Innovations in the Institutional Environment: The Kimberly Process Certification Scheme. Virginia Haufler

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1 Innovations in the Institutional Environment: The Kimberly Process Certification Scheme Virginia Haufler How do we create an incentive system that encourages ethical behavior by business in the midst of conflict? i How do we ensure that commerce does not contribute to strengthening illegitimate governments, or undermining the position of weak ones? Although many businesses flee conflict and instability, trade and investment often continue despite violence, corruption, and weak governance. Under these circumstances, business leaders may either become complicit in violence and corruption, or may inadvertently contribute to it simply through their daily operations. Some might argue that investors should withdraw from conflict-affected regions or those states with weak or repressive regimes in place. Others, however, seek to devise a political framework that encourages and even ensures corporate responsibility under these difficult conditions. In the past decade or so, different international frameworks have been tried, with varying success. These include the relevant elements of the OECD Convention on Multinational Enterprises, the UN Global Compact Policy Dialogue on Business in Zones of Conflict, the Voluntary Principles on Human Rights and Security, the Chad-Cameroon Pipeline Project, and the Kimberly Process Certification Scheme for diamonds (KPCS). Of these, the KPCS has been relatively successful. ii Its relative success can be attributed to both the nature of the industry it regulates, and the design characteristics of the KPCS. In particular, the combination of private sector certification with public sector export and import controls strengthen the legitimate diamond market in ways that provide strong 1

2 incentives for the diamond industry. The weakness of the KPCS is that the monitoring and enforcement are in the hands of governments, and the incentives for governments are less clear. The KPCS represents one of the most interesting institutional innovations in recent years. (Tripathi, ms.) The development and institutionalization of this system of certification and export control, providing both public and private benefits to the participants, contrasts with the lack of similar systems in other conflict commodities, such as coltan, cocoa, and timber. The explanation of these differences may lie in a number of unique features of this sector, e.g. high industry concentration, limited sources of the product, and extreme sensitivity to reputational effects. The ultimate effectiveness, however, may lie not so much with the industry side of this as with the public system of monitoring and enforcement, which differentiates it from other voluntary initiatives. This case provides an interesting basis to judge the relative success of corporate conflict prevention efforts. This article first describes the diamond cartel that dominated the industry for close to a century, and its breakdown and transformation. It provides a brief history of the activism over conflict diamonds, and the creation of the Kimberly Process to eliminate them. It concludes with an evaluation of the KPCS as an institutional innovation that takes steps to bring market incentives in line with norms regarding corporate responsibility in zones of conflict. The Diamond Cartel The diamond sector has been, until recently, a highly organized and centralized sector. DeBeers had actively created and maintained one of the most successful 2

3 international cartels in history. All players in the industry had a common interest in cooperating with DeBeers to enforce tight control of diamond supplies in order to maintain the illusion of scarcity that contributed to the myth that diamonds are valuable. The cartel was originally established by Cecil Rhodes and later strengthened by Ernest Oppenheimer and his successors as managers of DeBeers. The DeBeers empire was based initially on the extensive mines it had in South Africa, and on a market system that strictly controlled supply and distribution of diamonds by manipulating an extensive stockpile of diamonds that the company built up. The cartel itself operated through a series of long-term contracts between the company and most of the diamond producers in the world. DeBeers also controlled the Central Selling Organization in London which was, as its name implies, the central distributor of diamonds for the industry. iii Deborah Spar, in her 1994 book on cartels, described the system in this way: It is an intricate network of production quotas, quality controls, and stockpiles. It is a formidable system of fixed prices and controlled distribution. It is an incredible array of rules and regulations, rarely violated and meticulously enforced. Most of all, however, the diamond cartel is a staggering edifice of cooperation. (Spar 1994 p.52) This cooperation began to break down in the 1990s, partly as a result of the longrunning conflicts in Africa which pushed large amounts of rough diamonds into world markets. In order to control supply, DeBeers spent millions buying up these rough diamonds (which would later lead to charges that DeBeers was buying conflict 3

