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The Next KP Chair

Editorial

Dec 16, 2010 4:57 PM   By Avi Krawitz
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RAPAPORT...  The United Nations (UN) Security Council this week renewed its arms embargo on the Democratic Republic of the Congo (DRC) while “recalling the linkage between the illegal exploitation of natural resources, illicit trade in such resources and the proliferation and trafficking of arms as one of the major factors fueling and exacerbating conflicts in the Great Lakes region of Africa,” according to its related statement.

In layman’s terms, the UN endorsed a report by a panel of experts outlining that rebel groups in eastern DRC are profiting from the trade of minerals mined in the area. Global Witness reported that former rebels, who are now part of the national army, with “shaky” loyalty to the government, are also profiting from the mines. Among the minerals found in the eastern DRC’s Great Lakes region are gold, cobalt and coltan, which is used in the cellular phone industry.

The panel of experts concluded that in certain cases, the exploitation of natural resources merely enables armed movements to sustain their efforts toward political objectives, but added that economic motivations are fueling a significant portion of the armed actors, including criminal networks.

“The deployment of these criminal networks is increasingly driven by the desire to control natural resources,” the panel of experts wrote. “According to local leaders in one remote area, the first thing newly arrived officers often ask them is: ‘Where are the mines?’”

Most significantly, the UN stressed its concern regarding reports of persistent human rights violations, including the killing and displacement of civilians, sexual violence and the recruitment of child soldiers, amongst others.

It is therefore with a sense of irony that the DRC is preparing to assume the 2011 chairmanship of the Kimberley Process (KP), the body mandated to restrict the trade of conflict diamonds.

To be clear, the DRC’s diamonds are not listed among the minerals said to be funding the rebel groups and its government is not listed as a perpetrator of human rights abuses. In fact, the DRC’s government recently banned mining in the region while denouncing the involvement of both civilian and military local authorities in the illegal exploitation and illicit trade of minerals.

For all of the country’s good intentions, however, the question must be asked: Is it appropriate for the DRC to take on the role of KP chair at this time?

The question is complicated by the fact that the DRC is one of the poorest countries in the world. The country had a population of approximately 71 million people with an average gross domestic product (GDP) per capita of $300 in 2009, according to the U.S. Central Intelligence Agency (CIA) World Factbook. Its per-capita GDP ranks at the bottom of the CIA’s published list for 2009.

Renewed activity in the DRC’s mining sector boosted economic growth from 2006 forward, but the government's review of mining contracts combined with a fall in world market prices for its key mineral exports put the brakes on its economic development, according to the CIA.

The DRC’s government has evidently made encouraging progress in alleviating poverty, however, to the extent that the International Monetary Fund (IMF) committed in July to $12.3 billion in debt relief funding for the country. The IMF was satisfied that the country has implemented the policy measures required to qualify for the funding. These included satisfactory implementation of the country’s poverty reduction and growth strategy, maintenance of macroeconomic stability, improvements in public expenditure and debt management and improved governance and service delivery in key social sectors, such as health, education and rural development.

Still, there is undoubtedly a long way to go and taking on the role of KP chairman in 2011 will divert the DRC’s resources unnecessarily. There are understandable reasons that the DRC might want to take on the KP job — most likely, to show it is at the forefront of the fight against conflict minerals.

But this, too, may backfire. The KP is in the midst of its most challenging period, as the Zimbabwe, Marange crisis lingers on. Any weakness on the DRC’s part in ensuring that no conflict diamonds, be they from Zimbabwe or elsewhere, are allowed to flow to the market may depict the country itself as susceptible to conflict diamonds.

As stated already, it is not. Rather, the country’s conflict involves the trade of other minerals mined in the Great Lakes region. It is a conflict, as stressed this week, which includes a long trace of ongoing human rights abuses, which only serve to intensify the suffering of a poverty-stricken people.

It is not a question of whether the DRC can be an effective chairman, but rather how it can best serve its own diamond sector, and the global diamond community. From a humanitarian point of view, world bodies such as the UN should encourage the DRC government to prioritize the allocation of its resources, both human and financial, to combat the main challenges facing the country: conflict and poverty. This will make the DRC a far more effective member of the KP.

The writer can be contacted at avi@diamonds.net.

This article is an excerpt from a market report that is sent to RapNet members on a weekly basis. To subscribe, go to www.rapnet.com or contact your local Rapaport office.


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