Another KP Crisis, Another Game of Chicken

The news that Kimberley Process monitor Abbey Chikane has
visited Marange
to certify diamonds without the organization’s official
approval is strange, in that another meeting to discuss the KP/Zimbabwe
issue is set to take place in Belgium next week. Most hope that this new
meeting will resolve the ongoing stalemate—which is now mostly between Canada
and Zimbabwe. But Chikane’s visit could further scramble things.

I spoke very briefly to Chikane yesterday, although our
conversation was hampered by a bad connection. He seemed to indicate that he
was simply okaying the diamonds in advance of the KP’s official agreement. If this
was his intention (and this is probably the most benevolent explanation for his
actions), it still makes no sense for him to do this without official KP
approval. It creates a headache for the current KP chair, who had
to issue a statement today
warning people not to buy Marange diamonds. 

Whoever’s idea all this was, it puts Zimbabwe in a far
weaker position than it was in coming out of Jerusalem. One of the issues in negotiations was
whether the exports from the two compliant mines would have to be okayed by a
monitor. Zimbabwe had, in the past, fought that. Now, by having Chikane there,
they have, one could argue, basically agreed to supervised exports. And they
will do it with a far less sympathetic monitor than Chikane, who almost
certainly will not retain that role going forward.

Now, all this assumes an eventual agreement, which is probably
the best-case scenario from the KP’s perspective. The worst is that there either is no deal, or Zimbabwe
attempts to export the goods this week with Chikane’s signature.

For the moment, there is no evidence that the so-called “approved”
goods have left Zimbabwe. And completing the sales won’t be easy. The diamond companies,
assuming they want to go ahead with any sales, may have trouble getting
insurance or bank financing. They may also find themselves pariahs in the
diamond world, and vulnerable to losing client status from De Beers and other
miners.  

But there is also the “nuclear option”—a legal challenge. For all the
fighting over the “joint work plan” negotiated last year, it operates in kind
of a legal grey area. Every participating KP country has laws requiring that
rough diamonds can only be imported with KP certification.  

Remember, the KP has not suspended Zimbabwe. However, goods
from Marange have been barred from export, due to the joint work plan that was
negotiated under the KP auspices. But things like “joint work plans” were never
envisioned when the KP was created. As planned, a country was either “in,”
or “out,” via a suspension. (KP architect Ian Smillie has made this argument.)  So this kind of structure isn’t
addressed in most countries’ legislation. Therefore the “joint work plan” with Zimbabwe
in particular is vulnerable to legal challenge. 

And, of course, the KP itself may be brought up in front of
the E.U. antitrust division, and its waiver from the World Trade Organization
could be challenged. (Ironically,
the country that applied for that waiver is India, whose diamantaires now seek
Zim goods.) Losing any of these fights would basically kill it.

Now, I doubt it will come to this. But what is missing here is
respect for the KP as an institution. Over the last few months, a long list of
people have threatened to withdraw support for the KP. The NGOs have done it
several times. The government in Namibia threatened to
bolt in St. Petersburg. I can’t count the amount of times Zimbabwe has said it
will walk. 

This weakens the KP overall. And in the end, the Kimberley
Process is in everyone’s best interest. If the KP is going to survive and prosper
going forward—and that is far from certain—all the participants must be far
more committed to it, both in their actions, and in their public statements. It
is never going to be perfect, and people may not agree with every decision it
makes. But the diamond world is better because it has a KP. So stakeholders
must decide: Are they in, or are they out?

One final note: Don’t discount psychological factors here.
Zimbabwe obviously hates having to ask for permission to export its diamonds.
But it’s also reaping certain benefits. Mugabe’s Zimbabwe is a pariah
country. As a result of this Kimberley fracas, it has most of the world
supporting it, and governments like the U.S. and Canada negotiating with its officials. That could be a reason Zimbabwe has not (yet) used the
“nuclear option”; it is enjoying the ride.

Chaim Even-Zohar has his say on all this here, I disagree with some of his points, particularly his thoughts
on Chikane’s mission, but I do have some ideas on how the NGOs can be more
effective, which I hope to get to soon.

JCK News Director