THE KIMBERLEY PROCESS

Transcription

1 THE KIMBERLEY PROCESS An Evaluation of its Effectiveness and an Assessment of its Replicability in the Democratic Republic of the Congo by Brigit Moore Submitted to the School of International Service of American University in Partial Fulfillment of the Requirements for the Degree of Master of Arts in International Peace and Conflict Resolution Course Number: Course Title: Credit Hours: Semester of Registration: Comprehensive Examination: Evaluation and Certification: Grade: Remarks: Signature of Faculty Member: Unsatisfactory: Satisfactory: Distinction: Graduate Office Certification: Date: Date:

2 TABLE OF CONTENTS CHAPTER 1: INTRODUCTION Introduction... 1 Purpose of the Study... 2 Research Question... 2 Importance of the Study... 2 Significance of the Study... 4 Outline of the Paper... 5 CHAPTER 2: A REVIEW OF THE LITERATURE The Resource Curse... 6 Combating the Resource Curse Evaluating Efforts to Combat the Resource Curse CHAPTER 3: DESIGN OF THE STUDY Type of Design Assumptions and Rationale Limitations of the Study Information Collection, Analysis, & Verification Procedures CHAPTER 4: OUTCOMES The Kimberley Process Certification Scheme Background Information Kimberley Process Negotiations The Kimberley Process Certification Scheme Successes Ongoing Challenges Strengths of the Kimberley Process Certification Scheme Weaknesses of the Kimberley Process Certification Scheme Impact and Effectiveness Lessons Learned The Kimberley Process: Replicable in the DRC? Background Information Tin, Tantalum, Tungsten, and Gold Impact on the Conflict Current Efforts to Combat Conflict Minerals in the DRC The Replicability of the Kimberley Process in the DRC CHAPTER 5: DISCUSSION Summary of Outcomes Relation to Theory and Literature Relation to the Field of IPCR CHAPTER 6: CONCLUSION Significance of Research Findings Future Research and Practice in IPCR Appendices Bibliography... 82

3 CHAPTER 1: INTRODUCTION Introduction In early 2003, the Kimberley Process Certification Scheme (KPCS), an international certification system for rough diamonds, officially entered into force. The KPCS was the culmination of nearly three years of international negotiations which commenced in 2000 after the international community began to recognize that diamonds were funding violent conflicts in Angola, Sierra Leone, and the Democratic Republic of the Congo (DRC). 1 Diamonds that contribute to conflict are collectively referred to as conflict diamonds. The KPCS set out requirements for controlling rough diamond production and trade with the intent of eliminating the trade in conflict diamonds and ensuring that diamond purchases were no longer funding violence. 2 In the nearly nine years since its inception, the effectiveness of the KPCS has been greatly debated. While some herald it as having greatly reduced the negative impacts of diamond sales on conflicts, others criticize it as flawed and in need of substantial modification and improvement. This paper will analyze the KPCS to determine its effectiveness in eliminating, or at least reducing, the presence of conflict diamonds in the international market and ensuring that diamond purchases are no longer funding violence. More specifically, which parts of the KPCS work and which do not work? The paper will then examine the conflict in the DRC, a conflict that is negatively affected by several kinds of minerals that are not currently covered by a comprehensive certification scheme, to determine whether a Kimberley-like certification scheme could be usefully replicated there. 1 2 Smillie, I. (2005) What Lessons From the Kimberley Process Certification Scheme? in Karen Ballentine and Heiko Nitzschke (eds), Profiting from Peace: Managing the Resource Dimensions of Civil War. Boulder: Lynne Rienner and IPA. p. 47 Kimberley Process. Background < Accessed on 11 September

4 Purpose of the Study The purpose of this research project is to closely examine an international resource certification process the Kimberley Process Certification Scheme (KPCS) to determine its effectiveness in counteracting the negative impacts of conflict diamonds. This analysis will lead to a better understanding of how natural resource certification processes should be structured to most effectively combat the negative impacts of natural resources on violent conflicts. It will also lead to a better understanding of what factors within a conflict context determine the feasibility of developing an international certification scheme. Research Question The specific research question of this project is the following: How effective has the Kimberley Process been in eliminating conflict diamonds from the international market, and can the process, or key elements of the process, be replicated for the conflict minerals in the DRC, where no comprehensive conflict minerals certification process has been developed? Importance of the Study A thorough examination of the KPCS and its effects on diamond-fueled conflicts, the first part of this research project, is essential for several reasons. First, examining the successes and strengths of the KPCS not only identifies which aspects of the scheme should be preserved but also provides useful starting points for other conflict mineral certification schemes. Second, examining the failures and weaknesses of the KPCS provides an opportunity to make recommendations for how the Kimberley Process (KP) could be improved as well as for the 2

