1. Emily Bayens
INS 3305 International Political Economy
Dr. J. Kalpakian
20 June 2016
Conflict and Commerce: An Analysis of the Kimberley Process’s Effectiveness
I. Introduction
As commerce becomes increasingly globalized, the links between politics and
economics become increasingly tighter. Interestingly, there have also been surges of internal,
domestic conflict within states, which often leads to gruesome human rights violations. When
the international community realized how diamonds fueled these conflicts, there was a new
movement, working to decrease their production with the eventual goal of ending the trade of
conflict diamonds, which came about with the Kimberley Process Certification Scheme
(KPCS). Since 2003, when the Kimberley Process came into effect, there has been appraisal
as well as criticism, along with facts displaying instances of success and failure. Due to the
structure of the Kimberley Process, there is reasonable evidence to believe that without
significant amount of improvement, human rights violations stemming from conflict
diamonds will continue in disenfranchised states.
In order to determine the effectiveness of the Kimberley Process, it is important to
understand what it is that Participants join for. Through utilizing the framework of the four Ps
(power, prosperity, peace, and principles) in which Jentleson writes about, in which one
compares the advantages of each of the above categories, it becomes easy to evaluate a
country’s, as well as illicit non-state actors, specific stance on conflict diamonds as well as
participating in the Kimberley Process. When discussing this matter, it is useful to break up
states into three groups: producers who are threatened by illicit activity, such as Sierra Leone
and Cote d’Ivoire; states who rely on diamonds for economic activity like Armenia and

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Belgium; and states who are simply Kimberley Participants in order to gain access to the
consumer diamond market, such as the United States.
Beginning with the first group of states, countries in distress due to domestic conflict
are further split into two parties within the country-the legitimate government which is
internationally recognized, and the illegitimate, typically a militarized group threatening the
state’s sovereignty. The government obviously wants to gain peace and power over the illicit
coup to regain sovereignty. Concerning prosperity, many also could benefit from accessing
diamond markets. However, it may be more effective to not become a participant of the
Kimberley Process in order to bar any smuggling of diamonds from areas entrenched in
conflict, limiting the amount of money the rebels can earn to support their revolt.
Countries such as Belgium and Armenia, who rely on diamond imports and exports
are actually very diverse. Belgium mainly prospers within the diamond industry from trading
diamonds due to its status as one of the main diamond trading hubs. The main focus is
prosperity, with the principles of human rights and upholding a fellow state’s sovereignty
coming second. Armenia, on the other hand, relies on diamonds as a major part of the
economy in order to support its polishing and cutting factories. Once again, the main concern
for this country is prosperity, as diamonds make up one fifth of Armenia’s import and export
trade (Global Witness 26). Below, there is a further discussion on each of these countries’
behavior concerning the Kimberley Process.
The United States, who is diverse in the international community already, has an
interest in all four Ps, as stated in the Clean Diamond Trade Act. In Section 2, the call for
American action against conflict diamonds is supported by saying, “In order to put an end to
the emergency situation, and to protect its essential security interests, and pursuant to its
obligations under the United Nations Charter, the United States is now taking further action
against trade in conflict diamonds,” and continuing to address the prosperity aspect, “As the

