Keynote Address Talking Points
Hon Edward Chindori-Chininga (MP)
THE KIMBERLEY PROCESS CERTIFICATION SCHEME:
HOW WE UNDERSTAND IT;
ITS ROLE AND CONTRIBUTION TO A CONFLICT FREE DIAMOND INDUSTRY IN AFRICA
Boksburg, South Africa 1 June 2013
- The KPCS was formed to provide a system of warranties and chain-of-custody practices that would assure buyers that the rough diamonds they purchased were not financing violence by rebel movements and their allies seeking to undermine legitimate governments; and the illicit traffic in, and proliferation of, armaments, especially small arms and light weapons.
- The KPCS is an important and unique organization with an international and multilateral scope composed of Governments, Industry and Civil Society. This unique composition should facilitate common understanding in the governance of diamond resources vis-à-vis international relations and mutual benefits amongst Governments, investors and communities.
- The joint efforts of governments, industry leaders and civil society representatives have enabled the KPCS to curb successfully the flow of conflict diamonds in a very short period of time. Diamond experts estimate that conflict diamonds now represent a fraction of one percent of the international trade in diamonds, compared to estimates of up to 15% in the 1990s. That has been the KPCS’s most remarkable contribution to a peaceful world, which should be measured not in terms of carats, but by the effects on people’s lives.
- The KPCS has also helped stabilise fragile countries and supported their development. As the KPCS has made life harder for criminals, it has brought large volumes of diamonds onto the legal market that would not otherwise have made it there. This has increased the revenues of poor governments, and helped them to address their countries’ development challenges. For instance, some $125 million worth of diamonds were legally exported from Sierra Leone in 2006, compared to almost none at the end of the 1990s. Similar stabilization and benefits were recorded, though to different scales, in Angola, the Democratic Republic of Congo and Guinea.
- Conflict prevention remains critical hence the need for KPSC to continues and countries like Zimbabwe continue to demonstrate their commitment despite several challenges in its implementation that have evolved over the few years.
Challenges Raised by Governments
- While The KPCS was designed to be an apolitical but technical process that regulates rough diamond trade, it has proved to be vulnerable to manipulation due to the inevitable age old politics of African resources exploitation.
- With the concept of the global village, the interests of the international community on African resources are on the increase. Considering Africa’s rich natural resource base i.e. being the source for more than 60% the world’s diamond resource, the continent remains a target for economic and political predators.
- It must be noted that regardless of civilization, the existence and competitive nature of human beings in the global village still presents the “Survival of the Fittest” kind of co-existence, between the developed and the underdeveloped worlds, particularly the West and Africa. And now the demand for African natural resources by China has developed a new dimension to “Survival of the Fittest”. In that context, the role of international conventions and mechanisms on transparency, accountability and marketing of African resources, like KPSC, cannot be naturally good for Africans unless Africans facilitate and defend their position.
- Though started by African countries the “super power” tendencies witnessed in UN and other socioeconomic blocks globally, is inevitable and very retrogressive in KPSC. Developing countries, particularly in Africa, rather need fair and competitive space to leverage funding and technological advancement in strengthening these enabling structures into competitive operating environments.
- Africa and the developed world need each other through symbiotic relationships for Africa has the resources while the developed countries have the financial resources and technological expertise to harness the resources. However, the continent remains shortchanged in most cases as it cannot get fair benefits from its mineral endowment; and also needs to design and implement policies that are in its interests to facilitate for sustainability.
- It is therefore apparent that KPSC on its own cannot be expected to be favorable to the African continent because of the competitive nature of humans, but needs Africans themselves to actively participate and influence policies and objectives that promote space for their sustainability.
- The scope of the KP needs to be contained within agreed limits in mutual trust, and promotion of consensus and ethical practices among stakeholders. However, experience has privileged us to realize that extreme temptations exists among particular Participant states and their partners who always push beyond boundaries of the agreed scope of the Scheme, motivated by individual political pursuits guided by adverse foreign policies and agendas against fellow KP Participants. This, in our view, is counterproductive and contrary to the initial KP agenda.
- This influence is and can be further fuelled by the fact that in Africa, whereas Governments and the industry can be well defined, identified and be held accountable for their actions, “civil society” evolved to be a less defined entity especially. In the general context, one would assume civil society to mean the general public as represented in both their individual capacities and institutional capacities such as communities and professional bodies etc.; and this we assume is the case in the Western world.
