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GMSP Case Study

When diamonds weep

Group: 8, Section: C

Divyanshu 14048

Farhan Khan 14051

Vartika Tewari 14174

Mahua Dey 14073

Kailash Bisht 14066

Shailesh Chowdhary 14140

Submitted to:

Dr. M R Suresh

Table of Contents1. Case Summary.................................................................................................................................1

2. Major Issues.....................................................................................................................................1

3. Alternative Solutions and Issues with those Solutions..................................................................1

I. The People, Planet and Profit approach.........................................................................................2

II. ABCD Framework..........................................................................................................................3

III. SLEPT Framework.......................................................................................................................4

IV. AAAA Framework........................................................................................................................4

V. IDEA FRAMEWORK....................................................................................................................5

5. To buy or not to but considering the conflict diamond issues?....................................................6

6. Ethical responsibility of Diamond Industry to combat illicit trade in diamonds?......................7

7. Action by International community towards nation and corporation found in trading of conflict diamonds?...............................................................................................................................7

1. Case SummaryDiamonds have long been treasured as indicators of wealth. The trade in diamonds has ancient roots dating back to the 4th century BC, when diamonds were mined in India and traded throughout the world. Today, South Africa has become the world’s biggest diamond producer, while the city of Surat in India has become the industrial center for the cutting and polishing of these precious gemstones. In addition, the city of Antwerp in Belgium serves as a trading hub for rough-cut and industrial diamonds.

The increase in demand for diamonds as commodities (partly due to DeBeers’ exceedingly successful engagement ring campaign starting in the 1930s) has had numerous social and economic implications. Most importantly, the problem of “blood diamonds” (mined in conflict-prone areas) has resulted in the implementation of the Kimberly Process – a production protocol aimed at alleviating human rights abuses in countries producing diamonds.

The case deals with diamond trade and how their mining and export contributes to various conflict. Trade in diamond is highly profitable but are plagued by issues such as the exploitation of population for diamond extraction and the use of diamond profits to fund terrorist activity and rebel groups. Diamond trade has often lead to war and violence in many African countries. The case seeks to discuss various alternative that can solve the problem of conflict diamond and make the diamond trade business more sustainable.

2. Major Issues Human Right Violations

Displacement of Population

Terrorism funding

Smuggling

Use of diamond profit to finance deadly conflicts

Issue of Blood diamond

The Indian industry, which employs 1.3 million and exported $23.3 billion of cut and polished diamonds in 2011-12, is caught between two antagonistic forces: the producing countries from where it sources much of the rough diamonds (Africa) and the consuming countries to which it sells finished diamonds (the US and Europe).

3. Alternative Solutions and Issues with those SolutionsKimberley Process: The Kimberley Process is a certification scheme established in 2003 by a United Nations resolution, following a series of reports which first exposed the link between the diamond trade and the financing of conflict.

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The process has two main flaws. First, its narrow terms of certification focus solely on the mining and distribution of conflict diamonds, meaning that broader issues around worker exploitation - the health and safety of working conditions, the use of child labour and fair pay – are not addressed. It also fails to deal with entire populations being evicted from their ancestral homes to make way for mining.

Synthetic Diamonds: Industrial and gem-grade diamonds made artificially through machines. In terms of industrial-grade diamonds, which comprise at least 40 percent of all annual diamond production, this could mean tremendous cost savings for industries using industrial diamonds and the elimination of conflict diamonds from industrial uses. For gem-grade diamonds the viability of synthetic diamonds is questionable. This is largely due to the success of past diamond marketing campaigns-most consumers see synthetic diamonds as inferior to natural ones.

Laser Engraving: Lasers make it possible to mark diamonds--either in their rough or cut stage-with a symbol, number, or bar code that can help to permanently identify that diamond.

Invisible Finger Print: The technology works by electronically placing an invisible information package on each stone. The fingerprint can include any information that the producer desires such as the mine source and production date. Unfortunately, if the diamond is re-cut, the fingerprint will be lost, although it can be reapplied at any time.

4. Various Frameworks

I. The People, Planet and Profit approachA fragile economy and a climate out of control, poverty across half the planet and scarcity of natural resources, the extinction of species a explosion in population, ethical dilemmas on every corner, and low confidence and trust in business. Growing awareness of corporate malpractice in these areas forced several companies, including Nike and Tesco, to re-examine their sourcing policies and to keep a closer eye on the ethical standards of their suppliers in places as far apart as Mexico and Bangladesh, where labour markets are unregulated and manufacturers are able to ride roughshod over social and environmental standards.

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People- Ensuring health and safety of mine workers, making sure displaced people get fair share of profit earned from diamond trade, ensuring profit is not used to fund illegal activities, job creation and community development.

Planet- Ensuring natural habitat of the surrounding area is not disturbed due to mining activities, soil erosion, deforestation all these issues are taken care off while conducting diamond trade.

Profit- Ensuring sourcing of rough diamond is from legitimate source.

