A Report Card on Progress Toward Eliminating Conflict Diamonds

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Amy Parodi
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For decades, a diamond has been evaluated by four criteria: carat, cut, clarity and color. The higher the grade on these indices, the more valuable the stone. But for the last three years, a fifth criteria has become even more important for buyers and sellers: conflict - that is, whether profits from a diamond have help fund wars in Sierra Leone, Angola and the Democratic Republic of the Congo.

Governments, the diamond industry and NGOs have been meeting since May 2000 to create a certification system that will end the trade in conflict diamonds in an effort called the Kimberely Process (KP). The following is a report card on what they have accomplished.

Subject	Grade	Comments
Controls in Producing Countries	B-	Comprehensive details have been finalized; the major challenge will be monitoring and enforcement (see below) Some countries have already taken action: Botswana has reviewed its legislation and regulatory framework for KP compliance; Namibia’s new Diamond Act is aimed at KP compliance.
Controls in Trading & Consumer Countries	C	Details agreed but some countries are still reluctant to implement new procedures. The European Union will either dismantle existing controls in some countries (e.g. Belgium), or extend controls to all EU countries. It must be the latter. Adequate EU controls must be installed throughout the EU as most EU members have few or no diamond controls of any sort at present.
The Certificate of Origin	A	The actual certificate format has been well developed and agreed to by all producing countries. Working examples now exist in Angola, Sierra Leone and Guinea.
Re-Export Certificate	C-	Principle now accepted that trading countries (e.g. Israel, Belgium, US, UK) must ‘guarantee’ to the best of their ability that diamonds in their systems are conflict-free. Some countries are balking at cost and complexity; there are differences of opinion as to what a government can actually guarantee.
Industry Chain of Warranties	B	The World Diamond Council (WDC) has proposed an industry-managed ‘chain of warranties’ in each producing and trading country. This may be audited by governments as required. Details have yet to be worked out, but the principle is essential to ensure good controls at all levels of the chain. Any industry-sponsored mechanism must be regulated and monitored by governments; voluntary approaches are unsatisfactory.
WTO Issues	F	The US, Canada and others do not want the diamond certification system to be viewed as “a restriction on trade”, and want the system to comply with interpreted WTO regulations. They propose allowing everybody to enter the system. Other countries want basic standards for entry. There are solutions to this, but KP members have left this issue to the 11th hour, and still they remain as divided and confused on the subject as they were on Valentine’s Day 2001.
Statistics	F	There is general agreement that good statistics on the production and the trade of rough diamonds are essential to stopping the trade in blood diamonds. Yet four plenary meetings and several working groups have so far failed to muster enough political will to codify this provision.
Coordination	F	While all recognize the need for a secretariat function, many countries—especially Russia and the US—do not want to address this practical reality. In fact coordination issues have not been discussed in any of the 12 KP meetings because of worries about the cost and authority of a secretariat. The KP needs backup on data gathering and analysis, the organization of reviews, and problem identification. It also needs a dispute mechanism, and deterrents for countries failing to meet minimum standards.
Monitoring	F	Credible, independent monitoring of national systems and the industry warranties is the key to an effective system. Current monitoring provisions are tentative, timid, voluntary, and optional. Shoddy monitoring systems assist traffickers in conflict diamonds by covering their trail with bogus paperwork. Russia, China, Israel and others actively support the current weak provisions. No government, has championed an effective monitoring system. Where there is weak monitoring, only the killers win.

Overall Grade: An ‘A’ for multiple meetings with lengthy deliberations. An ‘F’ for not doing the job that the UN General Assembly called for in December 2000: a system that is effective, pragmatic and transparent, with “appropriate measures to help ensure compliance.” The system as it currently exists will be neither effective nor transparent. It is a watchdog without teeth, and, as currently drafted, it could actually make it easier to trade in conflict diamonds.


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