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consumer of a majority of the world’s supply of diamonds, the United States has an
obligation” (U.S. Legislation in Support of Diamond Controls). Fulfilling “obligations,”
protecting security interests, and by acknowledging the U.S. has a strong business concern
provides interest in principles, power, prosperity, and peace, making it a good idea to take
action against conflict diamonds.
II. Approaches
A. Realist
Realism may perhaps be the most accepting of the Kimberley Process due to its nature
by definition. As noted, conflict diamonds are used to threaten the sovereignty of a state by
financing rebel groups seeking power. Balaam and Dillman note how mercantilism, which is
closely related to realism, is a favored practice by states due to the yearning to achieve
security (Introduction to International Political Economy 76). Advocating for more policies
that will regulate the sale of diamonds, decreasing the opportunity for illicit radical groups to
receive money from mining diamonds, which will weaken their rebellion against the
legitimate government. However, Balaam and Dillman also note the irony in how liberals
thought globalization would reduce the need states feel to protect themselves, supporting
realist policies (Introduction to International Political Economy 76). This can be seen in the
sheer fact that there has been an increase of regulations designed specifically to protect states’
interests.
B. Liberal
The Kimberley Process largely defies classic liberal principles, which can be best
described by the concept of laissez-faire economics, where Adam Smith’s invisible hand is a
key factor in the regulation of economies. Under these ideas, liberalists largely support
deregulation, saying that the nature of the economy will regulate itself. However, the
structure of the diamond industry, discussed below, is much different and more complicated

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than typical goods in the economy, which eventually forced action to be taken in order to
regulate the situation occurring around conflict diamonds.
C. Structuralism
This perspective of international political economy would focus on the relationship
capitalism has on the interests each of the three types of Participants who have adopted
Kimberley Process guidelines, in other words, the prosperity component which affects their
foreign policy. For example, it would note that although the United States has some
incentives involving principles, power, and peace, there would be a greater focus that there
was more to lose in the aspect of prosperity than to gain in the other three. As an effect of all
three types of states participating in the Kimberley Process, there would be a farther
connection to how the strong economic interests of each state involves the exploitation of
another party, those being forced to mine diamonds in conflict areas by the rebel groups.
D. Social Constructivist
In social constructivism, the actions of actors stem directly from their self-identity.
Balaam and Dillman illustrate the main principles by stating, “constructivists suggest that
conflict or cooperation between two or more actors is a product of those actors’ different
values, beliefs, and interests” (Introduction to International Political Economy 125). Under
this concept, the actors involved in the Kimberley Process, from the rebel groups, to state
Participants, civil society Observers, and the diamond industry do not act out of concern for
norms or regulations, but because it is their natural will to do so.
III. Analysis
A. Diamond Industry
In order to properly understand how the Kimberley Process operates, it is first
important to have a background on the diamond industry, one which is complicated due to its
international characteristics. In the twentieth century, the revolutionizing of the diamond

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industry began with De Beers, a company that prospered by not only selling diamonds, but
also by controlling the diamond market. In forming the De Beers diamond cartel, the
company used monopolizing practices. First, De Beers would manipulate the mines in their
possession, which was actually not very many, their power came from their control of the
industry. Due to the fact that DeBeers owned so few mines, they had to create alternative
ways of keeping control over the diamond market by creating long term contract with other
producers, maintaining a stockpile of rough diamonds to decrease the supply, and eventually
gaining control over the Central Selling Organization, which was a major distribution channel
for diamond trading effectively only allowing certain buyers to buy select diamonds the De
Beers empire allowed. The company eventually controlled over eighty percent of the rough
diamond market. Many companies in the industry did not question the monopoly De Beers
was creating due to the fact that they all had the same interest-to maximize profit, which De
Beers was doing by decreasing the supply and increasing demand through the process of
transforming diamonds as commodities into luxuries (Haufler 405). By running such a large
monopoly over the diamond industry, De Beers essentially set up the pathway to create a
regulated system on diamonds by tying the industry up.
However, in the 1990s, an essential turning point in international relations with the
fall of the Soviet Union, things in the diamond market changed. Russia was seeking new
markets that would go around the control of the De Beers monopoly, in order to increase their
profit by selling more directly to the consumer market. Additionally, with the end of the Cold
War came the end of the USSR and US’s funding to potential allies in order to persuade
which side of the Iron Curtain they were on. Therefore, rebel groups and government leaders
began looking for new sources of income. This led to the selling of diamonds not under De
Beers’s monopoly to be sold for a cheaper price, increasing the supply, creating more
competition for the producers, and thus, decreasing the market value. Additionally, there

