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And Where Is Industry Leadership To Overcome KP Structural Obstacles?

There can be no better evidence that the Kimberley Process (KP) is not BS than the debate it stirs up. I am pleased that two eminent figures connected to the KP, Ian Smillie and former Chair Ahmed Bin Sulayem, chose to respond to a recent article of mine, which itself was prompted by the report that was posted on this site about a debate at a recent industry conference. It is, of course, difficult debate that brought the KP to life, and it is that same level of debate that will keep efforts going to address conflict diamonds, and broader issues in the diamond supply chain.

I write to clarify a couple of points and then ask two fundamental questions of Smillie and Bin Sulayem in the first instance, but really, I ask it of the entire KP and broader diamond industry. Because it is, when all is said and done, up to the industry to decide what really happens to the KP. 

What evidence is there that real change can be brought to the KP now, after 15 years, within the current framework? Who within the broader industry (because it is up to industry in the end, and this goes far beyond the World Diamond Council) will take the mantle and lead a real effort on the next steps needed for change? It is, in the end, almost entirely up to industry, which remains largely silent in this debate.

First, some clarifications (I will leave aside the need to address the standard hyperbolic and rhetorical distractions that the former KP Chair begins his piece with):

  • Conflict diamonds were and remain a serious concern, with grave human consequences. The KP, which was established to address this scourge, is and has been a serious effort that deserves due respect and recognition. I presumed both would go without saying in a short op-ed, but let me no longer presume and reiterate the points both Smillie and Bin Sulayem made about how critical this effort is. And to be clear, for that reason, I think the critical role that the KP plays can and should be both deeper and broader than it currently is.
  • Both suggest I think there is no merit in certification. My view is that there is merit to some limited degree at present, and there could be much, much more, as was intended in 2000-02. My reflection was not on what certification might be able to do, but on how the KP currently administers and uses certification, which is a very poor substitute for what was intended or is possible. So, as of now, within the way the KP actually works (in the real world), most certificates issued and collected by governments do little to fundamentally address concerns about conflict diamonds and are made no use of at all when it comes to how they could be analysed to address broader issues in the sector. If this could change, I would be all for it.
  • Both Smillie and Bin Sulayem imply that I am suggesting the KP evolve and move beyond a universal certification system lightly, and no matter what. The opposite is true. Were meaningful reform possible within the current structure, I would wholeheartedly support it, as I worked to do throughout my time in the KP, especially when we had the privilege and responsibility to serve as KP Chair.  During the US Chairmanship in 2012, in close coordination with the Committee on KP Reform led by Botswana and Canada, Ambassador Milovanovic and our whole team worked very hard to achieve consensus on a number of reforms to address precisely the issues raised by both: a revised peer review system, a new system to address KP certificate data anomalies, a clarified and consistent approach to deal with non-compliance, a basic administrative support mechanism, and, most of all, the Washington Declaration to advance KP efforts to promote sustainable economic development for artisanal miners. 

But of course, much was left undone, as it always is in any initiative, and, after leaving the KP in mid-2013, I fully expected the KP to continue these efforts in the subsequent years and develop further innovation to address the problems. I did believe reform was possible, and said so publicly, but precious little has been achieved since. The UAE, for its part, put many worthy ideas on the table that were taken note of by the Plenary last year, but was unable to see them through to meaningful action and adoption

So, we see that many critical issues remain, such as these recounted by both Smillie and Bin Sulayem: 

  • Meaningful efforts to address discrepancies and anomalies that highlight potentially serious problems in the certification and data collection system; 
  • A strong administrative function (an idea, I note, that the UAE worked hard to oppose before coming around to support); 
  • Poor overall functioning, communication, and delays that impact participants, especially ones facing non-compliance actions; 
  • Strong participation from both industry and civil society (the UAE role vis-à-vis civil society is particularly problematic, but that is material for another piece); and 
  • A significant overhaul to the approach to rough diamond valuation.

Leaving aside particular nuances on any of these specific issues or the proposals they make, I agree these are all worthy of debate. Of course, there are many other critical issues as well that are not on this list, but even these would have enormous impact. 

But, the starting premise for my proposition to end universal KP certification was this: there is no chance, within the current trajectory of the KP, that these will ever be more than debates, and probably half-hearted ones at that. If anyone, including Smillie and Bin Sulayem, or the current or future KP Chairs, can show me otherwise, I will happily write a retraction (these articles are, in some ways, unhappy retractions of many previous KP defences). It is enough for Bin Sulayem to write that the KP should act on his proposals; if it were, they would have been adopted in 2016.