- However, in KPCS civil society in the developing world has been adulterated by organized individuals/entities, mostly Western donor-funded, and have no or very limited mandate from communities and the general public. Such organizations may take any form, shape and context as it please them from time to time. This makes it difficult for mutual understanding and respect amongst stakeholders in the KPCS
- The KPSC should achieve more in peace building by revisiting its involvement of communities involved and affected by diamonds exploration, ensuring objective representation as “anything for them without them is not for them”.
- It must be noted that transparency in the KPCS should be within defined constraints of the minimum requirements as defined in the KPCS Working Document and applied on the majority of Participants. However, Zimbabwe’s experience is that the KPCS allows itself to digress and selectively interpret and apply its statute to the expense of some of its stakeholders.
- For example, extreme demands and devastating conditions have been applied on Zimbabwe many a times, particularly since 2009 leading to extraction of commercially sensitive information and stifling of diamond trade at the expense of the country and its citizens. For the record, Zimbabwe is the only country in the KPCS where massive mine level data from technologies used, production and market statistics have been collected against the agreed KPCS principle and minimum requirement that mine level data is commercially sensitive and that such data can only be submitted as aggregated national level data.
- Unless defined and measured to pre-determined and agreed standards, demands for “transparency” can be very ambiguous and self-defeating in KPSC as it can be abused and selectively applied to the detriment of national interests and sovereignty. In a nutshell, KPCS has struggled to promote transparency and accountability as this may be seen as interfering in the internal affairs of sovereign states.
Challenges Raised by Civic Society
- To begin with the Civic Society acknowledges the importance, relevance and achievements of the KPSC, and forms part of the founding participants of this noble scheme. However, there has been growing discontent among civil society since the scheme was launched in January 2003 that impacts hard on its credibility and reputation.
- Most of the KPSC’s observed weaknesses were not oversights (although some were); they are deliberate efforts to limit the cost and possible intrusion of the KPSC into national regulatory systems and the international diamond trade.
- But there was no provision in the Kimberley Process to do what all regulators must do. There was no provision to close loopholes, fix the parts that were not working and adapt the system to new realities.
- Kimberley Process was also not designed to work to solve the root causes of instability in the diamond mining sector, a sector that is vulnerable to economic predators and prone to violence.
- Decision-making – Consensus decision-making means that one participant can block progress on key issues. The KPSC has been unable to take strong decisions to crack down on cases of serious non-compliance. This inability to hold members to account for rules of the scheme undermines its effectiveness and its credibility in the eyes of consumers and participants. Hence the call that KPSC is to replace its decision-making procedure with a more effective system. Almost all of the debates have been polarized by the political agendas of various participating governments. A member country would be protected by allies with political or commercial interests in that country.
- Independent technical capacity – despite the fact that the KPSC has 80 represented countries, it has no permanent secretariat, no funding and no central repository of knowledge or ongoing institutional capacity. This has led to a lack of continuity between chairmanships – the KP chair rotates amongst the member countries on an annual basic – insufficient monitoring and a slow response to crisis situations. The KP doesn’t have the capacity to consistently and effectively follow up on issues of concern. The Kimberley Process needs a professional, independent technical body to support progress on administrative matters, monitoring, and statistical and legal analysis.
- The failure to include the cutting and polishing industry in basic KP provisions is one major gap. This was probably an oversight in the founding KP discussions, but attempts to rectify the problem have been blocked by some participating governments. Essentially, illicit diamonds that bypass the early stages of the Kimberley Process (such as those from Gabon and Cameroon, or those smuggled from Côte d‟Ivoire, Venezuela, or Zimbabwe amd diamonds robbed from European airport in transit) can be laundered through willing companies in the cutting and polishing industry. Because the KP does not require participating governments to audit or reconcile intake and production in this sector, it remains a black hole through which all manner of illicit goods can be processed. Arrests and the seizure of uncertified rough diamonds in the United States, the European Union, India and elsewhere demonstrate what may be the tip on an iceberg, one that the KPSC has been unwilling to acknowledge or deal with.
