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The Year Ahead for the Kimberley Process

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The world’s blood diamond watchdog, called the Kimberley Process (KP), has never been very effective. The KP is too weak to prevent most blood diamonds from entering the diamond supply. But a new year is upon us, and with it comes new possibilities. Could 2017 be the year when the KP finally turns over a new leaf?

Although we doubt that the KP is about to suddenly get tough on blood diamonds, this may be its best chance in years to enact a reform agenda.

 

The KP was founded about 15 years ago with the goal of breaking the link between diamond mining and violence. Ever since, it’s done a poor job at accomplishing that important mission. The fundamental problem is that the KP is too narrowly focused on stopping “conflict diamonds,” which it defines as diamonds that finance civil wars. If diamonds are mined in violent conditions but in a place where there is no civil war, the KP doesn’t get involved. In Angola, for example, private security firms and the military have a history of killing or torturing people in an effort to control the diamond wealth. Because the associated diamonds don’t qualify as conflict diamonds, they get integrated into the certified diamond supply.

 

Another issue is that the KP isn’t an organization with its own enforcement capabilities. It’s a coalition of 80-odd countries that have pledged to regulate the diamond trade and trade gems only with each other. This means that when a single country gets lax—allowing blood diamonds to enter legal channels—the whole diamond supply is affected.  A good example, described in a recent report, is the smuggling of blood diamonds out of the war-torn Central African Republic (CAR) and into neighboring Cameroon. From there, the diamonds are allowed to enter the diamond supply with KP certification.

 

The KP is weak in other ways. A lack of regulation and coordination among KP countries makes tax evasion easy. The biggest offender in this regard is the United Arab Emirates (UAE). By allowing the import of undervalued diamonds, the UAE makes it easy for exporters in diamond producing countries to pay only token export taxes when shipping diamonds to Dubai. The UAE’s regulatory practices deprive African treasuries of tens of millions of dollars per year—money that African countries could be using to reduce poverty.

 

All of these problems need to be addressed. Regrettably, fixing them has not been a priority. The KP is deeply divided between countries that want tighter regulation of the diamond trade and those that don’t. And lately, countries that would prefer a weak KP have had the upper hand.

 

The KP’s leadership in recent years is the best illustration. Each year, KP member countries select a different government to serve as the certification scheme’s leader, or Chair. That government hosts two KP meetings and shapes the KP agenda. In 2015, the KP Chair was Angola. In 2016, it was the UAE. So essentially, KP’s last two leaders have been a producer of blood diamonds and an enabler of tax evasion, respectively. Unsurprisingly, neither has been too interested in serious reform.

 

The good news is the KP may be moving in a more positive direction. Dynamics could be changing in a way that puts reform back on the table.

 

One encouraging sign is the way that civil society groups, or NGOs, have been banding together and fighting for change. NGOs, along with the diamond industry, have always participated in the KP as observers. NGO participation is welcomed in the KP because it lends the certification scheme more credibility. This past year, however, the KP’s 11 participating NGOs boycotted the two annual meetings in protest of the selection of the UAE as the KP’s leader.

 

In many ways the boycott failed because it did not lead to a change in the UAE’s own regulatory practices. However, the boycott pushed the UAE to make concessions to win back NGO participation. As Chair, the UAE proposed steps to reduce tax evasion by standardizing the way diamonds are valued. It also explored the idea of strengthening the KP by giving it a permanent home in the United Nations.

 

In the end, the boycott demonstrated that NGOs have the power to affect KP priorities. They’ll be listened to if they make enough of a fuss. Moreover, by not giving up on the boycott when the UAE offered concessions, the NGOs showed they could stick together. The only thing we wonder is why NGOs didn’t stage a boycott in 2015, when Angola was Chair. Going forward, we hope that NGOs recognize their own influence and continue to use it.

 

The NGOs will need help. They may get it, however. Australia has been selected as the new Chair for 2017, and the European Union is slated to become the Chair in 2018. Together with the NGO coalition, we expect that Australia and the EU will try to address some of the KP’s weaknesses. We also expect that rising demand for responsibly sourced jewelry will continue to build pressure for KP reform.

 

There are still many obstacles to overcome. But the next two years could be the best chance since 2012, when the United States served as Chair, to strengthen the KP.

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