Rapaport at www.diamond.net reports that Kimberley Process (KP) chairman Mathieu Yamba of the Democratic Republic of the Congo (DRC) last week unilaterally authorized Zimbabwe to export diamonds from the controversial Marange fields. The decision came without the required consensus that governs the KP, much to the annoyance and confusion of some key member states, the agency says.
While most wondered at the legality of the chairman’s actions, it was ultimately left to individual organizations and participating countries to make their own decision on how to respond.
The U.S., which is trying to become KP chair for 2012, and the European Union (EU), which heads the all-important working group for monitoring (WGM) at the KP, immediately distanced themselves from the decision. Others soon followed.
The U.S. State Department warned that it would publish the names of companies taking delivery of these goods to ensure that U.S. companies are aware of potential non-compliant goods in their suppliers’ stocks. Further, the State Department said it would ask its Office of Foreign Assets Control (OFAC) to investigate whether those transactions are in violation of the country’s sanctions laws, given that the Zimbabwe Mining Development Corporation (ZMDC) is on OFAC’s sanctions list. The ZMDC, which is actively mining at Marange through its Marange Resources subsidiary, is also subject to EU sanctions.
Jewelers of America (JA) and the Diamond Manufacturers Association of America (DMIA) issued a joint statement stressing that trading in Marange diamonds would be in violation of national laws. However, they fell short of taking a personal commitment to expel guilty members.
In a softer and more conciliatory tone toward Yamba, the World Diamond Council (WDC), which represents the diamond industry at the KP, advised members of the industry to refrain from trading in these goods until the situation and status of the exports becomes clearer. As of press time, neither the World Federation of Diamond Bourse’s (WFDB) nor the International Diamond Manufacturers Association (IDMA) had made public statements regarding the chairman’s announcement. For that matter, neither had the Non-Government Organization’s (NGO’s) at the KP.
But while the WDC and others seek clarification over the issue, at this point, there would be nothing to stop Zimbabwe from exporting the goods with valid KP certificates. It appears that from a legal standpoint, Yamba’s notice was at worst a gross violation of the spirit of the KP’s consensual nature.
It is therefore simply left to the diamond buyer’s better judgment, and conscience, to assess whether to take possession of the goods, and to determine if it is being done within the legal framework of the counties in which they operate.
Apart from that, the decision further exposes the structural flimsiness of the KP. After all, what mechanisms are in place to deal with a rogue chairman, never mind a defiant member? The lack of consistency between the approach taken by the KP chair in 2010, held by Israel, and the current chair, highlights the lack of transition at the KP and the consequent need for a permanent secretariat to help implement its procedures.
One can only speculate what motivated Yamba to take the action he did. To give him the benefit of the doubt, he may have genuinely felt that there was no other way to break the deadlock. Skeptics might argue that he gave into pressures from Zimbabwe itself, or perhaps the lobbying by the African Diamond Producers Association to clear the exports, or even the influence of the Indian industry which has made no secret of its desire to buy the Marange rough - or all of the above.
Regardless of his motivations, Yamba will no doubt have faced a barrage of questions from his KP peers this week. Some will likely request that he rescind the decision in a clarification letter. That is unlikely to happen. Rather, Yamba will be hoping that his actions will jump-start urgent talks within the KP to reach consensus and lead to the adoption of the proposed draft administrative decision regarding Marange diamonds.
To save face, the organization will want to reach consensus sooner rather than later, which will require some skillful diplomacy. Having got what it wanted – the right to unconditional exports - it is clear that there is no incentive to coerce Zimbabwe to budge in its position, if there were any before.
At Yamba’s instruction, exports shall continue until the administrative decision is passed, and that could be indefinite. Whether or not it is passed, an even greater task will be left to next year’s KP chair, whoever that may be, to remedy the dangerous precedent that has been set and restore the effectiveness– and perceived necessity– of the KP.