4 diamonds). At the same time, the collapse of the Soviet Union, which had implicitly supported the cartel, exacerbated the oversupply of diamonds as the collapse spurred Russian firms to push more of the stones onto world markets. These diamonds came to market through channels outside DeBeers control, which DeBeers referred to as the leakage of diamonds. iv ( The negotiations between DeBeers and Russia over the amount of diamonds the Russians would sell to DeBeers were tense and threatened to break down, as the Russians pressed to sell more diamonds outside the cartel. In addition, new smaller players entered the market throughout the 1990s and began challenging DeBeers for market share. By the turn of the 20 th century, Africa no longer remained the primary diamond producing region of the world Canada, Australia, Brazil, China and Russia together today account for more than half of world diamond mining. According to The Economist, in the early 1990s DeBeers produced about 45% of the world's rough diamonds, but sold about 80% of the total world supply through the Central Trading Organization. ("Changing facets" 2007) At the end of the decade, this had changed, as new producers were no longer willing to sell the majority of their stocks to the CTO. The management of DeBeers changed direction, and made the significant decision to end its custodial role in controlling diamond supply, and turned from being buyer of last resort to supplier of first resort, according to its website. ( By doing so, DeBeers hoped to strengthen its own position in new consumer-oriented markets. They also hoped this would allow them to settle antitrust issues in the U.S. that had heretofore restricted the firm s ability to develop consumer markets there. To demonstrate its changed policy, DeBeers committed to 4

5 selling much more of its stockpile of diamonds, thus reducing its ability to manipulate diamond supplies. (United Press International 2000 ) The trading arm of DeBeers stopped buying diamonds on the open market, which was one of the primary means to build up its stockpiles and control supply. The role of DeBeers in African regional politics had also been undergoing changes. African governments had raised complaints that too much of the upstream diamond business was handled abroad, and they sought to develop more sophisticated diamond processing capacity within the region. One of the big changes in the management of the company occurred when the government in Botswana became a major shareholder, and today the company aggregates a large portion of its diamonds instead of sending them to London. In 2005 it finally settled its antitrust dispute with the U.S., and shortly thereafter began marketing its products there under the DeBeers name for the first time. ("Changing facets" 2007) It has also been making significant investments in diamond fields outside of South Africa, primarily in the Northwest Territories of Canada. DeBeers still controls over half the diamond market, but it is no longer enforcing the old cartel. The Emergence of Conflict Diamonds Civil wars in Angola, Sierra Leone, Rwanda, Liberia, DRC, and Cote d Ivoire spilled across borders and garnered worldwide attention in the 1990s. The brutality of genocide in Rwanda and the cruelty of rebel practices in Sierra Leone generated media attention and galvanized activism on behalf of the victims. Early in the decade, a number of activists formed new organizations or redirected the attention of existing ones towards 5

6 the dire need to end the continuing violence and bloodshed. A number of them focused attention on how the market for natural resources can finance war, providing the funds to hire soldiers and buy weapons. v In a series of reports by Global Witness in 1998 and 1999, that NGO put oil companies and banks on notice for their culpability in facilitating the ongoing conflict in Angola. (Global Witness 1998, 1999) Ian Smillie, of Partnership Africa Canada, released a report in 2000 that linked diamonds to bloodshed in Sierra Leone. (Smillie et al. 2000) Conflict diamonds entered the political discourse shortly afterwards, propelled in part by highly effective campaigns by advocacy organizations that targeted consumer sentiment by re-labeling them as blood diamonds. vi The UN General Assembly responded by passing unanimously a resolution condemning the role of diamonds in financing conflict. It defines conflict diamonds as diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally recognized governments, and are used to fund military action in opposition to those governments, or in contravention of the decisions of the Security Council. ( The UN Security Council had applied sanctions against the UNITA rebels in Angola earlier, including an embargo on trade in diamonds in It followed up with a High Level Expert Panel (the Fowler Report ) to investigate sanctions busting, given the ineffectiveness of the sanctions, and the resulting report for the first time named names of individuals and companies involved in illegal trade. (Fowler 2000) The UN Security Council also applied sanctions to the trade in diamonds from Sierra Leone in 2000, following the signing of the Lomé Peace Agreement. The UN sanctions regime did not succeed in its aim of ending these conflicts through negotiated settlements under pressure of the international sanctions 6

