The Kimberley Process could collapse

The Kimberley Process could collapse, experts warn, after the group meant to prevent diamonds from financing conflicts decided to allow Zimbabwe to sell gems tainted by army killings.

Kimberley approval was meant to guarantee that stones often given as a symbol of love are not "blood diamonds" used to fund some of Africa's most brutal civil wars in Sierra Leone and Liberia.

Since 2003, Kimberley has gathered governments, industry and activists into a global regulator that makes decisions by consensus.

But at the Kimberley meeting in Kinshasa on June 23, rights groups simply walked out after the chairman, Mathieu Yamba of the Democratic Republic of Congo, gave the green light to two companies to sell gems from Zimbabwe's Marange fields.

"It weakens the process," said Tony Hawkins, an economist at the University of Zimbabwe. "Less and less regard will be paid to KP. In the long term, it could wither away and die."

Diamonds were discovered in Marange in 2006, drawing in thousands of small-time miners hoping to get rich quick.

Once the extent of the find became clear, the army cleared the area in late 2008, when Human Rights Watch says more than 200 people were killed, some by helicopter gunships.

Kimberley's own investigators documented "unacceptable and horrific violence against civilians by authorities", prompting a ban on exports of the gems in June 2009.

Since then, two firms operating in a series of incarnations as South African firms and Zimbabwe parastatal entities have kept on mining, with Harare stockpiling gems now estimated to be worth up to $5.0 billion.

Zimbabwe's gross domestic product last year was $7.5 billion, according to the International Monetary Fund.

"Blood diamonds" and "missing" millions

The mines ministry, which like the security forces are controlled by long-ruling President Robert Mugabe under Zimbabwe's shaky unity government, is desperate to sell the gems.

But finance minister Tendai Biti -- a backer of Mugabe's rival, Prime Minister Morgan Tsvangirai -- says he cannot account for any of the $30 million in Marange diamonds sold in the months before the ban.

Nonetheless, African countries, China and India supported the Kimberley decision, which was opposed by Western nations, rights groups and the industry -- which is keen to avoid the bad publicity which "blood diamonds" bring.

Industry groups have urged members not to trade in Marange diamonds and called on Kimberley members to find a compromise.

"By walking out of the house, and by upending the discussions, some members clearly do not realise the enormous negative and, I fear, disastrous impact their conduct has and will have on the entire diamond supply pipeline," said Avi Paz, president of the World Federation of Diamond Bourses.

"The clock is ticking and it shows it's five minutes to midnight. Disaster is awaiting around the corner for the international diamond trade."

The United States said it believes Kimberley can still find a way to monitor Marange diamonds.

"We believe that work toward a solution must continue, and that until consensus is reached, exports from Marange should not proceed," the State Department said in a statement.

"The US would like to ensure the Kimberley Process's future and enable diamond exports to contribute positively to the region's people and economy."

In the meantime, rights groups are calling for a boycott of Marange diamonds until Kimberley reaches a consensus.

"Governments and companies should ignore (Yamba's) decision unless they want to make blood diamonds available to consumers and ruin the credibility of the Kimberly Process as well," Human Rights Watch said.




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