As former KP Chair 2016, I was quite surprised to read several negative articles in the media on the work of the Kimberley Process as well as positive remarks from Vinod Kuriyan, WFDB President Ernie Blom and last week, DDI Chairman Ian Smillie.
What struck me most were the condemning comments from the leading American price list and media person Martin Rapaport (whose diamond auctions we host every month in our Almas Tower), and afterwards from the former US State Department Special Advisor for Diamonds Brad Brooks-Rubin. Both called the KP a defunct organisation, while Rapaport referred to it as ‘BS’ — a word which we normally don't use describing the activities of important international organisations.
Brooks-Rubin even went so far to say that the KP is not needed anymore because all certificates that are circulating between participating countries are beyond any doubt valid and does not address the real supply chain problems.
This made me wonder if that position is an official one as both gentlemen seem to speak on behalf of the largest consumer market for diamonds in the world, the USA.
And whether this would in any way be related to the fact that it is exactly in the US that major deficiencies have come to the limelight in the past six months and which were even acknowledged by the leading US trade bodies. As a culmination point we were informed that the USKPA does not even exist and was recently bought by trade analyst Chaim Even Zohar. Which raises questions about the validity of KP certificates coming from the US for many years.
As someone living in the real world and after having visited almost 22 countries during my tenure as KP Chair, I can only express how important the continuation of the KP is for both producer and consumer nations. Having been able in just a decade to bring down the amount of conflict diamonds from 4 percent to a mere 0.2 percent — as correctly pointed out by Blom — is an accomplishment to be proud of.
The KP brought stability and peace in Angola and created the same stable environment in West Africa. I don't get where Brooks-Rubin has found conflict diamonds in Venezuela. This country — after years of KP Failure — has, under our chairmanship, just been brought back to the family.
That doesn't mean there should not be efforts made to enhance its performance. As Ian Smillie correctly points out "the challenge in reforming the KP is not to abandon, but to fix what doesn't work".
The whole issue of broadening the definition of conflict diamonds should be addressed and it could have been done earlier as we brought it to the table when we applied to become Chair at the Shanghai Intercession in 2014 when we pleaded for a 'new normal'. It should however not be isolated to a 'terminology' discussion. Even within the current context there are issues which require immediate action.
We have seen several points of critical imminence.
While the Kimberley Process has been instrumental in stemming the flow of conflict diamonds, the initiative suffers from structural weakness. One particular problem that demonstrates this is the process of rehabilitation for countries that had previously been found to be non-compliant. The road back to normalisation and re-entry into the Kimberley Process takes too long and is too complex.
In the case of the Central African Republic (CAR), it was a year between the announcement in Luanda in June 2015 that diamond exports could be resumed and the first parcels of Kimberley Process certified diamonds leaving the country. A delay of a year in countries like CAR has a substantial impact on the local economy, where one in four households depends on the diamond industry.
Permanent UN Secretariat
To achieve a comprehensive vision for the Kimberley Process, we believe we should establish a Permanent Kimberley Process Secretariat under the auspices of the United Nations.
The Permanent Kimberley Process Secretariat under the United Nations could then also lead implementation across the world of a ground-breaking initiative to achieve best practice principles for rough diamond valuation based on a dedicated live transactions platform made available to all KP participants.
In order to maintain momentum, the next logical phase of the initiative should be to ensure that diamond producing nations receive a fair price for their resources. Too often, African nations, which account for 65 percent of diamonds mined annually, do not see a fair return on their goods. This has the inevitable impact of stalling the development and potential of these nations, despite their extraordinary natural resources.
In order to level the playing field for diamond import and export centres, during our chairmanship we have taken on the responsibility of establishing a standardised methodology, one that will bring transparency and consistency to the process through the availability of current market information for the producing country.
The Kimberley Process should, during the Review Year, agree on a generic set of criteria identified in the series of forums on Rough Diamond Valuation we organised during our chairmanship. Amongst which are:
- A methodology based on reverse engineering of polished diamond prices, i.e.: based on the forecast of the polished output and price that rough stone, after deducting a standard percentage (15 percent) of fixed cost/margin.
- Based on pre-formatted rough diamond protocols which build capacity and simplify the valuation process at the local level. This can be applied universally across all importing/exporting centres of rough diamonds.
At the Dubai Plenary there was strong opposition to the valuation initiative from the diamond industry. It would be interesting to hear from them how they think this matter can be brought forward constructively to create a fairer framework for the African diamond producing countries.
Strengthen The Third Pillar
Last but not least, the Kimberley Process relies upon the equal interaction of its Participants and Observers, which includes industry groups and civil society, in the form of NGOs.
Participants and industry groups are sovereign states and major commercial enterprises. In contrast, civil society has the weakest resources.
It is common for well-endowed industry groups to send up to 25 participants to Intersessional and Plenary meetings, as well as Review Missions and Review Visits, while we rarely see more than two or three NGO representatives at such gatherings.
For civil society, substantial effort is needed to reach out to donors in the hope of financial support, which, when it comes, is inadequate. Moreover, support is filtered, conditioned, channelled and coordinated in such a way as to challenge the independence of the NGOs, both from the donors, and from each other.
The Kimberley Process is ill-served by its dependence upon an NGO base which lacks resources, sustainability and whose survival is dependent upon others.
To this end, the UAE proposes the creation of a common fund which will collect and pool financial resources, without conditions, for the use of NGOs involved in the Kimberley Process.
The full transparency of the Civil Society funding is required for the well-functioning of the 'three pillars' nature of the Kimberley Process. The participants and their affiliated organisations should disclose annually to which NGOs involved in the activities of the Kimberley Process they contribute funds as well as the exact amounts.
It is my sincere hope that these constructive proposals can be discussed under the leadership of Australia as Chair during the Review. I hope the recent remarks by eminent speakers from the US only represent their very personal own opinion and is not related to some recently revealed deficiencies the US will surely want to address as is the case for every Participant which has been facing the same. The KP is a tool too important and its achievements too bold to be ridiculed for whatever reason.