- These reforms will never be carried out in the absence of serious renewal of political will on the part of KP member governments and the diamond industry. As the issue of conflict diamonds slips down the agenda of many participant governments, the KPSC risks becoming little more than a talking shop, with some members content to put in minimal effort and free ride on this pioneering conflict prevention scheme.
- The truth is that national systems for regulating diamonds in most countries either did not exist or were wholly inadequate, and the emphasis on simple – with inexpensive as the sub-text – skewed discussions in the direction of simplistic approaches to internal controls and verification. Where internal controls are concerned, the Kimberley Process requires participants to “establish a system of internal controls designed to eliminate the presence of conflict diamonds from shipments of rough diamonds imported into and exported from its territory.” Beyond that, however, the 21 provisions dealing with how this is to be accomplished are only recommendations, contained in an annex. Reviews by the KP and others of the internal controls in many participating countries, but especially those most affected by conflict diamonds have found that internal controls remain weak to nonexistent.
- It is known that large amounts of diamonds are being smuggled from Zimbabwe through Mozambique, which is not a member of the KPSC. Other countries are suspected of serving as transit sites for companies or individuals. These include Burkina Faso, Niger, Mali, Panama and Uganda. The KPSC has approached some of them in an effort to persuade them to join the KPCS.
- In most cases, as long as diamonds entering a country do so according to that country’s own laws and regulations, they can be taxed, processed and/or re-exported without causing damage or disruption. The costs of joining the Kimberley Process would, in the case of several of the countries now being pursued for membership, far outweigh the very small benefit. If the Kimberley Process is serious about having counties like Mozambique, Niger or Mali become fully functional members of the KPCS, it will have to think hard about how to make membership financially as well as politically attractive, or it will need to develop less onerous “associate membership” requirements that do not create unrealistic burdens for them.
- Dorothee Gizenga, October 2008, Morden Jeweler
- Ian-Smillie-GIZ-2011, Kimberley-Process-Problems-and-Opportunities-
- IRIN, June 22, 2009.Credibility of Kimberley Process on the line, say NGOs
- Kimberly Process Certification Scheme, Core Document
- Zimbabwe Ministry of Mines 2013.
THE ZIMBABWE EXPERIENCE FROM AN AFFECTED AFRICA COUNTRY LENS
Introduction and Background
During the year 2000, through the vision of the Ministry of Mines and Mining Development and under the leadership of the then Minister of Mines, Hon. Edward Chindori-Chininga, Zimbabwe embraced the Kimberley Process Certification Scheme (KP) agenda.
The objective was, and continues to be eradicating conflict diamonds and promote the legitimate diamond industry, from which many African countries depend on for their economic development. Conflict diamonds are diamonds used by rebel movements and their allies to fund wars against legitimate Governments.
Resultantly, on the occasion of the launch of the Kimberley Process Certification Scheme on 5 November 2002, Zimbabwe, together with other KP founding Participants met in Interlaken, Switzerland, deeply concerned about the international trade in conflict diamonds, which had direct links to the fuelling of armed conflicts by rebel movements aimed at undermining or overthrowing legitimate governments and the illicit traffic in, and proliferation of, armaments especially small arms and light weapons.
To date, Zimbabwe remains committed to the KP.
Conflict diamonds and other conflict minerals
It must be noted from the onset that conflicts are anti-development. In that context, conflicts are a liability to society. Conflicts come in many forms, and more often are motivated and fuelled by a foreign interference through diverse means.
Governments have an obligation to provide livelihoods and security to their citizens; and therefore have legal, regulatory and institutional frameworks to facilitate attainment of these mandates. Developing countries, particularly in Africa therefore need fair and competitive space to leverage funding and technological advancement in strengthening these enabling structures into competitive operating environments.
Apart from internal arrangements, Governments have demonstrated commitment in noble Schemes such as the KP to leverage their efforts towards peace and security; and harnessing of mineral resources for the well-being of their citizens.
It is in this context that African Governments pioneered the KP concept, which has come to be of much reason and purpose worldwide albeit, detractions on equal opportunity against the developing world, particularly Africa.
The scope of the KP needs to be contained within agreed limits in order to accommodate mutual trust among stakeholders. However, experience has privileged us to realize that extreme temptations exists among particular Participant states and their partners who always push beyond boundaries of the agreed scope of the Scheme, motivated by individual political pursuits guided by adverse foreign policies against fellow KP Participants. This, in our view, is counterproductive and contrary to the initial KP agenda.
