The challenge of tackling illicit economies with international sanctions regimes: the Kimberley Process in the Central African Republic.

International sanctions regimes and trade regimes often have ambitious publicly stated aims about advancing peace and security. The UN Security Council, for example, says its sanctions regimes pursue a ‘variety of goals’, from enforcing arms embargoes, constraining terrorism, protecting human rights, or deterring coups.¹ The US Office of Foreign Assets Control, likewise, sees sanctions as a tool ‘to accomplish US foreign policy and national security goals’.²

In practice, however, the aims of these regimes are often more limited (or, some would say, pragmatic). Different stakeholders in these processes can have different views of what success looks like, and what these regimes should precisely aim for. The Kimberley Process Certification Scheme (KPCS) in the Central African Republic (CAR) provides a case in point.

The KPCS is a trade regime that aims to prevent the export and sale of ‘conflict diamonds’, defined in its core document as ‘rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments.’³ The KCPS was a product of the rising anxiety in the late 1990s around natural resources being used to fund conflict.

The KPCS has been an intensely politicized process and its impact on the illicit trade in diamonds and associated conflict is a contested issue. Its objectives, and the ways in which the process works, are sometimes at odds with popular expectations of what it should achieve.

This is demonstrated clearly in the CAR, a country that has faced suspensions and restrictions under the Kimberley Process for years. In the case of the CAR, the evidence suggests that the KPCS has not so much reduced conflict financing, as much as it has shifted the exploitative focus of armed groups to other resources.

Origins and objectives of the Kimberley Process

The KPCS was created in 2002. The impetus came in part from major diamond players who feared a consumer boycott, in response to rising global awareness around the role that natural resources – and diamonds in particular – had played in war economies.⁴ Conflicts such as those in Sierra Leone and Angola involved significant rebel exploitation of diamond fields, and diamond companies were under pressure to show that they were not complicit in such supply chains. KPCS member countries would have to have their diamond industries issue ‘certificates of origin’ prior to export to assure international buyers that their purchases did not come from conflict zones where rebels may have profited from them.

Essentially, the KPCS’s chief aim was to keep what it termed ‘conflict diamonds’ out of formal supply chains.⁵ Yet many campaigns around conflict minerals over the years have implied that ‘cutting off’ natural resource revenue from rebel groups would help to bring about conditions for peace.⁶ These ambiguities make it important to consider how the impact of the KCPS falls within the broader objectives of achieving peace and security.

The Kimberley Process has faced major challenges and a crisis of faith among some stakeholders. The most recent plenary meeting in November 2023 ended in deadlock around a debate over broadening the definition of ‘conflict diamonds’ to include ‘state actors’ in light of Russia’s war in Ukraine and financial flows to Russia from the diamond trade.⁷ Western countries pushed for this expansion while Russia and allies, including Belarus and the Central African Republic, stood against.

The Kimberley Process Civil Society Coalition, a non-governmental observer organization, walked out of negotiations on the final communiqué of the plenary at 2 a.m., lambasting the way the process has been politicized. ‘We have been pushing tirelessly to break the links between diamonds and conflict,’ said coordinator Michel Yoboué. ‘We want to see action, but we can’t even agree on simple words.’⁸

Yoboué cited the CAR as an example of where the KCPS has become a politicized process, ignoring the inputs of an expert network in the country. ‘Civil society regrets the lack of constructive attitudes in developing an approach to ensure that the Central African Republic and its people – rather than rebels, criminal networks or mercenaries – reap the full benefits of their diamond wealth,’ said Yoboué’s statement on behalf of the coalition.

The Central African Republic within the Kimberley Process

There are two major areas where diamonds are found in the CAR: the ‘Carnot sandstone’ area in the country’s south-west, and the ‘Mouka-Ouadda sandstone’, covering a large area of eastern CAR (see Figure 2). These are all ‘alluvial’ diamonds, which means the stones are scattered near to the surface across a large area, rather than mined from deeper geological deposits.⁹

The CAR was fully suspended as a member of the KPCS in 2013. Yet there have been concerns around the use of minerals, and especially diamonds, by conflict actors in the country since the early 2000s. The CAR was the subject of a review in 2003 – the first year of the KPCS’s existence – due to a coup by Francois Bozizé, which ejected the regime of Ange-Félix Patassé. Between 2010 and 2012, growing activity by armed groups, including their exploitation of diamond mining, led to increased vigilance around diamonds from the CAR, and particularly from eastern CAR, within the Kimberley Process mechanism.¹⁰

Figure 1 Key events in the CAR conflict, and diamond and gold sanctions.

