diamond jewelry store Conflict Diamonds: Renewing the Controversy
By Bart Mongoven found at http://www.stratfor.com
June 22, 2006 22 19 GMT
After a few years on the back burner, the conflict diamond issue is heating
up again. Former Liberian President Charles Taylor, whose despotism was
facilitated by his regime's strong position in the diamond trade, appears
destined for trial at The Hague. Meanwhile, a major motion picture starring
Leonardo DiCaprio, "The Blood Diamond,"
is expected to hit theaters in September -- and diamond company De Beers,
anticipating the potential impact of the movie, has hired Nelson Mandela to
spearhead a pre-emptive public relations campaign.
Amid all of this, nongovernmental organizations (NGOs) are moving to capitalize
on the controversies -- seeking to raise new criticisms of the diamond industry
and potentially broaden their influence over the mining industry
generally.
The diamond industry has little to gain from the brewing controversy over
conflict diamonds -- but the situation seemingly gives some NGOs a rare
opportunity to make considerable progress toward their overarching institutional
goals. Diamonds play a minor role in the agendas of most of the NGOs so
positioned, but these groups appear to be looking at the conflict diamond issue
as a way to increase their influence dramatically in shaping broader voluntary
rules that corporations are following in developing countries.
Public Perceptions and the Kimberley Process
The diamond industry, from miners to retailers, has invested millions to ensure
that companies are not portrayed as accomplices in torture, terrorism or
genocide. Concern about these issues was born when industry players realized
just how narrowly they had avoided permanent damage to the gleaming reputation
of diamonds -- and, of course, their profits.
In 2001 and 2002, the world watched in horror as marauding mobs in Sierra Leone,
supported by Liberia's Taylor, attacked ethnic minority groups -- hacking limbs
(and occasionally heads) in a bid to extend Taylor's control of the country's
diamond trade. In the same period, in the Democratic Republic of the Congo,
diamonds funded both sides of a civil war. Angola, meanwhile, was just beginning
to recover from a decades-long civil war. In each of these conflicts, diamonds
played a central role: They either acted as a key driver or, as in the case of
Angola, a source of funding that allowed rebels to continue to fight.
NGOs, led by London-based Global Witness, began a campaign in the late 1990s to
draw public attention to that role. Members of the activist coalition argued
that the mining companies, trading firms and even jewelers were playing a role
in sustaining the conflicts, and they called on each of these actors in the
industry to address the issue. Around the same time, in 1999, a United Nations
study of the war in Angola cited diamonds as a key factor in warring factions'
ability to procure weapons and transport. The report argued that many countries
were helping to smuggle and launder Angolan diamonds for the rebels, and the
U.N. concluded that the monitoring systems that were in place were "wholly
inadequate" to monitor an illegal diamond trade.
Industry's initial response to the NGO campaign was weak. De Beers took some
steps to reduce sourcing from conflict zones, but that only left a void in the
market that competitors quickly filled. Retailers, meanwhile, did not see
themselves as responsible for the various crises in Africa -- only a small
percentage of diamonds on the market (less than 5 percent) could be classified
as "conflict diamonds," and retailers had no idea where the diamonds
they were selling had originated. And those who might have felt a sense of
shared responsibility also saw themselves as having limited power to change the
situation.
However, as Global Witness and its allies drew greater public attention toward
the role of diamonds in African conflicts, retailers noticed that the public's
perception of diamonds was changing in Europe and the United States. Though
diamonds were still in demand, their luster had been slightly dulled. That was
significant: Unless you're talking about a diamond's industrial uses in drill
bits and other machinery, its value lies chiefly in public perception. On the
jewelry market, diamonds are worth only what buyers are willing to pay for their
aesthetic beauty and the prestige associated with them -- and jewelers have
other beautiful stones they can sell.
Thus, the dimmer the public's view of diamonds became, the more vulnerable the
industry began to feel. The outcome of all of this was the Kimberley Process --
a certification regime that tracks the locations of a diamond throughout its
life cycle, from the mine to the jeweler.
Under this system, each link in the chain of custody must prove to third-party
observers that it has effective processes for tracking a diamond while it is in
possession. Entire national diamond-trading systems are certified at one time
under the Kimberley Process, and governments, therefore, are relied upon to
place pressure on their industries.