5 development of other international certification schemes. Because the usefulness of the KPCS as a starting point for other certification processes depends on its replicability in other, possibly very different, conflict situations, this research project will not only focus on the strengths and weaknesses of the KPCS, but also on if and how it might be replicated effectively in other contexts. Essentially, does the KPCS work? How well does it work? Should it be replicated? Once these questions have been examined, I will analyze the conflict context in the DRC to determine if the Kimberley Process could be replicated there. Since 1996, the DRC has been experiencing a devastating conflict that is frequently referred to as Africa s World War due to the significant regional involvement in the conflict. In addition to its international scope, all sides of the conflict have used rape as a weapon of war and have conscripted child soldiers to fight on the front lines. The war has left the eastern part of the country devastated: millions have died, millions have been displaced from their homes, starvation and disease are rampant, medical care is largely unheard of, and threats of violence against local populations are constant. 3 The conflict in the DRC is driven by the trade of multiple minerals; this makes the DRC a compelling case through which to discuss the replicability of the KPCS. Specifically, the DRC is endowed with vast stores of tin, tantalum, tungsten, and gold, each of which are vital components in popular electronics devices and therefore have the potential to bring great wealth to the DRC. The people of eastern DRC have not reaped any of the potential financial benefits from these minerals, however. Instead, various parties to the conflict have gained control of the mines through violence (most mines have changed hands multiple times throughout the conflict) and have forced local populations to work in the mines. Mining is often the only available means for civilians to survive. The conditions under which miners work are difficult at best, and 3 International Rescue Committee. Fact Sheet Congo Crisis. Accessed on 11 December

6 their meager earnings are barely enough to support their families. These natural resources, or more specifically the potential profit available to whoever extracts them, are cited as drivers of the conflict in the DRC. 4 Because of this, over the past several years there has been a growing push within the international community to regulate the use of conflict minerals in electronics manufacturing and thereby cut off funding to the armed groups. This increases the importance of understanding the successes, ongoing challenges, strengths, and weaknesses of the Kimberley Process; this type of analysis could provide important lessons for a potential certification scheme to regulate tin, tantalum, tungsten, and gold. Overall, this examination of the KPCS could both assist in efforts to improve the certification process itself, as well as providing a starting point for other conflict mineral certification processes that would increase their likelihood of success, specifically in the DRC. Significance of the Study The significance of this study is potentially quite large. First and foremost, by assessing the effectiveness of the KPCS, this project will contribute to the ongoing conversation on how the Kimberley Process could be improved and made more effective. Second, by examining the replicability of the Kimberley Process in the DRC, this project will determine the appropriateness and feasibility of developing an international certification for the conflict minerals there tin, tantalum, tungsten, and gold. Third, since many conflicts around the world are, or have been, negatively affected by natural resources, the results of the project could improve our general understanding of how natural resource certification processes should be structured, which would in turn increase their likelihood of their success. This research has the 4 Enough Project & the Grassroots Reconciliation Group. (2009) A Comprehensive Approach to Congo s Conflict Minerals Enough Project. p. 1 & International Alert. (2009) The Role of the Exploitation of Natural Resources in Fuelling and Prolonging Crises in the Eastern DRC. 4