7 regime, which reinforced the shift in international attention to the role of the private sector in the continuation and possible resolution of conflicts there. Coalitions of advocacy groups launched transnational campaigns against blood diamonds. Many of the non-governmental groups involved tried to walk a delicate line between threatening to destroy the reputation of companies involved in the trade in conflict diamonds, while not undermining the entire market for diamonds which would devastate countries like Botswana which had a well-managed diamond sector. Not surprisingly, diamond industry leaders initially resisted the external pressure and denied being complicit in the bloodshed devastating so many lives. Creating a New System: The Kimberly Process Certification Scheme By 2000, some leaders within the diamond industry realized that the conflict diamond campaign posed an increasing threat to diamond markets. The value of diamonds used for jewelry is at heart based on a myth about the value of diamonds, and not rooted in material value. The diamond cartel reinforced the perception that the diamond was a special gem by maintaining artificial scarcity, and branding diamonds as a luxury category and class of status goods. The idea that an engagement ring must be a diamond was one promoted by the diamond sector, and is of fairly recent origin. vii Countering the soft-focus portrayal of a diamond ring as an object representing love and commitment was a clever advocacy campaign calling them blood diamonds, linking them with horrific practices such as the mutilation of children by rebels in Sierra Leone. This campaign had the potential to change the vision of diamonds in the minds of consumers, leading them to believe they were no longer appropriate symbols of affection 7

8 and fidelity. If this campaign was successful, in a worse case scenario, could be the collapse of the diamond gemstone market. A few perceptive industry insiders realized that this campaign could be different from earlier ones highlighting other issues, such as labor standards in the mining industry, which had been easily dismissed. The stakes were significantly higher, and the impact of the blood diamond campaign appeared to be more significant. Over time transnational campaigns targeting corporations had become more effective and influential, and were part of an emerging anti-globalization movement that encouraged consumers and investors to consider corporate responsibility in their decisions. In response, the World Federation of Diamond Bourses and the International Diamond Manufacturers Association passed a resolution creating the World Diamond Council (WDC) in The mandate of the WDC was to develop a tracking system for the export and import of rough diamonds to prevent their illicit use. viii Through negotiations in a number of committees, the WDC explored options and produced proposals that would become the basis for a new international regime. The heart of the system would be an industry-designed system of warranties and chain-of-custody practices that would assure buyers that the rough diamonds they purchased did not come from conflict zones. These no go zones would be excluded from markets for legitimate diamonds as members of the WDC committed not to trade in uncertified stones. They also proposed that other sectors, including banks, insurers, and shippers, also agree not to do business with anyone dealing in conflict diamonds. ("World Diamond Council calls for International Government Action on Conflict Diamonds" 2000) In 2001, the industry 8

9 began to implement this voluntary system of certification and sanctions, and began to establish internal controls to prevent the purchase and distribution of conflict diamonds. Such a system, however, could not be implemented effectively by industry alone, as the participants recognized from the beginning. The WDC called for the implementation by governments of export and import controls to back up the diamond certification system. In order to regulate the global trade in diamonds, there needed to be border controls instituted and enforced by governments. Although it is conceivable that industry itself could establish limits on its own exports and perhaps even on imports, border controls themselves could not really be maintained by private sector initiatives. Major exporting and importing states needed to establish policies that would only permit trade in legitimate diamonds, and enforce them through their customs systems. The blood diamond campaign had also raised concerns among the major producing states, which had become anxious about the concerted campaign against conflict diamonds Botswana, Namibia, and South Africa all recognized the threat to one of their major exports. They supported calls by the UN General Assembly for the development of policies that would prevent the sale of rough diamonds from financing conflict. Spurred to action, the South African government in 2000 hosted the first UNsponsored negotiations among industry representatives from the World Diamond Council, south African diamond producing states, and civil society organizations (Global Witness and Partnership Africa Canada) in Kimberly, South Africa. By the end of the year, the UN General Assembly adopted a resolution supporting the establishment of a diamond certification system, as proposed by the WDC. Negotiations over the next two years produced concluded with the agreement to establish the Kimberly Process 9

10 Certification Scheme (KPCS), which built upon industry proposals to implement export and import restrictions by states. The entire process, from the first meeting to the implementation of the KPCS, took only three years. Under the KPCS, rough diamonds (diamonds that are uncut or minimally cut and unpolished) would be packaged together in a parcel with a forgery resistant certificate that documents that the stones meet the requirements of the KPCS. In other words, the stones do not come from designated conflict zones. All participant states are required to ensure that exports and imports of diamonds are in sealed containers, properly certified, and do not come from non-participant states. Participants are also required to institute internal controls (developed by the industry) to ensure that conflict diamonds are eliminated from internal markets as well as from exports. The state-based border control regime would be complemented by industry self-regulation which will provide for a system of warranties underpinned through verification by independent auditors of individual companies and supported by internal penalties set by industry, which will help to facilitate the full traceability of rough diamond transactions by government authorities. (KPCS Section IV) For each of these steps, the KPCS makes specific recommendations about the design of the system but leaves quite a lot up to the industry and the national government. The members are supposed to report fully information such as country diamond production levels, trade data, and the implementation problems they encounter. All KPCS members would meet annually to review the behavior of participants, address any problems that have arisen, and refine the system. One of the first issues they addressed was the need to institutionalize a system of peer review to monitor their own behavior, 10

