic Republic of Congo (DRC), Liberia and Sierra Leone – the Kimberley Process Certification Scheme (KPCS) was finally brought into effect in 2003, with the endorsement of both the UN General Assembly and the World Trade Organization.
Backed by domestic legislation in some 75 countries, the KPCS aimed to stop the diamond-fuelled violence – and to prevent its return – by regulating the global trade in rough diamonds. The key elements of the scheme were: (i) that each exporting member country agreed to certify its rough diamonds as ‘clean’; and (ii) that no member country would import diamonds except from other member states signed up to the process. For a while, the process seemed to work. But crooks always look for ways to beat the law, and regulators must stay one step ahead. In the case of the KPCS, the regulators have consistently fallen three steps behind, failing on almost every occasion when a breach has been identified.
Currently, in Angola, DRC and Liberia, the internal controls are grossly inadequate. In Venezuela, since 2007, 100 percent of the country’s diamonds have been smuggled out. In Zimbabwe, the government still confiscates mining companies willy-nilly, artisanal miners are beaten and murdered, and government-tainted smuggling is rampant. The KPCS has done nothing about any of this, and as a result has little remaining credibility. What next? In our post 9/11 world, it seems unlikely that Western governments will allow a return to the chaotic diamond economy of the 1990s, with billions of dollars in unregulated stones sloshing around the global money laundry. Diamonds are too important to the economies of too many countries – both poor and rich – to be left to the wiles of those who are happy to use fig leaves.
The KPCS has teeth if it cares to bite, but it has been hobbled by ridiculous inbuilt weaknesses, its pandering to dictators like Hugo Chavez and Robert Mugabe, and an appetite for endless debate. An industry built precariously on the sale of engagement rings nearly collapsed at the height of the global financial crisis, and it now seems to be courting yet another commercial disaster.
There has been talk of a ‘KP-Plus’ system in which some like-minded countries – perhaps the USA, Canada, Israel and Australia – could create a new KP-based certification arrangement, but one with independent third party monitoring, meaningful sanctions for non-compliance and a decision-making process that doesn’t require unanimity from countries with vested interests or those facing disciplinary action. If KP-Plus diamonds were to develop a commercial advantage and if the rest were downgraded to ‘dubious’, other KPCS member states might soon flock to the new regime, leaving Zimbabwe and those who believe in fig leaves behind.
