Kimberley Chaos

I attended the Jewelers of America Show in New York, as I have for decades. The show bore all the scars of the industry’s fight to survive and rebuild in today’s transformed economy.

My conversations with retailers and suppliers sounded like those in previous recessions, only worse. Suppliers spoke of low levels of business, cutbacks in overhead and personnel, inventory reduction, and careful monitoring of collections. Retailers spoke of rebuilding cash, exploring new types of lower-price merchandise, limited buying, and concern that Christmas might not show up.

As if that isn’t enough, the "green" wave presents new challenges. The public has responded to the long overdue drive to confront huge environmental and social problems. Even politicians finally are responding.

However long it may take, and it won’t be that long, economic exploitation of poor or underdeveloped nations will become anathema. For the first time that I can recall, people at the JA Show brought up the question of conflict diamonds, rogue nations, and dirty gold.

One young and talented designer asked me how she could be sure she was buying nonconflict diamonds. I was hard pressed to give a definitive answer. Sure, she could go to De Beers sightholders, or those of Rio Tinto or BHP. De Beers, after all, has a best practices policy, and Rio Tinto and BHP have nonconflict diamonds from Australia and Canada. In any case, all U.S.-based diamond companies, by law, must deal only in diamonds that come into the country with Kimberley certificates.

But this designer knows the realities. No sight-holder can conduct business using only diamonds that come from their sights. They all trade in rough and polished to fill their needs and dispose of overstocks. We don’t really know where those open-market diamonds come from, since plenty of people mix uncertified goods with certified.

I’ve always held that the Kimberley Process made honest people more honest, but only made things a bit more complicated for the crooks. It never meant that illegal diamonds would get trashed. Illegal goods were smuggled into countries that were Kimberley compliant (as was the case in Liberia, for example), counterfeit certificates were produced and used in various countries, and the illegal trade rolled on.

The recent resignation from the Kimberley Process board by Ian Smillie, who came from Global Witness to be a founding member of the Kimberley Process, emphasized the difficulty of enforcing Kimberley rules, especially when there are blatant cases of indifferent countries like Zimbabwe and Venezuela. Smillie is a highly regarded and dedicated proponent of strong enforcement, but even he became frustrated at the impossibility of proper controls. It’s the same failure that we see in drug enforcement. Desperate people and criminals are nearly impossible to stop, as we see in pirating off the Somali coast and in the appalling conditions at the Marange diamond mine in Zimbabwe.

The questions we have in mind are two: Will the American public force the issue on us? And, are there reasonable and workable solutions? Probably not to both. Were we a nation that responds to tyranny and mayhem overseas, we would legalize drugs, destroy the criminal trade in drugs, and spend a fraction of the billions used on the drug wars to help those with addictions. That alone would kill the funding of Taliban forces in Afghanistan and Pakistan. It is not as if we have any chance of getting American drug users off the habit now.

Diamonds and rubies are a bit different, of course. We want to believe retailers who say they have only conflict-free stones. And they want to believe the suppliers who give them warranties. But that warranty trail leads overseas, where anything might happen—and does. Tiffany will not sell rubies so long as there is a chance that a ruby is tainted with Myanmar’s abuses. (President Obama just renewed a ban on Myanmar rubies.)

But will they stop selling diamonds? Unlikely. They might as well close their doors. Tiffany does buy productions directly from mines and monitors how they’re processed. And they place severe tracking demands on suppliers. But the rest of the trade can’t do that.

The only real solution is to solve the abuses themselves through diplomatic and international pressure. There are always new tyrants arising, but this is the only path that will truly work.

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