Corruption, Development and Diamonds

RAPAPORT… The Rapaport International Diamond Conference 2007 focused on how to help the diamond diggers in West Africa benefit from the diamonds they find. 

I’d like to start this meeting the way they do in Sierra Leone, with a prayer and meditation,” announced Martin Rapaport, chairman, Rapaport Group, as he called to order the 260 attendees of the Rapaport International Diamond Conference (IDC) 2007. And so the meeting began with a prayer for all to keep an open mind during the daylong discussion, followed by a moment of personal meditation.

Led by a panel of experts — comprised of nongovernmental organizations (NGOs), government representatives and financial interests — and moderated by Rapaport, the event was an open discussion with the industry to put forth ideas on how to best help artisanal diamond diggers in West Africa. The question was raised as to how to take the next step without stepping on the U.N. -backed Kimberley Process (KP), which is a chain of warranties that guarantee the origins of a diamond. The KP was developed as a way to filter out smuggled diamonds and diamonds used to fund wars. The keynote speaker for the conference was “Blood Diamond” producer and director Edward Zwick, who participated in an open discussion during the conference that raised the issues of generational transition, government corruption and boycotts.

NO BOYCOTT

With a group of protesters outside the New York Hilton, where the conference took place, calling for a boycott of diamonds, the idea was a subject of much discussion. The consensus from the panel was that a boycott would be harmful.

“Should we buy artisanally produced diamonds?” asked Ian Smillie, research coordinator for NGO Partnership Africa Canada (PAC). “If the answer is no, then we better have an answer to get them paid adequately and to get them basic human rights — food, shelter, decent working conditions.”

A stringent response came from Barbara Fiorito, chair, board of directors, Fairtrade Labelling Organizations (FLO). “It’s okay to buy diamonds from Sierra Leone. It would be immoral to stop buying those diamonds without development in place and without other support.”

“There’s never been a product that has been successfully boycotted,” said Alex Yearsley, senior manager for investigations, Global Witness, an NGO that has been calling for a boycott of diamonds from West Africa in recent months. “We thought about it and it is the wrong thing to do. Is there effective change from boycott? No.”

A boycott is naive, commented Michael Stanley, senior mining engineer, the World Bank Group. “We have concluded that those diamonds will go to market somehow, it may not be a Western market, but to a market somewhere.”

Michael Conroy, TransFair USA, discussed academic studies relating to certificate systems and boycotts. “Groups like Amnesty International [AI] and Global Witness have figured out how to raise challenges to brands. I spent 12 years at Yale and various foundations developing certification systems. We found that boycotts were damaging to people, companies were put out of business and people were laid off. We built certificate systems that stated social and environmental conditions. The certification comes from sources that track social and environmental conditions. This also helps to get us away from corrupt governments,” said Conroy.

CORRUPT GOVERNMENT

Panelists acknowledged governmental corruption and weak governance as the biggest obstacles to development in West African nations. The answer to why governments are so corrupt in West Africa is complex. One must first look at the history of Africa. The basis of many African nations is tribal and therefore very fluid as people move from place to place as needed to survive and with no sense of country boundaries. There are frequently tribal rivalries as well, which put the tribes at odds with one another, creating conflict. There is a history of colonization. Further aggravating the situation is that when decolonization occurred, many of these countries were unprepared to self-govern because the countries that colonized them pulled out suddenly, with no thought of what would happen when they left. The strongest would come into power, who are not necessarily the ones best equipped to govern and are frequently out for self-gain. Corrupt government causes people of the nation to grow resentful as they see their leaders growing rich with no benefit coming to them. It is exactly this scenario that creates wars.

Yearsley noted that when artisanal miners in Sierra Leone were asked what diamonds are used for, there were two basic responses: either they thought that the stones were used for armaments, or they had no idea of what they were used for. They certainly had no idea of the value of these precious gems. Yearsley further pointed out that a rough diamond purchased from an artisanal miner for $5 in Sierra Leone may well sell for $25,000 in New York, with none of that wealth going back to benefit the diggers.

“Why is it that in Sierra Leone, people have mined diamonds for 40 years and when you look around there is not even clean water? How do we get some of that wealth to those people and how can they benefit from diamonds?” Yearsley asked.

Smillie stated that PAC began looking at the issue of diamonds in Sierra Leone in 1999. He put forth several questions that need to be addressed: First, why is Africa so underdeveloped? One reason, he says, is that democracy is not common in the governments in these countries. He also asked why foreign aid doesn’t work. According to Smillie, it doesn’t work because the governments are corrupt. “The problem is not resolved by law. Economic problems need economic solutions,” said Smillie. “Job development is key to economic development, but to do that, there must be an educated and healthy workforce for that to be viable.”

There were two main viewpoints that emerged on dealing with corrupt government: one, that when you are in a country, you have to deal with the government because you are in their country. The other suggestion is that perhaps to have sustainable development, groups must work from the community level and let the benefits filter up to government, since the government cannot provide the services that the communities need.

