Ian Smillie, the always somber and serious looking peace activist, has just completed an extensive presentation on the Diamond Development Initiative (DDI) to a working group of the Kimberley Process in Moscow. It may be recalled that this joint initiative, launched in late 2004 by De Beers, Global Witness and Partnership Africa Canada (PAC), has quickly been nicknamed “Kimberley II” – also by this writer. The objectives, the working methods, the membership, the resources and their uses, of this Diamond Development Initiative were rather clouded. To bring some clarity, the initiators felt it useful for PAC’s Smillie to brief select Kimberley Process members to explain exactly what this is all about.

After his extensive presentation, a government official from a leading cutting center shrugged it all off by saying: “Why do we have to listen to this? This has absolutely nothing to do with the Kimberley Process. This guy is talking about improving the living and working conditions of some one million alluvial artisanal diamond diggers in Africa, most of whom earn less than $1 a day. This guy is talking about the viability of establishing a broader development and regulatory environment in which alluvial rough diamonds can be mined and distributed in a manner which will provide greater benefits for the artisanal miners and local communities. This,” said the government representative, “has absolutely nothing to do with the Kimberley Process Certification Scheme. This isn’t Kimberly II, because it has nothing to do with Kimberley.”

Explains the KPCS member: “The Kimberley Process has a well defined governmental (and UN) mandate: to eradicate trade in conflict diamonds and deny these goods any chance to enter into the organized trade. The participants (i.e. member nations) at the Kimberley Process have neither a mandate nor are allowed to use the certification system for any other purposes – and the DDI will definitely not lead to an amended Kimberley Process System.”

I wasn’t there – so I cannot say if Ian Smillie produced a broad smile or was successful in maintaining his traditional stern composure. But he should have felt relieved – as the reaction of the government official was the desired outcome of his briefing: by explaining what the DDI is all about, it would also become clear what it is not. Were all those observers and writers, including myself, wrong by writing that DDI would lead to an expanded Kimberley Process? Probably not – because the embryonic movement (and I would now call it a “movement”) wasn’t sure at the time how it would go about achieving its goals. The exclusion of leading industry stakeholders was glaring at the DDI’s first plenary meeting in London, attended by some 45 people. Apart from the many De Beers participants, there were less than a handful of participants from the diamond industry. That exclusion was a tactical mistake: it underestimated the level of resentment that it created among the leading industry organizations worldwide.

With all this publicity (and almost “mystery”) around DDI, I readily accepted the invitation to attend a DDI meeting in London (in May) and another one in Washington last week. These meetings turned me from a “skeptic” into a “believer” – from a “critic” into a “supporter”. That only underscores what would have happened if there had been a more significant industry participation in the January 2005 London plenary.

But London was, after all, very preliminary. It was only at these follow-up meetings that the “mission statement”, which describes the DDI’s ultimate objectives, was approved by the initiative takers – who have been joined by the powerful presence of the World Bank’s Jeffrey Davidson, the head of the institution’s Communities and Small-Scale Mining Department. The mission statement probably says it all – even though it doesn’t say anything about “how to get there”:

“To gather all interested parties into a process that will address, in a comprehensive way, the political, social and economic challenges facing the artisanal diamond mining sector in order to optimize the beneficial development impact of artisanal diamond mining to miners and their communities within the countries in which the diamonds are mined.”

A recent 78-page UN booklet “Enabling Economies of Peace”, dealing with public policy for conflict-sensitive business, puts the DDI initiate in a rather precise perspective and context: “While the Kimberley Process has done much to rationalize the global diamond trade, it does not directly address issues of diamond production, particularly informal production by small artisanal mines in alluvial diamond fields. Several initiatives have been launched to fill this lacuna, each of which seeks to ensure the safe, sustainable and peaceful mining of diamonds, while also ensuring widest possible community benefits.”

The UN then lists a number of initiatives (such as The Peace Diamonds Alliance and The Campaign for Just Mining) and also describes the Diamond Development Initiative as follows: “Through a multi-stakeholder process, the DDI seeks to explore the viability of establishing a broader development and regulatory environment in which alluvial rough diamonds can be mined and distributed for the greater benefit of artisanal miners, local communities, local governments and the wider international diamond industry.”