Currently, a number of stakeholders in the KP are pushing for a number of reforms amongst them expanding the definition of conflict diamonds to include diamonds associated with other forms of conflict/violence and human rights. Notwithstanding the general need for organizational transformation with time, it is our view that the current definition of conflict diamonds is adequate.
The scope of the KP, as was carefully decided and adopted upon its commencement in 2003, needs to be within the confines of the expert capabilities of its internal processes, and needs not to duplicate the mandate of existing and competent international organisations.
In that context, the KP has no expertise to deal with complex issues of human rights, which are sufficiently articulated by several local, regional and international processes and schemes such as national constitutions and related legislations; and other instruments such as the African Charter on Human and People’s Rights and the United Nations Commission on Human Rights.
The KP was designed to be simply an apolitical but technical process that regulates rough diamond trade.
Relevancy of the KP
The KP is an important and unique organization, and has potential to remain so in the future. It is an international and multilateral organization composed of Governments, Industry and Civil Society. This unique composition should facilitate common understanding in the governance of diamond resources vis-à-vis international relations and mutual benefits amongst Governments, investors and communities.
Facilitation of the common understanding and mutual interests can be harnessed noting that the KP has 54 Participants including the European Union that represents its 27 members. In that context, the KP has 80 countries. These countries account for more than 99.8% of the global production and trade of rough diamonds. In addition to the Participant States, the KP also has the World Diamond Council that represents the international diamond industry, and civil society organizations; thus defining the tripartite nature of the Scheme.
It is therefore apparent that the relevancy of the KP may be considered as two-fold; facilitation of mutual benefits among Governments, investors and communities; and the reduction towards elimination of conflict diamonds that currently stand at less than 1%.
Going forward, the KP has the potential to accrue mutual benefits to all stakeholders, Zimbabwe included, if Participants and observers stick to ethical practices. This may only be achieved through consensual adoption of decisions by Participants and strict scope change management thereafter to avoid the introduction of policy matters outside the consensual processes of the Plenary.
Consensus in the KP is critical in facilitating mutual respect and understanding among stakeholders through taking into consideration the views, liberties and sovereignty of the minority as opposed to super majority approaches, which promotes monopolies of the majority.
The civil society dilemma – Civil society or NGOs
The KP is a tripartite organization composed of Governments, the diamond industry and civil society.
Whereas Governments and the industry can be well defined, identified and be held accountable for their actions, civil society remains, undefined ambiguous and unaccountable to their actions.
In the general context, one would assume civil society to mean the general public as represented in both their individual capacities and institutional capacities such as communities and professional bodies etc.; and this we assume is the case in the Western world.
However, that which the KP considers to be civil society in the developing world is a few organized individuals mostly donor-funded from the West and have no or very limited mandate from communities and the general public who are demanding for objective representation as “anything for them without them is not for them”.
These individuals take any form, shape and context as it pleases them from time to time; and are a monopoly as they are the only ones given an audience with the KP at the expense of the general public. This makes it difficult for mutual understanding and respect amongst stakeholders in the KP. This scenario is compromising sustainability of the Scheme, now and in the future.
The KP therefore would need to urgently define civil society to include wider representation from the general public in development to lest it risks being viewed as conspiracy between the developed/ donor world and a few of their partners in the developing world.
Role of international community on African Resources and role of international conventions and mechanisms on transparency, accountability, marketing etc
With the concept of the global village, the interests of the international community on African resources are on the increase. Considering Africa’s rich natural resource base i.e. being the source for more than 60% the world’s diamond resource, the continent remains strategic for its own development and the international community.
However, because of the scarcity and finite nature of natural resources, competition for the resources is high resulting in jostling for both economic and political space and competitive positioning that creates both opportunities and a wide range of challenges.
Africa and the international community need each other through symbiotic relationships for Africa has the resources but the international community has the financial resources and technological expertise to harness the resources. However, the continent remains shortchanged in most cases as it cannot get fair benefits from its mineral endowment; and also needs to design and implement policies that are in its interests to facilitate for sustainability.
All the same, international conventions by their own cannot be expected to be favourable to the African continent because of the competitive nature of humans but needs Africans themselves to actively participate and influence policies and objectives that promote space for their sustainability.