7 potential to positively impact many conflicts around the world. Ultimately, what is learned as a result of this analysis has the potential to save lives, not only in countries affected by conflict diamonds and conflict minerals, but in other conflict contexts that are affected by different conflict resources. Outline of the Paper Following this introduction, Chapter 2 provides a review of the relevant literature on the negative impacts of natural resources, called the resource curse, specifically highlighting its evolution from negative economic effects to negative political effects and most recently to its negative effects on conflict. Chapter 2 also reviews the literature on natural resource certification processes and evaluations of their effectiveness. Chapter 3 reviews the design of the study, including the underlying assumptions and rationale, the limitations of the study, and information collection, analysis, and verification procedures. The first part of Chapter 4 presents an overview of the Kimberley Process Certification Scheme (KPCS), as well as an analysis of the scheme s effectiveness and lessons that can be learned from it. The second part of Chapter 4 provides an overview of the conflict in the Democratic Republic of the Congo (DRC) and an analysis of the KPCS s replicability in the DRC. In Chapter 5, the relevant findings are summarized and related to the literature on the resource curse and natural resource certification processes as well as to the field of International Peace and Conflict Resolution as a whole. Finally, Chapter 6 concludes this research project, discussing the significance of the findings and implications and recommendations for future research and practice. 5

8 CHAPTER 2: A REVIEW OF THE LITERATURE The Resource Curse The effects of abundant natural resources on a country were long thought to be wholly positive. Not until more recent decades did academic work begin focusing on potential negative effects, which are collectively referred to as the resource curse. At first, the academic conversation focused on the negative effects of abundant natural resources on a country s economy. In the last decade, however, the discussion has expanded to include the negative effects of natural resources on politics, government institutions, and, most relevant to this paper, violent conflict. The idea of a resource curse really began to take shape in the 1980s, when scholars began to take note of the fact that abundant natural resources can lead to low or negative economic growth. The first work on this topic was on the concept of Dutch disease, or the relationship between increasing natural resource exploitation and declining manufacturing, resulting in overall lower economic growth. One of the first scholars to explore the concept of Dutch disease was Sweder van Wijnbergen, who in 1984 developed a model that showed how the abundance of natural resources in a country can reduce aggregate income. Essentially, van Wijnbergen argued that a temporary decline in the non-natural resource traded goods sector (which would result from an increase in the trade of natural resources) may permanently lower income compared with what could have been attained. The reason this is the case is that economic growth is caused by technological progress and technological progress is achieved faster in the traded sectors of an economy than in the non-traded sectors. 5 More recent work on Dutch disease shows that this effect is not limited to the export of natural resources, but applies to the 5 Van Wijnbergen, S. (1984) The Dutch Disease : A Disease After All? Economic Journal, 94(373): pp

9 exploitation of natural resources in general: Javier Capó, Antoni Riera Font, and Jaume Rosselló Nadal introduced the idea that increased wealth from the tourist industry s exploitation of natural resources, such as beaches or other natural areas, can lead to Dutch disease as well. 6 Following the academic discourse on Dutch disease, scholars began to focus on the concept of resource rents, or the idea that the discovery of a new income possibility from natural resources leads to increased rent seeking and reduces the net increase in income for society. A seminal work on resource rents is that of Aaron Tornell and Philip Lane, who demonstrated how the voracity effect when different groups attempt to grab a greater share of the national wealth by demanding more transfers causes the tax rate to go up in a country. This leads to the reallocation of capital to the informal sector where it is safe from taxes and reduces the overall growth rate of the economy. 7 Another example of academic work on resource rents is that of Ragnar Torvik, who demonstrated that the more natural resources available in a country, the more likely entrepreneurs will pursue rent seeking instead of running productive firms. This increased rent seeking results in a drop in income that is greater than the increase in income derived from the natural resources. 8 Over the past several years, academic work on the resource curse has expanded to include certain features of natural resources that lead to lower economic growth. For example, Katharina Wicke and Erwin Bulte incorporated the idea of a resource s pointiness, or its geographic clustering, and find that an abundant and pointy resource is associated with both intense contests over the resource and with overall lower economic performance. 9 Furthermore, Anne Boschini, Capó, J., A. R. Font, & J. R. Nadal. (2007) Dutch Disease in Tourism Economies: Evidence from the Balearics and the Canary Islands. Journal of Sustainable Tourism, 15(6): pp Tornell, A., & P. R. Lane. (1999) The Voracity Effect. American Economic Review, 89(1): pp Torvik, R. (2002) Natural Resources, Rent Seeking and Welfare. Journal of Development Economics, 67(2): pp Wicke, K. & E. H. Bulte. (2006) Contesting Resources rent seeking, conflict and the natural resource curse. Public Choice, 128: pp