KEYNOTE ADDRESS

Zwick was the keynote speaker for the conference. He explained that he made the film”Blood Diamond” to chronicle the story of a historical moment in Africa. He explained his research and the feelings of despair that he felt about seeing so much poverty and how he came to realize that his feelings were selfish. If he was going to tell this story, he had to give something back to help the people whose story he was telling, but who are so devastatingly poor. “We repaired roads, dug wells, improved sewage drains, built classrooms. More important, we injected $40 million of cash — in the form of jobs — directly into local economies, where the money stays and is turned over, again and again. The truck driver gives his pay to his wife, who pays the butcher, whose wife buys clothes for her children and so on.”

Zwick then challenged the diamond industry to give back to the continent that has given them so much. He noted that everyone in the diamond industry has benefited from the stones that destroyed Sierra Leone.

“I’m talking about a paradigm shift, about reimagining an entire industry as a force for good, not waiting for a development partner, but becoming a major development partner yourself — not to be defensive, but rather to lead. What would happen if the industry decided to dedicate a portion of every single African diamond sale to the rebuilding of infrastructure and the creation of sustainable development? The Red Campaign is doing it with Gap T-shirts and jeans, American Express is using credit cards; what’s to stop the branding of West African diamonds?” Zwick asked.

GENERATIONAL CHANGE
 
Another area of discussion that came up was that of transgenerational change, meaning how the way that younger generations think influences their spending habits. Values and what money is spent on shift from generation to generation. The all-consuming Baby Boomer market is being replaced by a new, more socially aware generation that may or may not base its purchases on social consciousness. This shift in the paradigm may impact diamond jewelry sales in the sense that this generation of shoppers may not feel comfortable buying a product that they feel does not represent their values of humanitarianism and environmental sensitivity. It’s an issue that goes to the future stability and welfare of the diamond industry.

“We have to step back and consider a broader context,” stated Matthew Runci, president and chief executive officer (CEO), Jewelers of America. “We need to act across generational values in all aspects of our lives. We have to find out what matters to teenagers and college kids. What do they buy and what matters to them?”

Artisanal diggers could benefit from this consciousness if the diamond story adapts to the changing attitudes. As development progresses in West Africa and a diamond comes from that region, tell that story, said Michael Rae, CEO, Council for Responsible Jewellery Practices (CRJP). “Sell the stone with the story of the process of what is happening to the people as they go through the transformational process.”

Another aspect of transgenerational change is that technology makes information more available more quickly than ever before, pointed out Conroy, TransFair USA.

The conference raised many issues and opened discussion among the attendees during breaks. It remains clear that there are different strategies to solve the problems and it will take time to implement those strategies.

Sidebar — Give Us Your Diamonds
By Peter Gonnella

About 20 representatives and associates of the African People’s Solidarity Com-mittee (APSC) braved bitterly cold conditions in New York City on February 5 to stage their “all diamonds are blood diamonds” protest. The demonstration took place outside the New York Hilton where the annual Rapaport International Diamond Conference was being held.

In below-freezing temperatures, the small, but vocal, group of APSC demonstrators trumpeted their mantra of not only boycotting diamonds from Africa, but also from all over the world. Brief addresses were made by: Penny Hess, chairwoman of the APSC; Aisha Fields, a member of the African People’s Socialist Party, and Diop Olugbala, international organizer for the International People’s Democratic Uhuru Movement. “The diamonds of Africa belong to African working people,” said Hess. “They are part of the legacy of colonial plunder that began with slavery that has made America and Europe wealthy and powerful, and the majority of Africans impoverished and powerless.”

The APSC contended that discussion at the conference revolved around how the diamond industry could maintain its control over Africa’s resources, while appearing to be concerned about improving the conditions of the diamond workers. “Despite the diamond industry’s attempt to portray [itself as the savior] of African people, the only way that African people are going to experience prosperity … is through gaining total control over their resources once again — by uniting and liberating Africa,” Hess went on to say.

One of the ways the APSC suggested that U.S. consumers could help was to donate their diamonds, or money, to the Uhuru Movement for African- led development and empowerment programs designed to bring water purification, electricity and otherinfrastructure to diamond-producing regions of Africa. The APSC describes itself as a white solidarity organization working under the African People’s Socialist Party, which leads the Uhuru Movement for the liberation of African people.

Sidebar — Rapaport IDC 2007 Delegates
Alex Yearsley — Global Witness
Ian Smillie — Partnership Africa Canada
Barbara Fiorito — Fairtrade Labelling Organizations
Michael E. Conroy — TransFair USA
Amy O’Meara — Amnesty International USA
Eli Izhakoff — World Diamond Council
Jeff Fischer — International Diamond Manufacturers Association
Ernest Blom — World Federation of Diamond Bourses
Matthew Runci — Jewelers of America
Michael L. Rae — Council for Responsible Jewellery Practices
Cecilia Gardner — Jewelers Vigilance Committee
Sue Saarnio — U.S. Department of State
Nancy Smith-Nissley — U.S. Department of State
Barbara Addy — USAID
Christopher Sheldon — World Bank
Michael C. Stanley — World Bank
Alyson Warhurst — Warwick Business School
Alyson King — European Commission (EC)
Karel Kovanda — EC, Chairman: Kimberley Process
Ed Zwick — Director, “Blood Diamond”
Martin Rapaport — Chairman, Rapaport Group