There are two words here “regulatory environment” that makes the industry jump. However, the reference clearly aims at the situation within artisanal diamond mining countries such as the DRC, Sierra Leone, Angola, CAR, Ghana, Guinea, Liberia, Tanzania, South Africa and others, including South American countries, and – eventually – this might also impact the export regulatory regimes. We don’t know that yet – DDI is still at a very early stage. But it is not Kimberley II.

The confusion, which Ian Smillie addressed in Moscow, is partly caused by the (too) frequent reference to Kimberley, also in the DDI literature. It seems as if governments, industry leaders and NGOs never miss an opportunity to talk about the Kimberley Process as one of the diamond business’ greatest success stories and achievements, totally ignoring that the “rank and file” of the diamond business very much see Kimberley as a “mission accomplished”. Many feel that it deserves to be abolished.

Many diamantaires feel that the wars in Sierra Leone, Angola, Liberia, DRC etc. are over – and the sporadic regional flare-ups, unfortunate and sad as these might be, which we still occasionally encounter in places like Ivory Coast and DRC, are only remotely diamond related. The insistence that the Kimberley Process must be seen as a “permanent feature” because of its preventive nature is not an argument that is broadly supported by the business at large.

The aforementioned UN booklet confirms that today 99.8% of the world’s diamond production is channeled through the Kimberley Process, which implies that 0.2% (i.e. $20 million) of the production escapes the process – and, in a worst case scenario, all of this might represent “conflict diamonds”. Though I completely, utterly and totally disagree with this UN (and Kimberley System-inspired) figure, it certainly strengthens the hands of those who believe that Kimberley has served its purpose.

The DDI initiators should move away from citing Kimberley too often as a success story. The much-proclaimed unity is weakening. In the recent Moscow meeting governments and NGOs wondered whether outsiders should be part of the three year review of the entire Kimberley Process Certification System that will take place next year. Some - led mainly by the EC delegation at Kimberley - want it done only by insiders. NGOs think that a review of a complicated agreement by the very people who designed and manage it will not be objective or credible. Smillie and colleagues think that outsiders – such as the World Bank's Evaluation Division; the UN, Deloitte or individually chosen experts -- would get this review process away from the endless internal bickering and help to give all Kimberley stakeholders (governments, industry, civil society) an objective view of whether or not the KP is doing its job properly.

 The NGO’s fail to understand the reluctance of some participants to get an external, objective, independent view of the overall KPCS and they can’t help but wonder if all Kimberley participants are fully committed to having the very best and most efficient and effective mechanism. Some major diamond countries pleaded (again) to remove the “value” designation from the certificates, or asked for the combining of industrials and gems into one customs category, to reduce errors and to streamline the system. Needless to stress that these requests met a wall of opposition. You have to be blind not to recognize a schism within the organization.

Kimberley is not the subject of this article. These trends, the discord from within, are only mentioned to highlight that the Kimberley Process - a great accomplishment when it was most needed - is now viewed as a cumbersome burden in the eyes of many diamantaires. The thought of having a Kimberley II, therefore, meets intuitively and instinctively with considerable resistance. Fortunately, it is a “False Scare” – but it also took me quite a long time to reach that conclusion.

The DDI initiators may have misjudged the sense of the industry when they presented the DDI as a “continuation process” in the context of “where Kimberley left off”. The dedicated and enthusiastic DDI proponents note that “In a remarkably short time, the Kimberley Process was able to articulate a system for managing and certifying the internal and international trade in rough diamonds … The KPCS remains a work in progress. It has been credited, however, with huge increases in official diamond exports from Sierra Leone and the DRC and with the ending of all official diamond trade with many countries accused of involvement in conflict diamonds.