It must be noted that regardless of civilization, the existence and competitive nature of human beings in the global village still presents the “Survival of the Fittest” kind of co-existence, between the developed and the underdeveloped worlds, particularly the West and Africa. In that context, the role of international conventions and mechanisms on transparency, accountability and marketing of African resources cannot be naturally good for Africans unless Africans facilitate and defend their position.
Unless defined and measured to pre-determined and agreed standards, demands for “transparency” can be very ambiguous and self-defeating in international conventions as it can be abused and selectively applied to the detriment of national interests and sovereignty. For example, transparency as defined in the minimum requirements of the KP is within the context of providing aggregated national production and trade data in order to safeguard commercial interests whereas during the period of rough diamond trade embargoes from 2009 to 2012 the KP forced itself on the country and collected mine level data.
Over and above, Africans must decide on what is good and sustainable for the continent. Africa needs home- grown transparency and accountability systems and processes in order to facilitate sustainable mitigation of its peculiar challenges. These peculiar needs should be considered if international conventions are to have reason and purpose, otherwise international conventions risk being viewed as subverting the will and sovereignty of the continent.
The role the KP played and is playing in Zimbabwe
As a stakeholder, Zimbabwe is actively involved in the KP. However, so far in the execution of the Scheme, the country’s interests are largely negatively affected resulting in unprecedented economic prejudice both to Government and its citizens. This is so because the KP have allowed itself to digress from its noble apolitical and development oriented agenda; and is regrettably promoting devastating political and economic vested interests of stronger states, particularly Western countries.
Since the official commencement of the KP in January 2003, Zimbabwe remains committed to the successful implementation of the Scheme. This has been demonstrated many a times through the country’s quest to meet KP minimum requirements and upholding cooperation and transparency. So far, Zimbabwe is the only over-controlled country in the history of the KP. The country has been subjected to a minimum of four KP Review Visits and Missions and several KP Monitoring excursions, apart from other High Level Envoy visits; whereas the majority of KP Participants have merely experienced a single visit.
It must be noted that transparency in the KP should be within defined constraints of the minimum requirements as defined in the KP Working Document and applied on the majority of Participants. However, Zimbabwe’s experience is that the KP allows itself to digress and selectively interpret and apply its statute to the expense of some of its stakeholders.
For example, extreme demands and devastating conditions have been applied on Zimbabwe many a times, particularly since 2009 leading to extraction of commercially sensitive information and stifling of diamond trade at the expense of the country and its citizens. For the record, Zimbabwe is the only country in the KP where massive mine level data from technologies used, production and market statistics have been collected against the agreed KP principle and minimum requirement that mine level data is commercially sensitive and that such data can only be submitted as aggregated national level data.
How KP decisions relate or are being affected by sanctions
The KP requires Participants to meet minimum requirements. In order to meet minimum requirements, Participant states need to have institutional capacity to enforce its laws and regulations.
National institutional frameworks in KP implementation can be well defined by Government institutions such as the Ministry of Mines and Mining Development as the Responsible Authority, Minerals Marketing Corporation of Zimbabwe (MMCZ) as Appointed Exporting Authority, Zimbabwe Revenue Authority (ZIMRA) as Appointed Importing Authority and other Government agencies in their various capacities such as the Zimbabwe Republic Police etc.
Industry players such as the Zimbabwe Mining Development Corporation (ZMDC) are also critical in KP implementation as they are responsible for setting up and running of appropriate diamond mining, security and accounting systems. These systems require funding.
Noting that MMCZ (a KP implementing Authority), ZMDC and affiliated partners are under sanctions, particularly from the USA and the EU, the playing field for KP implementation capabilities is uneven at the Expense of Zimbabwe. This is further worsened by the fact that monetary transactions are restricted by the USA Office of Foreign Assets Control (OFAC) that blocks and freezes/ confiscates all US dollar denominated transactions by ZMDC and MMCZ.
In November 2011, at the Kinshasa Plenary, all diamond exports from the existing mines in Marange, were approved as KPCS compliant with the consensus of all participant countries present and that any new mines would be verified as compliant by the KP monitoring team of Mark Van Bokstael and Abbey Chikane .