Significantly, the Kimberley agreement, as initially drafted, called for the
process to be reviewed in its third year -- 2006 -- to determine whether it was
working.
Once the Kimberley Process was in place in January 2003, the diamond industry's
mission was clear: press for increased certification of diamonds, enforce the
industry's monitoring of its chain of custody, and alert the public globally to
the successes achieved under the Kimberley Process. By following this course, it
was believed, the industry could put the conflict diamond issue to rest. For the
most part, it has succeeded; the industry loudly claims that less than 0.2
percent of diamonds sold are not certified -- and NGOs do not dispute this
argument. In many ways, the issue appeared, until recently, to have been
resolved.
'No Dirty Gold'
The Kimberley Process captured the imagination of numerous organizations
involved in attempts to change industrial practices in developing
countries.
NGOs concerned about the social and environmental effects of gold mining
developed a strategy to persuade the gold mining and retailing industries to
agree to a similar code of conduct. The idea was to capitalize on the momentum
created by the conflict diamond issue, telling jewelers that a similar situation
lurked in the background with gold; thus, NGOs from around the world began
trying to draw parallels between conflict diamonds and gold mining. The strategy
was not entirely successful, but mining companies and jewelers did get the
message that they should start looking to build codes of conduct for those
issues that cannot be resolved through political action or government
regulation.
Some mining companies began work to build a code of conduct under the auspices
of the United Nations. Most mining companies agreed to stop using the most
heavily criticized gold-mining practices -- including cyanide mining -- under a
code developed by the International Council on Mining and Metals. Similarly, the
jewelry industry also began to call quietly for the mining industry to adopt a
code of conduct relating to gold. Led by Tiffany & Co., jewelers began to
work with NGOs and mining companies to find ways of improving social and
environmental aspects of gold mining.
Prodded by retailers and NGOs, the jewelry and mining industries currently are
developing a certification regime, working through an organization called the
Council for Responsible Jewellery Practices (CRJP) in London. The goal is to
hammer out a workable code of conduct and to track the chain of custody, so that
retailers can guarantee their merchandise does not contribute to human rights
abuses or environmental degradation.
The Road Available
NGOs have had three years in which to find holes in the Kimberly Process system,
and to dream about ways to broaden the agenda it represents. And now, almost as
if on cue, the movie "The Blood Diamond" is about to be released.
Whether coordinated or not, the movie will be perfectly timed to give maximum
exposure to the criticisms of industry that NGOs have prepared. Activists will
argue that the Kimberley Process is not strict enough, that it should be policed
by governments (rather than third parties hired by the companies in question)
and that its mission should be broadened to include elements other than simple
chain-of-custody requirements -- including issues like those being addressed by
the CRJP. The movie itself, of course, will not make a case for these arguments.
But by bringing attention to these issues, it will create a forum for
representatives of Amnesty International, Global Witness and other groups to
explain what they believe is -- and is not -- working with the Kimberley
Process.
During the late summer and fall, we expect to see NGOs moving to broaden the
certification regimes that influence what products are sold in jewelry stores.
Fights over both the limits of the Kimberley Process and gold practices will
extend into 2007.
The larger, more amorphous issues at stake, however, are the degree to which
major international NGOs are able to embed their values in commercial activities
and relationships, and the degree to which the groups are seeking expressed
power within these certification regimes. If groups like Global Witness or
Earthworks are able to gain influence within the CRJP, or if the Kimberley
Process gives these groups significant influence in expanding the mission of the
certification regime, they will have crossed a major threshold in the de facto
public policy cycle. In short, these NGOs would be actively embedding liberal
Western ideals in global commerce. That would be an important step.
However, there is a danger of overreaching. If the NGOs should press beyond this
point and demand that control of the oversight process in the Kimberley Process
be taken away from industry, they could jettison the very influence they now are
pursuing. This has occurred before; NGOs (particularly Amnesty International)
threw their weight behind the U.N. Norms initiative concerning corporate social
responsibility, while ignoring the concerns of industry. The result: The whole
project was discredited before it could take flight.
That leaves the question: Will the NGOs that are active in mining issues know
when to stop pushing -- or be able to stop if they need to?
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