International transparency initiatives in the resource sector

Embargoes on arms deliveries and the diamond trade were very important tools for ending the civil wars in Sierra Leone and Angola that were financed by the trade in these precious stones. As a reaction to these "diamond wars", further international initiatives were founded that intended to improve governance and transparency in the resource sector and, in the long term, wanted to prevent violent conflict.
Two initiatives are exemplary for this because they brought together governments, corporations and civil society organizations in controlling the resource sector: The Kimberley Process Certification Scheme for rough diamonds (Kimberley Process) and the international Extractive Industries Transparency Initiative (EITI).

The Kimberley Process Certification Scheme for rough diamonds

The Kimberley Process (KP) has been internationally adopted by governments, companies and civil society to stop the trade in conflict diamonds. The KP was introduced in January 2003 and is supported by the United Nations. The Scheme requires the governments of diamond-producing countries to certify shipments of rough diamonds as ‘conflict-free' and to prevent conflict diamonds from entering the legitimate trade chain. Each rough diamond requires such a certificate of origin and can only be exported into KP member states.

Currently 81 states were part of the Kimberley Process. As the 28 states of the European Union count as one participant, the KP currently has 54 members (which includes the one voice of the EU). Besides the member states, the diamond industry and a civil society coalition also participate as observers.

This Certification Scheme is one of the few legally binding regimes that regulate the trade in conflict resources. Member states have to embed certification in their national legislation and establish a system for the control of im- and exports. Accession to the KP, however, is voluntary as it does not constitute an agreement subject to international law. Yet, there is a lot of pressure to join the Scheme as only members are allowed to trade with rough diamonds amongst each other.

But still, the KP cannot be a panacea for each commercial branch. Even this Scheme needs to be worked on, in particular in implementation and scope. Since 2004, for instance, diamonds from the rebel-held areas in Côte d’Ivoire have appeared on the international market. Serious human rights violations by the military in the diamond fields of Zimbabwe since the end of 2008, for instance, have given rise to new challenges that the Kimberley Process cannot solve.

So far, its mandate does not cover human rights violations by state security forces. Its definition of conflict diamonds is limited to rough diamonds traded by rebels. This is why the Kimberley Certificate is by no means a guarantee for a 'fairly' sourced and marketed diamonds. On the contrary: The fact that human rights violations and inhumane working conditions for miners are daily occurrences is still absolutely characteristic of the diamond industry in Sierra Leone or the DR Congo. This is why it is high time for a new definition of so-called conflict diamonds, which also includes human rights violations.

EITI: The Extractive Industries Transparency Initiative

The Extractive Industries Transparency Initiative (EITI), together with civil society in the Publish What You Pay (PWYP) campaign, strive to achieve more transparency in balance sheets as well as the distribution of revenues from the gas, oil and mining sector. It is a much broader approach than the Kimberley Process Certification Scheme, which is only applicable to rough diamonds. But this initiative is purely voluntary. Governments and companies alike can declare their willingness to make transparent company payments to governments.

Founded in 2002 during the World Summit on Sustainable Development in Johannesburg, EITI has 51 resource producing member countries (March 2017). A step by step accession procedure makes sure that the requirements of EITI are kept. When they join, countries become 'candidates'. To obtain the status of 'compliant', countries will have to subject themselves to a review process that is monitored by independent inspectors. At the time of writing, seven countries have received that status, for example Ghana, Kyrgyzstan, Nigeria or Peru. The World Bank and investment funds support this Initiative.

Like the Kimberley Process, EITI is a multi-stakeholder initiative that unifies governments, companies and civil society. Counter to the KP, EITI also takes effect on the national level: Each member country forms a working group that brings all three parties together and makes decisions on a country level.

Sources and further information:

• The Extractive Industries Transparency Initiative
• EITI (2011): EITI Rules, 2011 Edition including the Validation Guide. EITI International Secretariat Oslo.
• Global Witness and Save the Children (2005): Making it add up. A constructive critique of the EITI Reporting Guidelines and Source Book.