The Kimberley Process, at War With Itself

The Kimberley Process, famously established to stop civil
wars, may now be suffering from its own internal strife.

To understand why the KP is at the very ugly point that it’s
at, let me give you some background: 

For the last year and a half, as we know, the Kimberley
Process has been trying to figure out how to handle exports from the region of
Marange. Just about all parties have basically agreed to an export resumption from
the two mines in the area said to be compliant with KP standards. The only
sticking point is how Marange will be monitored going forward. 

When the KP’s Working Group on Monitoring, which had been
charged to resolve this situation, met in November to hammer out a deal, the negotiated agreement included a clause—the so-called “violence clause”—laying out a method to stop further exports from Marange, should violence resume. Zimbabwe was said to be unhappy with that mechanism (basically, it felt stopping exports was too easy). But, even so, the agreement was sent
out to the group, and, when no one objected within the alloted period, 2010 KP chair Boaz Hirsch officially declared
it ratified
on Jan. 18.

Enter 2011 KP chair Mathieu Yamba, a representative of the
Democratic Republic of Congo, widely considered to be sympathetic
to Zimbabwe. On Feb. 4, Yamba sent
out a notice
saying the agreement wasn’t
ratified, as Namibia (a Zim ally) actually had objected to the agreement, even though no one recalls
receiving Namibia’s email with an objection. At that point, many began to
suspect Zimbabwe was just ignoring the KP and smuggling out Marange diamonds
regardless.

That wasn’t good, but soon it got even worse. On March 19, Yamba,
citing “a lack of consensus,” sent out a communiqué, declaring in an “Administrative Decision” that Marange could export …

With immediate effect, Zimbabwe is
hereby authorized to resume exports from the complaint mining operations of
Mbada and Canadile (Marange.) The exports shall include the stockpile of both
Mbada and Canadile (Marange) as well as their current production (excluding the
2007-2009 stockpile.) Should the WGM fail to reach a consensus on the Draft Administrative
Decision at the [November] Intercessional, exports shall continue until the Administrative
Decision is passed.

I have posted the full notice here. Yamba’s
administrative decision, posted here,
includes what are considered Zimbabwe-friendly changes to the “violence clause” (they are in red in the posted document.)

Members of the Working Group of Monitoring told me they had
no idea this was coming, and were not happy about it. In response, WGM chairman
Stephane Chardon, a representative of the European Union, sent out an email declaring
that there was in fact “no consensus,” and that “further consultations are
required before Marange diamonds can be traded under the KP.”

This was followed by the U.S. State Dept. taking an even tougher
stance, announcing that, in the absence of an agreement that everyone has
signed off on, America still views those Marange diamonds as non-compliant, and
will take measures against them. in other messages, the State Dept. has discussed possibly referring any companies that buy those stones to the Office
of Foreign Assets Control
(OFAC).

So right now, we have the KP chairman saying one thing, and
the chairman of the WGM saying another—and the U.S. warning it’s going to take
every measure at its disposal to render the chairman’s decision meaningless.

Here are some quick thoughts:

– Many were leery when DRC took over its current leadership
role. Sad to say, the chairman is “living down” to expectations. His announcement
makes a mockery of the KP’s consensus-based model and should not be allowed to
stand. (Mind you, the consensus model probably needs some tweaking. But the rules
are the rules.) By the way, the chairman has not responded to JCK’s email inquiries, but we welcome his views.

– The KP is, among other things, very new, and its rules are continually evolving. While apparently there have been “terms of reference” passed limiting the Chairman’s power, some of the people I spoke to were legitimately puzzled: Whose word goes here—the Chairman’s, or the Working Group’s? 

– Along those lines, no one is sure what the industry should do about this. Discussions are
now taking place to puzzle this out. If the KP chairman says these diamonds are
okay to export, can the World Diamond Council declare people shouldn’t buy them?
(This is a very different situation from the “rogue”
monitor incident
a few months back.) I am hoping that the industry will be
very careful, and recommend that no company buy Marange diamonds until this is
100% sorted out. Which, hopefully, it will be soon …

 

UPDATE: Jewelers of America and the Diamond Manufacturers and Importers of America have put out a statement on the situation. And De Beers sent out a notice urging sightholders to “exercise caution” given the “apparent inconsistency” of the Chairman’s decision. 

JCK News Director