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Kimberley Process Not Rushing to Expel Venezuela

Oct 9, 2007 6:17 AM   By Avi Krawitz
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RAPAPORT... The Kimberley Process Certification Scheme (KP) is discussing how to proceed with the status of Venezuela as pressures have intensified to expel the country from the scheme.

Sources close to the KP told Rapaport News that KP chairman, Karel Kovanda, has asked the organization's participation committee to make recommendations how to deal with Venezuela's non-compliance.

The sources said however, that expulsion would serve as a last resort, “which did not provide a concrete solution” to issues in Venezuela, and that the KP preferred to engage the country to help it comply with KP systems.

His comments came in response to a call from watch group, Global Witness, for the KP to remove Venezuela for flagrant non-compliance, adding that “failure to do so could compromise the entire scheme.”

“Nearly one year after clear evidence of massive diamond smuggling in Venezuela came to light, the country continues to flout the KP,” said Charmian Gooch, director of Global Witness. “If the KP does not address large-scale smuggling of rough diamonds in Venezuela and other countries, it cannot effectively protect against the threat of blood diamonds.”

Venezuela appeared to rejoin the KP party when the country's deputy mines minister Ivan Hernandez attended the KP mid-term meeting in Brussels in June where he confirmed the country’s commitment to the process.

Since then, the source said that Venezuela has complied with the process by providing its 2006 production and export statistics, but has failed to submit its annual report, the second technical prerequisite required for its membership.

“The KP is not an army and the most effective way to ensure that diamonds are not smuggled out of Venezuela is to engage with the government, and work with them to ensure the right controls are in place,” the source said. “Removing them could be contrary to our interests and would likely encourage smuggling.”

Kovanda has reportedly also put a possible review visit to Venezuela on the table, but an invitation would need to be forwarded from the country, for it to materialize.

He added that the Venezuela issue was being blown out of proportion and that “while it is a weakness the KP needs to deal with,” it does not directly affect the KP’s prevention of conflict diamonds entering the market, since Venezuela was not a conflict zone.

In addition, he said, Venezuela is a somewhat insignificant player in the diamond market.

According to KP statistics, Venezuela mined some 17,000 carats of diamonds valued at $1.18 million in 2006. The statistics showed no official rough diamond import or exports figures.

The source noted that more prevalent to KP at the moment were activities in Cote D’Ivoire (Ivory Coast,) which is an area said to be the only source of conflict diamonds in the market today - as well as Ghana’s implementation and alleged smuggling in Zimbabwe.

Following a review visit to Zimbabwe in June, the KP has submitted its final report to Zimbabwe and awaits its approval. Similar to Venezuela, Zimbabwe is not technically considered a “conflict zone” where smuggling activity has caused illicit stones to enter the market.

Still, Global Witness said the KP’s dealing with such cases could make or break its credibility.

“Loopholes in major trading and manufacturing centers are allowing conflict and illicit diamonds to enter the legitimate diamond market,” said Gooch. “To be credible, the Kimberley Process must require governments to adequately enforce their KP controls, including through regular spot checks to verify industry compliance.”

“The international diamond industry also needs to live up to its promise of self-regulation to combat the trade in conflict diamonds,” he added.




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