10 Jan Pettersson, and Jesper Roine discussed how the lootability of natural resources, or the ability for groups to easily extract and trade the resource, and the quality of institutions already in place in a country affect economic growth; they found that highly lootable resources (such as diamonds) combined with bad institutions lead to the worst possible growth effect. 10 In the late 1990s, research on the resource curse expanded even further to include not only negative economic effects, but also the negative political effects of abundant natural resources. These negative political effects include, among other things, reduced democratic governance and increased corruption. The most notable works on the political effects of the resource curse are that of Terry Lynn Karl and Michael Ross. Karl discussed how the discovery of oil in Venezuela led to bad economic as well as political development in the country. 11 Although this work has been criticized following its publication, the debate it sparked has created a wealth of literature on the negative political effects of abundant natural resources. Ross is one example of the work that Karl inspired; Ross showed how timber booms in several countries in Southeast Asia have resulted in politicians intentionally destroying institutions so that they could benefit financially from the timber trade. 12 Furthermore, in another work, Ross demonstrated that countries that are rich in oil are less democratic on average than countries that are not rich in oil. 13 Beginning in 1998, the effects of natural resources on the generation of violent conflict began to be examined. In this work, Paul Collier & Anke Hoeffler found that the presence of natural resources increases the risk of war. They also found that initial income, ethno-linguistic Boschini, A., J. Pettersson, & J. Roine. (2007) Resource Curse or Not: A Question of Appropriability. Scandinavian Journal of Economics, 109(3): pp Karl, T. L. (1997) The Paradox of Plenty: Oil Booms and Petro States. Berkeley: University of California Press, Berkeley. Ross, M. L. (2001) Timber Booms and Institutional Breakdown in Southeast Asia. New York: Cambridge University Press. Ross, M. L. (2001), Does Oil Hinder Democracy? World Politics 53: pp

11 fractionalization, and initial population size to be significant and strong determinants of the duration and the probability of civil wars. 14 Collier concluded that conflicts begin because of groups economic agendas (what he calls the greed model) rather than ethnic or religious hatred, economic inequality, the lack of political rights, and/or government economic incompetence (what he calls the grievance model). 15 This theory has subsequently been dubbed the greed or grievance model. He supported this model with an analysis of different conflicts between 1960 and 1995 to determine if the cause of the conflict was greed or grievance. In order to measure greed, Collier focused on three factors: the prevalence of lootable resources (proxied by the predominance of primary commodity exports in a state s gross domestic product), the costs of attracting recruits to join the fight (proxied by the proportion of young men in a society), and the availability of other income earning opportunities (proxied by the number of years of education the population has received). In subsequent works, Collier and Hoeffler have reevaluated and modified their theory; in a 2004 article, they reframed it as the opportunity theory. In this work they replicated their earlier study, but this time they concluded that while the opportunity model is superior, there are in fact some elements of the grievance model that can explain the occurrence of conflict. 16 More specifically, they found that the following factors influence the opportunity for rebellion: the availability of finance (specifically, primary commodity exports because of the opportunities such commodities provide for extortion), the cost of rebellion (specifically, that low foregone earnings facilitate conflict), and dispersed populations. While they found most proxies for grievance to be insignificant, they found ethnic dominance (or the majority of one ethnic group) Collier, P. & A. Hoeffler. (1998) On economic causes of civil war. Oxford Economic Papers, 50: pp Collier, P. (2001) Doing Well Out of War, in Mats Berdal and David M. Malone (eds), Greed and Grievance: Economic Agendas in Civil Wars, Boulder: Lynne Reinner. Collier, P. & A. Hoeffler. (2004) Greed and Grievance in Civil War. Oxford Economic Papers, 56: pp