“Participants in the KPCS,” says the DDI, “ascribe its success to the willingness of a wide range of governments, civil society and the diamond industry (represented by the mining, trading and manufacturing sectors) to give each other space and respect, and to work together. The Diamond Development Initiative emerges from a recognition that the underlying problems of Africa’s alluvial diamond operations and its estimated one million artisanal miners lie beyond the KPCS, and have not yet been addressed.”

In fact – the only reason for the DDI to bring up Kimberley is to demonstrate what can be done if we are united. In fact – the DDI doesn’t have anything to do with Kimberley. Nothing. If anything, it may have worsened the plight of small-scale miners. Sierra Leone diggers have testified that the traders “passed on” their extra Kimberley-related costs to the small miners. [Undoubtedly, it is true that the conditions of diggers in the conflict areas were abhorrent – far worse than anywhere else. These diggers’ dignity was reduced to that of near-slavery or actual slavery under the rebel warlords. But DDI addresses itself to all artisanal diggers – and not to select segments.]

Outside of the diamond industry – in the halls of the United Nations, the World Bank, the development NGOs, the peace NGOs, the governmental agencies involved in development assistance in African nations – the DDI has, in a very short time, earned much appreciation, support and recognition.

The diamond industry, so far, has been left (or kept) out of the process. That must – and will – change now. The focus of the DDI will be the creation of a multilateral partnership framework that will allow interested parties to pool their resources, experience and knowledge, and to integrate various initiatives that are being developed in this field. There is room for every industry organization or player that wants to support the DDI’s objectives and who wants to contribute to the process.

A second plenary meeting of the DDI is tentatively scheduled for an African location in September. Civic society, NGOs, international development bodies and agencies, hope to also welcome many stakeholders from the industry. It must be recognized that, so far, the DDI is mostly a movement, a concept, an idea, an objective. At the next Africa Plenary the participants will discuss ways to implement the DDI’s objectives.

The DDI was also discussed at a forum at the JCK Show. It was reported that it received an enthusiastic response from jewelers who considered this a “consumer confidence issue” of the first order. Assisting in uplifting the miserable working conditions of diamond diggers can add a “charity” element to the purchase of diamonds – when you buy your diamond you contribute to these diggers’ welfare. Anything that strengthens consumer confidence in the diamond product is good for business, is good for prices, and is good for sales. That is self-centred reasoning – out of place and out of context. This is not what the DDI is all about.

The DDI is a truly humanitarian development effort. The DDI will not work in isolation. Its objectives are part of urgently needed broad mining sector reforms which requires a comprehensive approach that includes legal, fiscal, institutional, environmental and enterprise reforms. There are no “short cuts” – claims of “let’s just depend on private enterprise” (and those claims have been made) are utterly false – as “private enterprise” will fail if certain other prerequisites are not met.

A mining country first needs sound macro-economic policies, which must come as a result of (or come alongside) broad nationwide economic reforms, and liberalization of socio-economic regimes which, preferably, will be inductive of private investments. This means, for all practical purposes, revision of taxation laws, banking and trade laws and structures, reducing or eliminating the gaps between black and official exchange rates (or, in general, reforms of the exchange rate systems), and a wide range of other “capacity building” activities within the artisanal sectors – ranging from defining the “rights” to the output, to redefining the licensing conditions, the provision of certainty of tenure (protection of rights), and, most importantly, providing the skills and tools for more efficient, safer and responsible mining.

Many of these reforms are already in process by the worldwide donor community led by the United States, the United Kingdom both by itself and in EU context, by the World Bank, IMF, and other regional development institutions, by NGOs, by religious charities and by many humanitarian development organizations. DDI is trying to “close a gap” – making sure that in the myriad of very important projects, the one million diamond diggers will not become a “forgotten” group. The artisanal diggers represent the weakest, the poorest and, from a human development perspective, the most miserable sector in the mining industry. DDI is there to help them – to advance their cause within the framework of existing aid projects and in new projects. Through DDI, the artisanal diamond diggers will have a “lobby”, a voice, input in places they wouldn’t be heard otherwise. Indeed, if there wouldn’t have been a DDI, we should have invented one. And that is exactly what is happening today.

Have a nice weekend.