Following the Kinshasa Plenary, the US (who was the 2012 KPSC Chair) announced unilaterally that it had abstained from the consensus approving the Marange Exports at the Plenary in Kinshasa and further explained that this was consistent with its foreign policy on Zimbabwe and the sanctions imposed and maintained on certain persons and entities of the government of Zimbabwe.
This was the first time the Zimbabwe and other Members in the KPCS, were made aware of this abstention, as it was not communicated at the time the decision was taken. What is clear is that, within the framework of the KPCS, there is no scope for abstentions at all, it is either one objects or they are part of the consensus, more so given that decisions are not taken by vote. So it is clear that the US was part of the Kinshasa consensus.
There was however a sinister motive behind the so called US, abstention in Kinshasa; in the last week of November 2011, the US announced it had added on to the list of sanctioned entities in Zimbabwe, Mbada and Marange Diamond Mines.
No reasons were furnished to these mines nor were these mines afforded an opportunity to comment on the allegations made against them in particular that they where involved in undemocratic practices aimed at undermining democracy and human rights in Zimbabwe.
The US a member of KPCS, accepts that the diamond mining operations in Marange are KPCS compliant. It accepts that these diamonds are legitimate within the Kimberly Process. The US however condemns these diamonds on the basis of its foreign policy on Zimbabwe, as illegitimate as they are produced by entities listed on the US, sanctions list. It follows therefore that, the US conflicted in its Chairmanship in that, on one hand she advanced her country’s foreign policy and on the other she would advance the common interest of the KPCS, which permits compliant diamonds such as those from Marange to be freely traded as such.
The prejudice currently being suffered by the country as a result of the sanctions is huge; diamonds are being traded at about 25% below market. International courier companies such as Brinks have refused to transport Marange diamond because of sanctions, so traders have to hire private jets or use commercial airlines. International Insurance companies do not accept Marange diamonds for insurance because of sanctions. Payment for these diamonds can only be made in Rands or Hong Kong dollars with massive exchange rate costs and margins because of the size of the transactions. This however does not apply to Murowa diamonds owned by RioTinto as it is not facing any United States financial restrictions or financial sanctions on its diamond exports.
These financial restrictions and sanctions create loopholes for illegality, fiscal leakages and loss of revenues to the people of Zimbabwe for social and economic growth. It obviously makes the job of the Minister of Finance difficult in raising the required financial resources for the national budget requirements. The mines had committed to support a national budgetary position of about 600 million dollars in the 2012 budget which to date has not been achieved.
These financial restriction and sanctions promote corruption, illegality, fiscal leakages and national insecurity and retard growth and securitization of diamond mining operations in Marange. In fact the United States through financial restrictions and financial sanction is promoting against what all members of KPCS and the international legal mandate of KPCS member states and parties strived to achieve when it was found. Zimbabwe is a founding member of KPCS and must be treated equal like all other parties to the international treaty.
Reasonably, sanctions work against Government efforts towards KP compliance and are therefore a liability to the KP. What remains strange is the fact that the sanctions are applied by KP Participant states on another KP Participant, which may be considered as double standards.
As momentum builds within the KPCS, the World Diamond Council (WDC) has now called for the removal of sanctions on diamond mining operations from Marange. This call was made at the 2012 Diamond Conference in Victoria Falls. In making this call, the WDC, has accepted that the issue of sanctions is a KPCS matter and the WDC, as the representative body of the diamond industry must rally the entire diamond industry behind this call.
The Zimbabwe Parliamentary Committee on Mines and Energy concurs and support the call by the Minister of Finance in his budget statement that all forms of sanctions against the marketing of Zimbabwean diamonds be lifted. Zimbabwean need these resource to develop their country for social and economic growth.
Zimbabwe cherishes for safeguarding the integrity of the Scheme through consistency with international law governing international trade, acknowledgement and full respect for sovereignty of states and principles of equality, mutual benefits and consensus as enshrined in the Scheme’s statutes.
Guided by the KP principles as agreed on the occasion of the launch of the KP in January 2002 at Interlaken, Switzerland, the KP should be compelled to stick to its agreed mandate as guided by its statutes.
We therefore emphasise and encourage for facilitation of the widest possible participation in the Scheme to enhance global cohesion and common practices in the eradication of conflict diamonds, and contribution of the diamond resource in facilitating development, particularly in diamond mining countries.