12 to have negative effects. Also interesting, they found that the longer it had been since the end of a conflict, the less likely another conflict would arise in that country. In their 2008 work, Collier and Hoeffler amended their earlier findings once again: rather than concluding that motivation can account for civil war risk, they found that the important determinant is the feasibility of rebellion; essentially, where rebellion is feasible (economically as well as militarily), it will occur. 17 Similar to their 2004 work, they found that income, growth, natural resources, peace duration, and population are important when it comes to the likelihood of increased conflict. Specifically, they found that lower per capita income, collapses in economic growth, a high ratio of primary commodity exports to gross domestic product, a small amount of time passed since the last conflict, and finally, larger population sizes all increase the likelihood of conflict. Additionally, in their discussion surrounding primary commodity exports, they note that there are three ways in which primary commodity exports could lead to conflict: increased opportunity for predation by rebel groups making rebellion feasible, the desire to capture resource rents, and strong grievances over unequal distribution of benefits. Although their work has highlighted many variables that can increase the likelihood of conflict, this paper is only interested in the theory that natural resources increase the likelihood of conflict. As is evident from the review of their work, Collier and Hoeffler s theory has evolved substantially since it was first proffered in It is important to note, however, that throughout their work, they continue to argue that natural resources increase the likelihood of conflict. The main difference between their studies in 1998, 2004, and 2008 is how natural resources increase the likelihood of conflict. At first, they argued that it was greed caused by an abundance of natural resources that generated conflict. Their theory then transformed into a 17 Collier, P. & A. Hoeffler. (2008) Beyond greed and grievance: feasibility and civil war. Oxford Economic Papers, 61: pp

13 theory that the likelihood of conflict increases if parties have the opportunity, because of abundant natural resources, to rebel. Most recently, their work supports the idea that, rather than greed or simply opportunity, it is the feasibility of rebellion, created by abundant natural resources, that increases the likelihood conflict will occur. Since Collier and Hoeffler first developed the greed and grievance theory, a number of other scholars have researched the effects of natural resources on conflict. For example, Michael Ross examines the varied effects of different kinds of resources in generating or lengthening conflicts. In addition to lootable resources, Ross was interested in obstructable resources (resources whose transportation can be easily blocked by a small number of people with few weapons) and the legality of trading or selling resources in the international market. Based on his research on the effects of these different kinds of resources on conflicts between 1990 and 2000, Ross proposed several hypotheses about how natural resources influence civil wars. Summarized, these hypotheses are as follows: lootable resources are more likely to benefit rebel groups and lead to and prolong nonseparatist movements; unlootable resources are more likely to benefit the government and lead to separatist conflicts; obstructable resources are more likely to prolong and intensify conflicts; and illegal resources will benefit rebels unless the government is willing to endure international sanctions. 18 Another interesting addition to theories about the link between natural resources and conflict is that of Päivi Lujala, who described how the location of resources impacts the duration of a conflict for example, if resources are located inside the actual conflict zone, the duration of conflict is doubled. 19 It should be noted that not all academic work supports theories that natural resources can Ross, M. L. (2003) Oil, Drugs and Diamonds: The Varying Roles of Natural Resources in Civil War, in Karen Ballentine and Jake Sherman (eds), The Political Economy of Armed Conflict: Beyond Greed and Grievance. Boulder: Lynne Rienner and IPA. Lujala, P. (2010) The spoils of nature: armed civil conflict and rebel access to natural resources. Journal of Peace Research, 47(1): pp

14 cause conflict. While not in complete opposition to it, Karen Ballentine cautions against the idea that conflicts are caused by economic factors alone and argues instead that, while including economic factors in analyses of conflict will lead to a clearer understanding of the dynamics of violent conflict and can help develop effective policies aimed at preventing or ending conflicts, more holistic approaches to conflict prevention and resolution are required. 20 Achim Wennmann argues that the emphasis on natural resources in conflict financing is unhelpful since natural resources are just one source of conflict financing for armed groups, who shift from one source of financing to another as they need to. 21 Therefore, rather than focus on individual methods of conflict financing such as natural resource extraction, conflict economies should be approached as a combination of financing strategies. Christa Brunnschweiler & Erwin Bulte disagree with the idea that conflict and natural resources are linked, arguing that naturally resource-rich countries are actually less likely to enter a civil war, but that if they do enter a civil war, their dependence on resource extraction increases. 22 Although certain scholars take issue with the greed or grievance model and some reject it entirely, this research project will be guided by the idea that there exists a link between an abundance of natural resources and conflict, and that methods to counteract the negative impacts of natural resources on conflict should be studied and evaluated wherever possible. Combating the Resource Curse Some authors, in addition to analyzing the link between natural resources and conflict, Ballentine, K. (2003) Conclusions, in Karen Ballentine and Jake Sherman (eds), The Political Economy of Armed Conflict: Beyond Greed and Grievance. Boulder: Lynne Rienner and IPA. pp Wennmann, A. (2007) The Political Economy of Conflict Financing: A Comprehensive Approach Beyond Natural Resources. Global Governance, 13(3): pp Brunnschweiler, C. & E. H. Bulte. (2009) Natural resources and violent conflict: resource abundance, dependence, and the onset of civil wars. Oxford Economic Papers, 61(4): pp