11 which was launched in 2003, with a Working Group on Monitoring that regularly reviews implementation. ix ( States that violate the terms of the KPCS, that are too riddled with corruption to implement it effectively, or that otherwise are free-riding on the KPCS system would have their membership revoked. No KPCS member state could trade with non-members, which is a tough sanction for states that depend on diamond exports as a major source of revenue. Within each member state, the diamond industry would develop a system of certification warranties to ensure that no conflict diamonds were knowingly brought to market. In addition, they would submit themselves to regular third-party audits. While the World Diamond Council has established guidelines on how to implement such a system, there is some variation in the design of the warranty system across countries. To date, the KPCS has not established clear oversight and sanctioning of industries in response to the problems revealed by some audits, and the audit system itself is not well established. This has been one of the primary complaints of the civil society participants in the KPCS (Global Witness and Partnership Africa Canada). The KPCS is credited with the dramatic increase in the level of legitimate diamonds traded in international markets, which indicates that more participants are using the system. Some of the conflicts that first generated headlines about diamonds have been settled, with attention shifting from Angola and Sierra Leone to the Côte d Ivoire as the main source of illicit diamonds in the world today. There are now 49 member states (the European Community counts as one), plus the WDC and two NGOS, constituting all major producers, traders, polishing centers, and the majority of diamond consumer markets. The industry has implemented its certification system and chain of custody 11

12 standards within each member state, and the major industry associations and firms have joined. Diamond shipments that have occurred outside the KPCS have been seized, although smuggling has remained an ongoing problem. Most member state participants have been reviewed at least once, and a few have been barred for non-compliance, such as the Democratic Republic of Congo and Liberia. The latter was permitted to re-join in 2007, after the lifting of UN sanctions in response to a change in government and significant reforms there. There are expressions of concern about specific firms, particularly the Russian firm ALROSA, which has remained opposed to the attempt to control conflict diamonds and is suspected of violating the terms of the Kimberly Process. Accountability, Enforcement, and Evaluation The KPCS is unique in terms of the way in which the public and private sectors are entwined. Both sets of actors had an incentive to design this system and respond to threats to the diamond market. But of course, it is not the threat to the diamond market that stimulated the activist campaigns it was the threat to the lives of people threatened by conflict. In evaluating the KPCS, we have to first consider the goals it established officially and the goals that the participants hoped to achieve for themselves. The KPCS was a situation in which the two sets of incentives were aligned. Both major diamond exporting states and the diamond industry itself wanted to preserve their market, and at a certain point realized they could only do so if they prevented diamonds from financing war. Differing perspectives on the success or failure of the KPCS hinge in large part on the perceived goals favored by different actors. From the beginning, the different 12

13 participants weighed the goal of conflict reduction differently. While all actors wanted to see an end to war, the diamond industry and exporting states were primarily concerned with preserving the reputation, and thus the value, of diamonds. (Tripathi ms.) On this basis, we can say that the KPCS had success in preserving diamond markets but ambiguous success in terms of actual conflict reduction. The system was praised for fostering a huge growth in legitimate trade in diamonds, indicating a reduction in the illicit exports that had been at the heart of the conflict diamond problem. (Global Witness and Wexler 2006 p.5) The system was established fairly quickly and yet overall fairly effectively. It was designed to provide incentives for participation by providing a ready market for legitimate diamond sales a market that would not be subject to official sanctions or consumer boycotts. In fact, the private sector would be enticed by the possibility that the positive benefits of participation, by enhancing reputation in a visible way, might lead to higher sales or profits. The certification is a clear and public symbol of a positive reputation, to be highlighted to consumers, activists and public officials. Different sources estimate that conflict diamonds have been reduced to only about 1% of the global trade. In preserving the market for diamonds, the system also preserves the profits of the industry participants. While there is general agreement that this is good for exporting states and their citizens, the issue is sensitive because many of the activists raise concerns about the relative weight of profits versus peace in the design and enforcement of the KPCS. Are the victims of war benefiting as much as the diamond industry? This is difficult to assess objectively. One thing that has become increasingly clear is that the 13