Bozizé’s takeover was an early challenge to the KPCS, since he went from being a rebel actor profiting from diamonds to taking the presidency. The KPCS suspended the CAR for two months in 2003, but then reinstated the country after Bozizé assured inspectors he would work to tackle conflict diamonds, although in practice insurgents continued to benefit from the illicit trade.¹¹

However, it was the rise of the Séléka rebel coalition in 2013 and their ensuing takeover that led to a full suspension of the CAR’s diamond exports under the Kimberley Process. Séléka was disbanded by its leader Michel Djotodia in September 2013, but this did not prevent its constituent groups of militants from continuing to exploit diamond and gold deposits in eastern and western CAR.¹² Transitional authorities, whom Djotodia ceded control to in January 2014, were unable to stem clashes between ex-Séléka combatants and Anti-Balaka militias.

Persistent instability and the emergence of new armed rebel coalitions following the 2016 election led President Faustin Archange Touadéra to turn to Russia for support. Wagner paramilitary forces deployed in the CAR in 2018. They, too, have made inroads into the CAR’s minerals sector, and companies linked to Wagner trading in both gold and diamonds have been subject to international sanctions.¹³

Impact of the Kimberley Process on the CAR’s diamond ecosystem

Today, state-aligned forces’ control in the CAR varies substantially, with eastern CAR still dominated by armed group activity. Northern and north-eastern CAR continue to experience high levels of armed group activity, including profiting from mining sites. South-western CAR began to stabilize earlier than north-eastern CAR and, as a result, eight sub-prefectures in the south-west were exempted from the KPCS export ban in 2016.¹⁴ Today, the south-west is under the reasonably consistent control of the state and Wagner mercenary troops. Observers agree that the volume of legal diamond exports from the CAR is increasing.¹⁵ The country recorded almost US$14 million of diamond exports in 2022, up from US$11.6 million in 2021.¹⁶

Figure 2 Kimberley Process green zones, and gold and diamond deposits in the CAR.

Source: Alexandre Jaillon and Guillaume de Brier, Mapping artisanal mining sites in the Western Central African Republic, IPIS and USAID, November 2019; US Geological Survey, Kimberley Process Permanent Secretariat

Figure 3 Legal diamond exports from the CAR, 2004–2022.

Source: Kimberley Process Secretariat, via https://www.kimberleyprocess.com/en/central-african-republic-0

While this means that the formal sector is gradually reanimating its diamond-buying networks in the south-west and winning back some of the trade from artisanal miners, two important factors dampen what should be positive news. The first is that licit diamond revenue for the CAR is still substantially lower than it was in 2012, prior to the suspension. This is in large part due to the CAR’s remaining 16 sub-prefectures still being banned from exporting rough diamonds, which means that diamonds mined in these areas can only be traded illicitly. The second factor is that, while there is still an illicit market for diamonds, which remains very active, the global drop in licit demand for Central African diamonds has led to a substantial shift towards artisanally mining and illicitly exporting gold.

The geography of south-western CAR’s diamond reserves provides an opportunity for traders to operate illicitly. Observers familiar with the CAR–Cameroon border region agree that, if an individual had diamonds and were willing to sell them illicitly, they would easily be able to find a buyer for them, particularly in the border towns of Cameroon such as Garoua-BoulaÏ and Kentzou.¹⁷ Buyers in these border towns are often West Africans from a clutch of countries. Given that diamond mines, including in western CAR, are often much closer to border towns than they are to Bangui (through which Kimberley Process-compliant diamonds must be exported), a seller looking to recoup their money swiftly will inevitably be tempted to sell on the illicit market.¹⁸

This said, diamonds were a more complex commodity to trade than gold, even prior to the KPCS suspension. The CAR’s diamonds are all alluvial, and alluvial deposits are not necessarily clustered together, but scattered over very large areas.¹⁹ The risk for miners is that they may dig for weeks or months and not find diamonds to sell.²⁰

Gem-quality stones need to be cut and polished before acquiring value, a process that is typically done in Dubai, which means that diamond buyers must have international networks in order to profit.²¹ Diamond miners thus are typically embedded in pre-financing networks, in which a buyer or mine owner finances the dig, and shoulders the risk of diamonds not being found. When diamonds are found and sold, depending on the agreement with the pre-financier, the miners may also share in the revenue of the sold diamond.²² Given the high levels of trust needed to make these networks function, it is unsurprising that even after the suspension was partially lifted, formal buyers required time to re-acquire the trust of artisanal mining networks.²³