This is a KP “review year,” which comes every 5 years, but there is no committee established to work on review as there has been in the past, and no clear public agenda for reform has been established yet by the Australian Chair. The Intersessional comes early in the calendar, before most governments will have had a chance to develop their own plans. Both the EU and India, which will lead in the coming years, will face internal difficulties in bringing bold ideas forward for action, whether from within their government structures or their industries.

Usually, when explaining why the KP cannot reform, we focus on the weak structures in the “organisation” and the challenge of reaching consensus in a politicised initiative. But I believe it is more than that — the underlying certification system is no longer an opportunity and incentive for making the KP work; it is an obstacle.

As conceived, universal certification offered the ultimate incentive and gravest consequence: inclusion in, or exclusion from, the formal diamond supply chain. Of course, no one presumed all smuggling would be eliminated, but the concept of creating a fence around the supply chain was a worthy one, especially when the initiative focussed on an agreed-upon issue and approach: preventing rough diamonds from fuelling militias seeking to overthrow legitimate governments from entering the supply chain. This, of course, remains the only substantive issue that can prevent rough diamonds from being certified within the KP.

Over time, as would be expected, the issues of interest to various KP stakeholders have changed. These range from human rights and other forms of conflict to sustainable economic development to supply chain fairness and consistency. But, so long as there is a certification system underneath, premised on a single issue, that can result in exclusion from the formal supply chain, the KP cannot evolve to include these. How can a government or its industry risk exclusion by allowing real discussion of other issues that may be present within such a system? 

Yet, when the concept of bringing these issues to other forums is raised, because the KP just focuses on this one issue, then the usual response is that these other issues must be addressed within the KP. Why the contradiction? Because the KP is a universal system that costs significant human and financial resources to implement, so how can we allow other systems to emerge? And if those systems raise issues that then bring into question KP compliance, they can threaten access to the supply chain. Although this is often manipulated by some governments into scare tactics about neo-colonial efforts to exclude African diamonds, Bin Sulayem rightly points out that the challenges in the US compliance system make this a potential concern in Washington and New York as well. 

This even extends to the divisive debate about something so basic as a secretariat, something even the simplest initiative has, because of the potential for the staff of that secretariat to influence access to the supply chain.

So I believe KP participants will not allow evolution or real expansion when they face this type of consequence, and no manner of diplomatic outreach to them will suffice. And, again, I believe there is simply no evidence to support the view that a dramatically overhauled certification system with rigorous data collection, analysis, and enforcement will emerge unless the diamond industry were to decide to fund and support it.

That leaves two options:

  • Remove certification and attempt a new approach within the current framework of stakeholders that focuses instead on the many critical issues within the diamond supply chain, but without the specific exclusionary legal mechanism of certification. Many other supply chain initiatives function successfully without this — in fact, they basically all do.
  • Achieve no real progress on reform, and keep having these same debates year after year within the KP, while spending millions on the existing system. This would maintain a level of certainty for the industry and stakeholders and provide a starting point for all, which could certainly be lost if certification is eliminated.

I recognise this may remain a largely academic debate, so long as the KP is managed by governments and the industry is almost entirely absent. The KP is not a true multi-stakeholder initiative because governments have the only votes that count; industry and civil society are merely observers. But the choice of what really happens will be made by one of those observer groups — industry.

Relatively few within the industry truly understand the KP or could explain more than the most basic elements of how it actually works. Although companies within certain parts of the supply chain do devote resources to compliance, this is often more of a check-box approach than meaningful engagement. Yet the industry is the sector that actually is in the place of explaining the KP — when doing so to the consumer — more than anyone else. And, arguably, industry is the main beneficiary of the system, given the claims made by many in industry about how the KP supports claims that a diamond is “clean.” 

So, having heard from members of civil society and from a government representative, I ask in conclusion — where is industry? What is industry’s view?

Can industry devote the real resources necessary to ensure that the potential for the KP certification system described by Smillie and Bin Sulayem is realised, so that it is robust and meaningful? That data is analysed properly, anomalies addressed, and issues mitigated? That the appropriate level of engagement is had within the manufacturing and retail sectors so that supply chain issues within the KP are understood and addressed? That the system itself functions better?

Or will industry indicate that certification is no longer the right, cost-effective, or impactful approach, and that, consistent with supply chain due diligence concepts being developed by industry to implement the UN Guiding Principles (UN reference document here) and other mechanisms, that we can move beyond certification? Will industry support the concept that due diligence can enable these deeper supply chain concerns to be more meaningfully addressed? Will the industry live up to its responsibilities under the Guiding Principles to implement systems to ensure respect for human rights?

Either way, until there is a clear answer from industry, I see no evidence for the potential of KP reform within the current framework at the level it is needed. So, rather than continuing to beat up that system, let’s have these stakeholders work on the next generation, one that does not rely on universal certification.

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