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were new discoveries of diamonds in New Zealand and Australia (Haufler 405). With the
recognition of conditions occurring in the procuring of conflict diamonds, the concept of
diamonds as a luxury was changing. It was slowly no longer being seen as an extravagance to
flaunt one’s higher social status or a representation of love. Instead, civil society was
associating the dazzling gems with the atrocities occurring in places like Sierra Leone which
were under illicit political rebels. This new consumer connotation of diamonds as a luxury
soon threatened the entire diamond industry (Balaam and Dillman, De Beers and "Blood
Diamonds" 407). During the 1990s, De Beers’s market share in the diamond industry
decreased from eighty-five percent, to sixty-five percent (Haufler 406). The diamond industry
was drastically changing, and if De Beers wanted to stay in business, there would have to be
another major revolution in the diamond industry.
B. Commerce vs. Conflict
There are questions about the establishment of the Kimberley Process, and the main
reason for its creation is what can truly define its effectiveness. Was the most important
reason for the regulation scheme to save the interests of multinational companies of the vast
diamond industry (prosperity), or was it for humanitarian, sovereignty, and environmental
reasons (principles)? In the Preamble of the Kimberley Process Certification Scheme, it is
noted that the process was created in order to “find a solution to the international problem of
conflict diamonds, was inclusive of the concerned stake holders, namely producing, exporting
and importing states, the diamond industry and civil society” (1). Each stakeholder clearly
had something to gain, or at this point, save with the Kimberley Process
The negotiations of the Kimberley Process coincided with De Beers’s new business
plan which was transforming from “buyer of last resort” to “supplier of first resort.” The new
plan included new agreements and mining interests in Botswana and Canada, needed due to
the fact that the company would have to loosen market control over supply and demand as an

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attempt to enter the consumer market in the United States. A settlement to a class action
lawsuit required an end to De Beers’s monopolizing practices as well as a fine of $295
million for price fixing. Haufler claims that it was not necessarily the restructuring of De
Beers’s business plan, but rather the introduction of the Kimberley Process that saved the
company, and furthermore, the entire diamond industry (406). Some critics argue that the
language in the preamble connote a focus on the step of the process of the diamond trade
where revenue is made, rather than at the extraction process, when the most human rights
violations occur (Cullen 63).
On the other hand, there were also other movements at the same time concerning
social conditions such as environmental protection and humanitarian abuses. For instance,
there was a greater call for corporate accountability due to the Nike scandal (Haufler 406).
Balaam and Dillman describe this as a “countertrend,” turning from behaviors accepting
illicit business behavior which create cheaper goods in order to “widen the degree of
separation between [consumers] and any potential unethical or illegal practices” (Introduction
to International Political Economy 407). At the same time, the international community was
debating on the ethics of the responsibility to protect. Additionally, the United Nations was
realizing that the smart-sanctions imposed on war-torn countries was only harming citizens,
rather than governments, the intended recipient of harm (Haufler 406-407).
C. Structure of the Kimberley Process Certification Scheme
Another main reason many scholars believe the Kimberley Process is ineffective is
due to the general structure. First of all, the Kimberley Process is a system of global
governance, incorporating a multitude of actors: states, business, and civil society, however
not all of these actors are treated equally. Secondly, critics argue that the consensus vote does
not allow much progress in the Kimberley Process. Thirdly, due to Kimberley’s nature of