II. ABCD FrameworkAccess

Majority of diamond mines are in politically unstable African countries

Cartels control production and hence are able to create barriers to entry

New technologies used to create diamond can only provide diamond for industrial purposes

Buying Behaviour

Consumer consider synthetic diamond as inferior to natural diamond

There is more awareness now among consumers regarding diamonds and certificates that prove that they are not from the conflict regions

Considered as symbol of social status

Consumption Characteristics

Gem grade used for collection, exhibits and decorative art objects

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Industrial grade used for medical field, space programs and diamond tools

Disposal

Re cutting of diamond expensive and reduces its size and value

Considerable loss in resale value

III. SLEPT FrameworkSocial Factors

Exploitation of local population

Reason for many civil war in Africa

Displacement of local population

Terrorism Funding

Presence of diamond fields in under developed African countries

Legal Factors

Kimberley Process Certification Scheme

Diamond Development Initiative International

Community and Small Scale Mining Initiative

Network Movement for Justice and Development

World Diamond Council

Economic

Dependence on African countries for sourcing of rough diamond

Political

Not so favorable governments in diamond producing countries such as Zimbabwe

Technology

Synthetic diamond to significantly reduce dependence on natural diamond and hence reduce cost

Use of technology for certification and tracking the source

Database creation

IV. AAAA FrameworkAlter

Kimberley Process rules can be altered to make it more broad and effective

Avoid

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Avoid sourcing from politically unstable countries

Accede

Comply with all the rules governing diamond trade

Ally

Collaboration with countries producing diamond

V. IDEA FRAMEWORKIdentify the facts-

It is believed 20 percent of all diamonds on the market could be conflict diamond.

Profit from diamond is being used to fund terrorist and rebel

Communities displaced not being dealt adequately

Determine

Whether to source from blood diamond

As a consumer whether to buy diamond

How to identify diamond is not sourced from conflict countries

Whether not buying diamond is a feasible solution

Explore

Technological substitutes

Use of technology for tracking and certification

Strengthening of rules governing diamond trade

Act

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5. To buy or not to but considering the conflict diamond issues?It is very critical question to answer but for sure we should not buy diamonds which involved is involved in conflict. If by knowing we are buying diamonds then in a way we are also involved in someway to those illicit trade and the criminal activities being financed by that trade. So any stakeholder from seller to buyer should pay careful attention in the whole process and should take responsibility as an agent of human rights.

Ask Before You Buy.  Recognize that you are responsible for what you buy and that someone’s life may be at stake. Make sure you know who your suppliers are if your are a seller or any intermediary and ask them serious questions to ensure that the diamonds you

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buy are not from conflict zone of the market nor involved in other serious human rights abuses. Err on the side of caution. Tell your supplier you really care about where your diamonds come from. If they know you care, they also will care. Make it a point to personally talk to every diamond supplier about human rights issues and how important they are to you. And if your are the ultimate consumer you should purchase diamonds if your are ethically satisfied with its source and that it is not a conflict or blood diamond.

6. Ethical responsibility of Diamond Industry to combat illicit trade in diamonds?Severe human rights violations, including murder, rape and forced labour, have taken place in the diamond fields of various African countries. Recent reports from Human Rights Watch (HRW) indicate that these horrific conditions continue to take place. The jewellery trade’s purchase and distribution of blood diamonds is funding a continuing cycle of horrific human rights violations. So in a way diamond industry is providing money and distribution to those who murder, rape and enslave. Every time we buy or sell a blood diamond, we are sending a message of encouragement to the perpetrators of these inhuman crimes. We are legitimizing their dirty business. We become their partners in crime.

Thus diamond industry should take its responsibility to stop this illicit trade and ultimately stop its contribution by indirectly financing those illicit activities because diamond industry as a whole cannot surpass the entire humanity and it do have ethical and moral responsibility to stop this.

7. Action by International community towards nation and corporation found in trading of conflict diamonds?It is clear that the Kimberley Process has still a long way to go before it achieves the lofty goals set out by its creators. Given its failings and flaws, what needs to be done in order for the process to be an effective means by which trade in conflict diamonds is halted? The following is a list of recommendations:

First, the Kimberley Process certification scheme for rough diamonds must make provision for regular, independent monitoring of all national diamond control systems. Without this, it will create false consumer confidence and the appearance of integrity where none can be assured. Such false confidence will do nothing to stop conflict diamonds where they still exist, and it will do nothing to prevent their return where controls are weak and predators are strong.

Second, the United Nations Security Council must, as a matter of priority, address the issue of conflict diamonds in the DRC. It should embargo all unofficial diamond exports from the DRC, and insist that the Kimberley Process develop a more rigorous approach to statistics and monitoring.

Third, civil society organizations should take an active role in promoting the Publish What You Pay campaign. This, initiative, founded by NGOs such as Global Witness and Oxfam, is aimed at helping citizens of resource-rich developing countries hold their governments accountable for how revenues from the oil, gas and mining industries are managed and

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distributed. Together with Kimberley’s certification scheme, consensus on basic corporate transparency in developing countries can be reached, and corruption can be diminished.

Fourth, mining contracts that were acquired through bribery or military action prior to implementation of the Kimberley Process should be nullified and considered void, while contracts entered into during the implementation of the process should be monitored and regulated.

Finally, the diamond industry can and should endorse all of these recommendations. Endorsements can begin with apex bodies such as the World Diamond Council, the International Diamond Manufacturers’ Association, the World Federation of Diamond Bourses, national diamond manufacturers associations, national diamond exchanges, national and international diamond mining associations etc. Much has been done already. With greater commitment to an effective Kimberley Process and greater overall transparency, the diamond industry could become a world leader in corporate social responsibility.

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