14 market for illicit diamonds has not disappeared. States with negligent diamond resources are exporting diamonds that clearly must have come from somewhere else. There was near universal support for the KPCS, and participation by both state and non-state actors. In this sense, the system allowed a wide range of interests to have a voice in the design and now the implementation of the regime. Global Witness and Partnership Africa Canada, two of the NGOs most involved in the campaign against conflict diamonds, are official members of the Kimberly Process. The goal of conflict reduction is difficult to assess completely, but we can see that both Sierra Leone and Angola two states wracked by civil war financed in part through diamonds negotiated peace settlements shortly after the KPCS was instituted. However, it certainly has not prevented new conflicts from emerging in places such as the Cote d Ivoire. Something like the KPCS may undermine the ability of warring parties to continue the fight, but it appears to be ineffective at preventing them from going to war in the first place. Most of the concerns raised about the KPCS today have to do with its design, and the processes by which decisions are made, policies implemented, and outcomes enforced. It is here that we see continuing concern over the Kimberly Process, and fundamentally opposed evaluations of the system. As a press release from Global Witness noted after a November 2007 meeting of the KPCS, weak controls and enforcement in major trading and manufacturing centres are undermining the effectiveness of the KP and allowing conflict and illicit diamonds to enter the legitimate trade. (Global Witness 2007) Industry self-regulation means nothing without the action of governments, and it is in fact the weaknesses of some participating governments that are at the center of 14

15 debates over its effectiveness. The U.S., as a major consuming state, was critical to getting the KPCS up and running. It has passed legislation banning conflict diamonds, and the U.S. diamond industry was highly supportive of it. (Silverstein 2001) The weakest link is not the consuming nations but the major suppliers, particularly in Africa. Exporting states, especially South Africa and Botswana, feared the rising political backlash against the use of diamonds to finance bloodshed, particularly through the successful link made to the plight of child soldiers in Sierra Leone. x But other exporting states had less commitment to the cause of conflict prevention, and less capability to enforce the KPCS regime. The members did institute a monitoring system under which participants are regularly reviewed. A number of states have already undergone this process. This part of the system is done by the public sector, which tries to detect cheating. Cheating in this case includes falsification of certification documents by industry and government officials; lack of controls as the rough diamonds change hands and are transferred among middle-men, distributors, polishers, and retailers; and unwillingness by states to enforce export and import controls. The ability, and more important, the willingness of some states to provide effective oversight within their own countries is a source of weakness in the regime. Some member countries are weak governments, with high levels of corruption and erratic commitment to the process. The certificates of origin from these states may be suspect, as officials can be richly rewarded for certifying diamonds from suspicious sources. Observers comment often that the system of peer review is still evolving, and needs to be strengthened. 15

16 The campaign against blood diamonds effectively leveraged the consumer market in order to get action by industry and governments. But this can also be a weakness in the design of the KPCS. Certification is valuable and effective as an incentives if consumers have the correct information and care about it. In many cases, this is where certification systems in general can be undermined. (Cashore et al. 2004) Creating a label that would signal clean diamonds may not be enough, if few consumers or retailers even know about conflict diamonds, still fewer are aware of the certification system, and only a handful actually insist on buying only conflict-free free certified diamonds. This is despite the fact that retailers are members of the KPCS, and Tiffany s jewelers has been very publicly active in supporting the system. It is very difficult to ensure to what degree consumers are well informed, and in general, labels signaling corporate responsibility may mean very little to the average buyer. Nevertheless, some diamond producers and retailers are making certification part of their brand, which may raise the profile of the system overall. Reflecting on the Kimberly Process The Kimberly Process re-establishes a diamond cartel, but in a new and improved version. It is not a cartel in the traditional sense in which industry players collude formally or informally to restrict supply, with the goal of increasing prices or dividing up market share. In this case, there were very public negotiations, and participation by a wide range of actors firms from every stage of the production process; both producing and consuming states; intergovernmental organizations; and nongovernmental organizations. The goal was not explicitly about levels of supply, prices, 16