The Kimberley Process has, inadvertently, made this more difficult. Diamonds mined in these areas must be taken to the main town in the relevant sub-prefecture, where they will be sealed in bags, and then taken to Bangui for re-inspection by the monitoring team.²⁴

The KCPS has attempted to address bottlenecks. One widespread source of dissatisfaction was the wait time that the checks added to the process, reducing the speed at which miners could be rewarded for their efforts.²⁵ Measures such as an enhanced use of digital imagery for inspections have been adopted, to some positive effect.²⁶ However, most estimates suggest that a major portion of diamonds mined, even in the exempted south-west, are smuggled out rather than licitly exported. In the east, all diamonds mined can be assumed to be either bought and stockpiled, or smuggled into illicit supply chains.²⁷

The CAR has certainly seen examples of armed group leaders taking control of either mines or local diamond supply chains, and arranging their illicit sale directly. In 2017, anti-corruption NGO Global Witness documented the case of the ‘General’ Nama who, as a Séléka commander in 2013 in south-western CAR took over the local buying house, and also forced miners to sell diamonds to him at a fraction of their value.²⁸ However, there is also a more passive – and more common – role that armed groups adopt; namely that of taxing either mining activity or movement along roads leading to and from mining areas.²⁹ Generally speaking, transnational organized crime networks that sell the ‘conflict diamonds’ are thought to take the much larger share of a Central African diamond’s revenue.³⁰

The KPCS has substantially reduced the attraction and the viability of diamonds as an avenue for conflict financing. While it has certainly not succeeded in stopping the trade in ‘conflict diamonds’ through illicit networks, it has reduced the prices that both illicit buyers and licit buying houses are prepared to offer miners.³¹

Gold booms as an alternative to diamonds

In the past decade, there has been a substantial shift of miners turning from diamonds to gold as a source of income. This includes miners operating in areas controlled by armed groups.

Gold is not sanctioned as a commodity in the CAR, and there is no particular restriction against buying (including in conflict-affected areas that are not KCPS compliant) or selling gold. There are voluntary frameworks, notably one established by the Organisation for Economic Co-operation and Development. Designation under the United Nations sanctions regime is a possibility, if an individual is proven beyond doubt to be financing armed groups through the illicit trade in natural resources.³² However, given the targeted nature of this regime and the burden of proof required, ordinary miners and low-level dealers can generally expect to escape scrutiny.

The shift to gold has also been facilitated by some market characteristics. First, mining gold is a lower-risk economic activity. Once a seam (or fillon) of gold is discovered, it can be followed through rock, and as long as a miner can access the seam, they can be reasonably confident their efforts will pay off – unlike in the much more uncertain practice of diamond mining.

A secondary factor is that, while the vast majority of the CAR’s gold is exported, it is also valued within the country and is a tradeable substance that can be accepted as a means of payment locally. A miner without an international network can be assured that they can exchange their gold in-country, for cash or for the commodities they need. Both of these factors increase the ease with which gold can be traded illicitly.

A former member of the UN Panel of Experts on the CAR described the shift as such: ‘It has shifted from one extractive sector to another. In the Central African Republic, the main mineral was diamonds, and because of the restrictions, people shifted to gold … In terms of overall conflict financing, there’s probably not a reduction, it’s just a shift.’³³ This shift has been confirmed by other observers.³⁴

Sanctions regimes and illicit economies: between expectations and realities

Many of the campaigns centring on ‘conflict minerals’ have sought to establish sanctions regimes to govern mineral supply chains as a way of promoting peace. However, the KPCS in the CAR appears to have triggered a displacement to the gold trade, rather than decreasing harm or reducing conflict.

While there is still a place for regulation of ‘conflict diamonds’ in international markets, there is a clear argument for the close tracking of the contexts in which the KCPS is applied to identify harms and risks, as the Kimberley Process Civil Society Coalition has called for.

Consistent efforts to constrict illicit economies more strategically – either through other sanctions regimes such as those created by the UN or through other policy instruments – whatever resource these economies might be centred around, would be a practical way forward. However, as the recent geopolitical deadlock at the Kimberley Process meeting shows, a practical way forward is not always politically possible.

Notes