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being an institution of soft law, there is little enforcement to keep Participants in check,
which leads to poor, individual guidelines of stringency.
The first issue with the structure of KPCS is that it only allows states to be deemed as
“Participants.” Although the process is officially termed as “global governance,” which
means that it is inclusive of states, civil society, and companies in the diamond industry, only
states are allowed to vote. A Participant is defined as “a state or a regional economic
integration organisation for which the Certification Scheme is effective” (KCPS Core
Document 4). Civil society and the diamond industry, on the other hand, are sanctioned into
the “Observer” category. Whereas Participants can vote on issues, Observers are only invited
to partake in Plenary Meetings (Cullen 63). Although Participants are the members who are
largely effected by the Kimberley Process due to economic implications, state agendas may
lead the mission of KCPS astray despite the information Observers present during the Plenary
Meetings.
Despite limiting the voices able to be heard during KPCS voting, the next problem is
ironically easier to solve by limiting the number of voters in the process. Interestingly, the
Kimberley Process makes voting very difficult due to its rules on unanimity. Unlike many
institutions, where a majority vote is implemented on decisions, all Participants must agree
on a result. Due to this, a minority group of states can possibly form a coalition to block
decisions that may harm their states’ interests (Cullen 62). If Observers were allowed to vote,
there would surely be issues in passing new regulations, as civil society and businesses
definitely have different objectives than that of states.
Another argument contributing to the debate on Kimberley’s effectiveness is that of
its nature of being an institution of soft law. The states who organized the Kimberley Process
wanted to ensure that the process would not be binding in international law in order to still
protect Participants’ sovereignty, which would encourage more supporting states. This can be

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observed in the language of the Core Document, which implies that it is completely different
from a binding treaty. For example, the states involved are specifically noted as
“Participants,” not “parties.” States are also not required to sign the Core Document or ratify
it. The only sanctions that can be imposed by Kimberley against members is expulsion from
the Process, which has implications where other members are not allowed to trade with them,
and places stricter requirements on the state if they choose to rejoin. By operating under soft
law, the Core Document creates norms to operate within the diamond industry, rather than
obligations (Cullen 62-64). If procedures are not met, a Participant must report the state in
violation to the Chair, and the matter will be investigated (66). Although a non-binding
doctrine that can increase prosperity looks promising to many countries, there are many
downfalls to the consequences when the greatest implementation of soft law is simply being
kicked out of the process, especially when it has not been exercised extensively.
Branching off from the idea of the Kimberley Process’s regulations not binding
countries to international law, comes the concept of internal/external controls. The Kimberley
Process gives a great deal of freedom to its Participants, who are allowed to design their own
system, as long as they meet minimal standards listed in the Core Document for importing
and exporting diamonds to ensure that they do not come from diamond conflict. Participants
must meet minimal standards in order to remain members of the Kimberley Process. (Cullen
65-66). This leads to differences in regulations between Participants, which can be useful in
some cases, adapting to certain situations, but can also cause issues, as many Participants
only form guidelines complying with the minimum standards, allowing smuggled conflict
diamonds to pass through examinations.
Belgium, which is the home of one of the largest diamond trading hubs globally,
Antwerp, is also a community authority. The role of community authority is led by a member
of a regional trade block who validates and verifies Kimberley certificate (Petrova 952). As a

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community authority as well as a large actor in the diamond trade, Belgium has created very
stringent internal control regulations to approve the origin of rough diamonds that may or
may not be exported from the country. With Antwerp, the “diamond capital of the world,” 50
percent of rough diamonds entering Belgium, 99 percent being exported again, four diamond
exchanges, and over 1500 diamond companies, it is important that Belgium has efficient
systems to analyze the diamonds coming in and going out of the country (953). Therefore,
Belgium has established the Belgian Federal Public Service Economy (FPSE), which collects
information about diamond producing countries, such as weight of diamonds produced and
exported as well as their value and province of origin as well as requiring all diamond dealers
to be registered with the office. In cooperation with the FPSE is the Diamond Office in
Antwerp, ran by the Diamond High Counsel. The Diamond Office in Antwerp is by
effectively the customs office for diamonds in Belgium. As shipments come in, inspectors
from the FSPE, are involved with the appraisal of diamonds within the Diamond Office. If
the inspectors notice something that raises suspicion of a country of origin, the customs
officials investigate (953-954).
Alternatively, the United States, has a different form system of evaluating diamonds
that are being imported and exported into the country. The US Kimberley Process Autority
(USKPA) is the main licensor for rough diamond export in the United States (Petrova 957).
However, USKPA is much more inefficient than the system implemented by the FSPE and
the Diamond Office in Belgium. For instance, in Belgium, statistics are the main indicator
that diamonds are being illegally smuggled due to their origins. In the United States however,
there are not guidelines from the Clean Diamond Trade Act describing how statistics should
be kept. This leads to huge discrepancies in the American diamond trade, allowing blood
diamonds to slip through into exportation. For example, in 2003, the United States exported
twice as many diamonds as were imported, and 46 percent more in 2004 (956). Since the