15 also recommend ways to prevent and end resource-fueled conflicts. As Michael Ross notes, natural resources are never the only source of conflict, nor do they make conflict inevitable. He adds,...for every resource-rich country that has suffered from violent conflict, two or three have avoided it. Better policies may help to reduce the likelihood that resources will generate conflict and to direct resource wealth instead to education, health, and poverty reduction. 23 Philippe Le Billon provides several examples of policies that would help mitigate the resource curse. He argues that preventing resource-fueled conflict requires ensuring that the financial wealth created by resource exploitation is captured and diffused in the interest of society, and that interest coalitions are able to sustain this situation. 24 More specifically, in order to prevent resource-fueled conflicts, it is important to increase corporate responsibility, maximize and cushion resource revenues, allocate revenues fairly and efficiently, diversify the economy, and promote peaceful and secure resource supply. 25 To end resource-fueled conflicts, Le Billon mentions targeted sanctions, international investigations by the United Nations (UN) and civil society organizations, the use of judicial trials and aid conditionality, market regulation and commodity certification schemes, and economic supervision. 26 Paul Collier and Ian Bannon also discuss several ways to mitigate the negative effects of the resource curse on conflict. They argue that the best protection against civil war is development that raises and sustains economic growth, diversifies the economy, and assists countries to cope more effectively with commodity price shocks. 27 They also argue that, since so Ross, M. (2003) The Natural Resource Curse: How Wealth Can Make You Poor. in Ian Bannon & Paul Collier. (eds). Natural Resources and Violent Conflict: Options and Actions. Washington, DC: The World Bank. p. 19 Le Billon, P. (2003) Fuelling War: Natural Resources and Armed Conflict. New York: Oxford University Press. p. 53 Le Billon, P. (2003) p. 53 Le Billon, P. (2003) p. 64 Bannon, I. & Collier, P. (2003) Natural Resources and Conflict: What We Can Do. in Ian Bannon & Paul Collier. (eds). Natural Resources and Violent Conflict: Options and Actions. Washington, DC: The World Bank. p. 8 13

16 many low-income countries depend on primary commodities for their revenues, and the vast majority of resources that sustain and fuel civil wars depend on access to the global economy, several tactics aimed at improving natural resource governance should be pursued. 28 These include increasing transparency of natural resource revenues, shutting rebel organizations out of markets, criminalizing the finance of illicit commodities, tightening scrutiny on illicit payments, and attracting reputable companies to risky environments. 29 Evaluating Efforts to Combat the Resource Curse Although the above recommendations are diverse, it is important to note that there seems to be some consensus that any effective measure to prevent and end resource-fueled wars should include efforts to cut off the financing abilities of rebel organizations through better regulation of the markets. The KPCS is an example of this type of market regulation. Unfortunately, evaluation of efforts by the international community to cut off the financing abilities of rebel organizations is largely missing from the literature on the resource curse. From the limited literature available, most works focus on the results of the Kimberley Process; however, even in the aftermath of the Kimberley Process, relatively few authors have attempted to analyze the process in depth (Haufler, 2010; Murphy, 2011; and Wexler, 2010). This project intends to add to the body of knowledge on natural resources and conflicts by evaluating the Kimberley Process and illuminating the lessons learned from it. Additionally, this paper will analyze the conflict in the DRC to determine if replicating the KP for conflict minerals is an appropriate and feasible approach. Current efforts by NGOs and international organizations to mitigate the negative effects of conflict minerals in the DRC will also be Bannon, I. & Collier, P. (2003) p. 11 Bannon, I. & Collier, P. (2003) pp