17 profits or market share. xi But the end result of establishing limits on trade in a particular type of diamond conflict diamonds is to reaffirm the market power of legitimate diamond players; they are the ones with easy access to major markets for their products, and exports of legitimate diamonds have expanded since the implementation of the KPCS. This system does reduce competition, since non-kpcs states and firms cannot sell into KPCS member state markets. On the other hand, these same states had in most cases been subject to UN sanctions prior to the implementation of the Kimberly Process, so they already had limited access. Many of the formerly sanctioned states have implemented reforms and seek to become members themselves. While some might label this club a cartel, it is more close to being an international sanctions regime with public and private elements.(cutler et al. 1999) xii The Kimberly Process is, in many ways, the most successful effort to directly regulate trade in order to prevent conflict and promote the peaceful negotiation of differences. The process it establishes, with both private and public sector participation, is unique. It has a wider range of voices involved than in most such regimes, although the true victims of conflict diamonds were not directly represented. The system has mixed enforcement, in which states enforce the certification system established by the industry. But the industry itself has not monitored its own activities sufficiently, and there are gaps in the coverage of the chain-of-custody process. The profits of the industry have been preserved, but this is not a system designed to empower the victims of war. And peace itself, while ostensibly the main goal, cannot be directly attributed to the existence of the Kimberly Process. Under the force of criticism, the Kimberly Process has clearly evolved over time. While there is some concern that discussions among participants sometimes 17

18 center on trivial bureaucratic issues, it is striking that the KPCS has progressively strengthened its monitoring system. Can the Kimberly Process be replicated elsewhere? Does it provide a model for aligning incentives in such a way that the international political framework provides incentives for more ethical behavior by business? It would be difficult to regulate other commodities in a similar fashion as diamonds, since few other industries are quite so concentrated and few other products are dependent on reputation to such a high degree. There also are few products where the incentives of both private and public actors were so closely aligned, as both had a large stake in maintaining the value of diamond gemstones. However, the way in which the public sector acted as an enforcer for private sector voluntary efforts may provide a model for how to make private voluntary initiatives more effective. It is an institutional innovation that has not been replicated elsewhere in such a fashion, but could usefully be considered for other high-value commodities (coffee, cocoa, timber). While the KPCS is an institutional innovation that has much to recommend it, such a system does not necessarily indicate a widespread commitment to ethical behavior on the part of business. Willie Nagel, an international diamond trader who contributed to the creation of the Kimberley Process, commented that the system was designed to stem the flow of conflict diamonds, but "conflict-free diamonds should not be confused with ethical diamonds." (The Economist 2007). Other important values may be ignored by the participants. And the strength of this system relies on the economic self-interest of the major players. Nevertheless, the Kimberly Process demonstrates that the interests of the private and public sectors need not be contradictory in efforts to resolve conflict. 18

19 i The research for this paper was supported in part by a grant from the US Institute of Peace. The opinions, findings, and conclusions or recommendations expressed in this paper are those of the author and do not necessarily reflect the views of the United States Institute of Peace. ii Compared to other international efforts, the KPCS has indeed been successful. Nonetheless, it is subject to criticism on a number of fronts. One point to note here, however, is that despite its failures, the KPCS has been much more effective than the UN sanctions regime that preceded it. iii We popularly think of the company as DeBeers, which is how I will refer to it here, but the structure of the firm is more complicated and different branches of the business go by different names. iv In her study of cartels, Spar argues that the success of the diamond cartel was due in large part to the tight hierarchical control of both the DeBeers Corporation and the Soviet Union. (Spar 1994 p.41-2) v The natural resource-conflict link (the resource curse ) has been explored extensively in the academic literature in recent years. See for instance (Ross 2006; Humphreys 2005; Luong and Weinthal 2006; Overseas Development Institute and United Nations Development Programme 2006) vi These campaigns also launched a larger business and conflict agenda, including policy meetings at the United Nations Global Compact, and interest within national foreign policy and development agencies. vii Tiffany s has been a major promoter of diamond engagement rings, which until recently were not a specialty of some top jewelry retailers. The idea of a diamond 19

20 engagement ring has taken hold so completely that now DeBeers itself is entering this market. There is also a large industrial diamond market, though much of this is being supplied today by synthetic diamonds. Natural diamonds are still the main source for gemstones, however. viii One insider was of the opinion that the shift from resistance to action was spurred in part by generational change in organizations such as DeBeers, with the new leaders more sensitive to the possible negative impact on markets of sustained activist campaigns against diamonds. ix All the reviews are available on the Kimberly Process website x Keck and Sikkink argue that successful transnational activism is typically linked to issues of bodily harm, and certainly the thought of innocent children being caught up in such violence contributes to the media effectiveness of the cause.(carpenter 2007; Keck and Sikkink 1998) xi Although Participant states are obliged to report production levels, and non-reporting is a violation of KPCS, such reporting is not designed to manage the supply of diamonds. Instead, the goal is to monitor the level of legitimate diamonds in the market, determine their origin, and estimate the level of smuggling/ violation of the KPCS. xii I thank Tim Buthe for raising the issue of the KPCS as a cartel. Bibliography 20

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