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United States is not a major diamond producing country, these statistics imply that diamonds,
more than likely conflict diamonds, were indeed smuggled. Petrova claims that the shortfalls
of the USKPA is due to random examinations of the diamonds and containers, meeting only
the basic guidelines of the Kimberley Process, unlike Belgium, where every package is
examined (957).
IV. Conclusion
In conclusion, when determining the efficiency of the Kimberley Process, one must
first ask what the goal is. When analyzing the language of the Core Document, one could
interpret the wording to mean that the Kimberley Process was instituted in order for
humanitarian reasons, in order to aid those suffering under illicit rebel regimes, which led to
the degradation of those individuals’ human rights. There could also have been an interest in
decreasing the trade of conflict diamonds, which supported the activities of said rebel groups.
Finally, there could have been an interest for the diamond industry, who was being
dramatically undercut by the rebel organizations with cheap diamond prices, ruining the
market’s nature of supply and demand. Although the Kimberley Process has certainly aided
each of the stakeholders represented in Kimberley’s form of global governance, states, civil
society, and the diamond industry by regulating conflict diamonds, and therefore, decreasing
the availability smugglers can get them onto the market, there are still issues in the regulation
of diamonds. This means that despite regulation there are still illicit organizations producing
diamonds, human rights violations occurring in conflict zones, which rebel groups profit
from, and conflict diamonds are still on the market. However, it is unlikely a system can be
formed that will remove conflict diamonds from global market completely. Instead,
Kimberley, still a rather young process for global governance, must learn from its shortfalls
in order to devise a more efficient system to complete the goals of all members of its global
governance.

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Works Cited
Balaam, David N. and Bradford Dillman. "De Beers and "Blood Diamonds"." Introduction to
International Political Economy. 6th. Essex: Pearson Education Limited, 2014. 407-
409.
—. Introduction to International Political Economy. 6th. Essex: Pearson Education Limited,
2014.
Cullen, Holly. "Is there a Future for the Kimberley Process Certification Scheme for Conflict
Diamonds?" Macquirie Law Journal (n.d.). 1 December 2014.
Global Witness. "Making it Work: Why the Kimberley Process Must Do More to Stop
Conflict Diamonds." 2005. 1 December 2014.
Haufler, Virginia. "The Kimberley Process Certification Scheme: An Innovation in Global
Governance and Conflict Prevention." Journal of Business Ethics 89.4 (2009): 403-
416. 28 November 2014. <http://www.jstor.org/stable/40605378>.
Jentleson, Bruce W. American Foreign Policy. Ed. Jake Schindel. 5th. New York: W. W.
Norton & Company, Inc., 2014.
KCPS Core Document. 2003. 1 December 2014.
<http://www.kimberleyprocess.com/en/kpcs-core-document>.
Petrova, Albena P. "The Implementation and Effectiveness of the Kimberley Process
Certification Scheme in the United States." The International Lawyer 40.4 (Winter
2006): 945-960. 3 December 2014. <http://www.jstor.org/stable/40708018 .>.
"U.S. Legislation in Support of Diamond Controls." The American Journal of International
Law 96.2 (2002): 485-487. 3 December 2014. <http://www.jstor.org/stable/2693948
.>.