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Cablegate: Kimberley Process - Status Quo or More?

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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #3836/01 3051510
ZNR UUUUU ZZH
R 011510Z NOV 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 2518
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0688
RUEHRL/AMEMBASSY BERLIN 0560
RUEHBS/AMEMBASSY BRUSSELS 1247
RUEHBY/AMEMBASSY CANBERRA 0567
RUEHOS/AMCONSUL LAGOS 1193
RUEHUJA/AMEMBASSY ABUJA 1113
RUEHLO/AMEMBASSY LONDON 1349
RUEHMO/AMEMBASSY MOSCOW 0693
RUEHOT/AMEMBASSY OTTAWA 0521
RUEHFR/AMEMBASSY PARIS 1208

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E.O. 12958: N/A
TAGS: EMIN ENRG ETRD SENV EINV SF
SUBJECT: KIMBERLEY PROCESS - STATUS QUO OR MORE?

1. SUMMARY: The Diamonds - Source to Use 2007 Colloquium in
Johannesburg offered heated discussion on whether to expand the
Kimberley Process from its successful efforts combating conflict
diamonds to include mitigation of illicit diamonds, artisanal
mining, and lack of transparency. World Federation of Diamond
Bourses President Ernest Blom made a persuasive case that the
voluntary Kimberley Process should continue doing what it does well
and let other entities address broader and more difficult issues.
Minerals-Energy Officer and Specialist attended the Diamond
Colloquium on October 25-26. Septel will report on the balance of
diamond issues raised. End Summary.

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Success Story Against Conflict Diamonds
---------------------------------------

2. World Federation of Diamond Bourses President Ernest Blom lauded
the success of the Kimberley Process in the second day opening
speech, noting that its 47 members (including the EU, so
representing 73 countries in total) represent 99.8 percent of global
trade in diamonds. Blom said only 0.2 percent of diamonds were
currently not accounted for, compared to 4 percent in 2000 when the
Kimberley Process was launched. He stated that the only significant
non-Kimberley producer is the Ivory Coast. Blom cited recent
achievements of gaining Turkey as the 47th member and earlier
admitting Liberia after the lifting of UN sanctions. He noted that
the movie "Blood Diamonds" was factual as of 1999, but the Kimberley
Process had dramatically ameliorated the situation as of 2007. Blom
explained that the World Diamond Council (WDC) did an extensive
campaign to publicize the benefits of diamonds to Africa in response
to the movie. He lamented that the movie refused to do a disclaimer
to this effect. Blom took note of the WDC country review of
Zimbabwe and asserted that allegations of smuggling of its diamonds
via South Africa were untrue.

3. Blom criticized NGO's for "refusing to admit the success of the
Kimberley Process", emphasizing that no other product in the world
has been so self-regulated. In a separate meeting with
Minerals/Energy Officer and Specialist in his Johannesburg CBD
"Jewelry City" offices, Blom repeated that the Kimberley Process has
not been given adequate credit for its accomplishments. He
emphasized the need to keep the process in place against potential
for future conflict. Blom also described the detailed "chain of
warranties" or "know your client" system applied to processed
diamonds which militated against illicit diamonds.

4. De Beers Managing Director Faried Sallie told Minerals/Energy
Officer and Specialist in a separate meeting that the Kimberley
Process had been a highly effective mechanism. He stated that all
diamonds purchased and sold by De Beers are 100 percent
conflict-free. South African Diamond and Precious Metals Regulator
CEO Louis Selekane, who works with SA Customs to provide Kimberley
certification, also described the process as successful both in
Qcertification, also described the process as successful both in
South Africa and globally.

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Role of NGO's
-------------

5. At the Diamond Colloquium, South Africa Institute of
International Affairs official Tim Hughes argued on behalf of the
importance of NGO's in the Kimberley Process. He emphasized the
value of trilateral collaboration with industry and governments,
noting that without NGO's, there would not have been a Kimberley
Process.

--------------------------------------------- -----
What About Illicit Diamonds and Artisanal Diggers?
--------------------------------------------- -----

6. Hughes called for the Kimberley Process to expand its efforts to
more broadly combat illicit diamonds and to address the social
problems of artisanal diggers. He admitted that many stakeholders
would argue against "mission creep", but he argued for the need for
industry, governments, and NGO's to tackle this challenge that

PRETORIA 00003836 002 OF 002


contributed to smuggling and conflict. Hughes commended the De
Beers-led public-private partnership Diamond Development Initiative,
launched in Accra in 2005, as targeting financing and underlying
conditions of artisanal miners. He asserted that alluvial diamond
artisan diggers were one million strong and struggled to survive on
less than one dollar per day. Finally, Hughes called for the
Kimberley Process to have more "teeth", lauding the recent booting
out of Venezuela for non-compliance.

7. Southern Africa Resource Watch official Claude Kabemba also
called for expansion of the Kimberley Process mandate to more
broadly target illicit diamonds. He also noted that other minerals,
such as gold, have financed conflict in Angola, DRC, and elsewhere.
Kabemba stated that because Kimberley is voluntary and reliant on
government buy-in, the initiative is weakened by countries like DRC
and Angola, which either do not control their borders and commerce
or do not choose to control their resources. He asserted that the
Kimberley Process deals only with symptoms, but does not address
governance and transparency.

----------------------------------------
Comment - If It Ain't Broke Don't Fix It
----------------------------------------

8. The Diamond Colloquium provided a forum for NGO's to seek to
stretch the envelope on the Kimberley Process mandate, but World
Federation of Diamond Bourses President Ernest Blom made an
effective case that the voluntary Kimberley Process should continue
doing what it does well and let other entities address broader and
more difficult issues. His view carried the day at the conference.
Moreover, new conflicts unfortunately can always ignite in diamond
producers, especially in Africa, and the world community should keep
this useful tool
tee-ed up and ready for future use.

BOST

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