Interview with the New State Dept. Advisor of Conflict Minerals

Pamela Fierst-Walsh, senior advisor on conflict minerals and U.S. representative to the Kimberley Process, took some time to speak with JCK yesterday. Here, she speaks about why the Kimberley Process continues to be insufficient, the potential of blockchain, and the sanctions against Russia and Dan Gertler:

JCK: How does the State Department view its engagement with the diamond and jewelry industry?

Pamela Fierst-Walsh: If there is one thing we would like the industry to know it is that while the Kimberley Process is a really great start, we consider it just that, a start. It’s a floor. It’s not a ceiling. Industry needs to be looking at whether it’s sufficient to meet the needs of modern consumers.

It’s a really exciting time because so much of the supply chain for jewelry and for diamonds is pursuing the trend of responsible sourcing. It’s an exciting time to be part of the conversation.

JCK: Why is the State Department so interested in the concept of responsible sourcing?

Fierst-Walsh: Our interest in responsible sourcing is really a reflection of what the U.S. consumer is looking for. People in the industry consistently say that the modern consumer, and in particular the American consumer, is looking to feel good about the purchase that they make when it comes to purchasing jewelry. It matters to them so it matters to us.

JCK: What about the chance of diamonds and other objects being used for money laundering and to finance terrorism?

Fierst-Walsh: That’s another part of the work that we do. It’s important that valuable things are not enriching bad people. It’s important people know more about their supply chain and their customer’s customers, and that could include bad actors, of course.

JCK: You also oversee conflict minerals. What do you see as the current state of play with responsible sourcing of gold, especially in relation to Dodd-Frank, Sect. 1502?

Fierst-Walsh: Gold continues to present a lot of challenges. There are a lot of opportunities for those who source gold to do it responsibly. There are real challenges to it because gold is so portable and so profitable. As more people go mine to market, we start to see a proof of concept. A few years ago, people said there is no way you could track gold. But now folks are saying, yes you can.

JCK: How do you see the current state of the Kimberley Process?

Fierst-Walsh: The Kimberley Process is important. It has a lot of history and it has done a lot of good. We will continue to enforce it. It needs to modernize its standards. We are working very closely with our colleagues on an ad hoc committee to support a Kimberley Process that can meaningfully reflect the needs put on our supply chains.

We need to have a more meaningful approach to what the KP stands for. It needs to reassess its reputation. Its hopes started out really high and it’s met a lot of those hopes. But there are too many gaps in the concept of KP compliance and what people think it means.

JCK: What do you think of IMPACT leaving the KP?

Fierst-Walsh: That was such a bummer, to put it mildly. It was like seeing an old friend leave but you have to respect their position. They have endured a lot in the last few years and felt their time and resources are better spent elsewhere. I respect their position. Civil society continues to have representation in the Process but that was a real symbolic loss.

JCK: What specific reforms would you like to see in the KP?

Fierst-Walsh: We need to have a look at what the definition of conflict diamonds means. I run into people who think it means a Band-Aid of things and conditions in the diamond industry. They are surprised to hear the definition is as narrow as it is. We would like to see some movement on expanding it.

JCK: What do you think of the role blockchain can play in responsible sourcing?

Fierst-Walsh: Blockchain is exciting. It’s everywhere. It has a lot to offer the responsible sourcing world. Jewelry has everything to gain by embracing technology. I hope people are taking into account artisanal miners and how they get access to the technology that underpins blockchain. There is a real risk that you can you leave out a lot of people.

JCK: What do you see as the big problem areas for the jewelry industry?

Fierst-Walsh: The Kimberley Process has an ongoing concern with Central African Republic (CAR). There are a lot of carats getting out of the CAR. We don’t know where they are going. That example shows the importance of including a responsible sourcing approach. It demonstrates you can have a Kimberley Process certificate and that’s great, but look at how many stones are unaccounted for.

JCK: We currently have sanctions against Russia. Do you think there will be sanctions against Russian diamonds?

Fierst-Walsh: I have no way of speculating. I have no way of knowing.

JCK: Diamond magnate Dan Gertler was recently sanctioned by the U.S. Treasury Department. Do you expect the government to enforce those sanctions?

Fierst-Walsh: If you have been sanctioned, consider it enforced. Dan Gertler was sanctioned. That is no small tool. It is a really impactful way to get at corruption and improper enforcement. If I were a Dan Gertler, I’d be aware of this new tool.

JCK: How do U.S. companies avoid dealing with sanctioned individuals like Mr. Gertler?

Fierst-Walsh: That’s a good question. I feel I have answered it. You have to know your customer.

(Image courtesy of the U.S. Department of State)

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JCK News Director