Regulating Reality: Reconfiguring Approaches to the Regulation of the Trade in Artisanally Mined Diamonds

1. Regula'ng
Reality
Reconfiguring
Approaches
to
the
Regula'on
of
the
Trade
in
Ar'sanally
Mined
Diamonds
By
Nicholas
Garre>,
Harrison
Mitchell
and
Estelle
Levin

2. Methodology
• Time
to
complete
report:
14
days
• Based
on
field
research
in
DRC
and
Sierra
Leone
between
2003
and
2008
• Decided
not
to
reflect
the
capital
perspec've
and
produce
a
laundry
list
of
recommenda'ons
• Reflect
the
perspec've
of
those
in
the
field
backed
up
by
expert
analysis

3. Searchers
vs.
Planners
• A
planner,
imposes
a
structure
upon
already
exis'ng
structures
–
tends
to
be
rigid,
determines
what
to
supply
• A
searcher
finds
something
that
works.
A
service/product
in
a
market
place
and
sees
if
it
is
taken
up
–
tends
to
be
flexible,
finds
what
is
in
demand

4. Reconfiguring
Approaches
• Discrepancy
between
the
capital’s
posi've
view
of
interven'on/
regula'on
and
the
more
realis'c
view
of
those
in
the
field
• Four
obstacles
were
relayed
to
us
con'nually:
– Lack
of
state
capacity
to
regulate
–
but
not
only
ma>er
of
state
capacity
– Size
of
sector
– Geography
of
the
country
– Informa'on
Asymmetries
– Func'oning
informal
trade
• Based
on
this
finding,
our
main
goal
is
to
emphasise
a
need
for
a
new
approach
to
regula'ng
the
trade.
• Further
refining
imposed
and
unworkable
regula'on
and
policy
is
likely
to
waste
resources.
• We
suggest
Fundamentally
different
star'ng
point:
tofacilitate
and
work
with
the
exis2ng
and
func2oning
trading
structures
as
much
as
possible

5. A-­‐Legality
• There
are
a
number
of
dis'nc'ons
one
has
to
make
with
respect
to
the
defini'on
of
the
trade
in
ar'sanally
mined
diamonds:
There
is
illegal
trade,
legal
trade,
informal
trade
and
formal
trade.
What
we
have
found
is
that
most
trade
in
the
two
cases
we
introduce
in
our
study
is
a-­‐legal
trade.
• A-­‐legal
trade
in
the
ar'sanal
diamond
sector
occurs
where
it
is
not
possible
for
the
agent
to
act
legally
because
the
state
either
does
not
apply
and/or
does
not
enforce
the
law
correctly.
In
prac'ce
this
occurs
where
the
law
makes
requirements
of
the
agent,
(e.g.
ar'sanal
miners
cards),
but
does
not
put
the
necessary
structures
in
place
for
agents
to
comply
(e.g.
provide
the
cards).
• This
again
hints
at
unworkable
regula'on.

6. DRC
• In
theory
a
rela'vely
complete
set
of
controls
• In
prac'ce
some
posi've
results
at
the
comptoir
level
through
to
export
• Li>le
knowledge
of
the
providence
of
diamonds
entering
the
value
chain
• Cannot
say
with
certainty
that
diamonds
KPCS
cer;fied
were
mined
in
the
DRC

7. Sierra
Leone
• Swi`ly
modernised
since
the
end
of
the
war
• S'll
significant
informal
sector
• Cross
border
trading
ongoing
• Diamonds
undergo
gradual
formalisa'on
• Governance
over
exports
has
vastly
improved,
as
a
result
taxa'on
accumulates
at
point
of
export
• However,
like
DRC,
KPCS
cer;fied
diamonds
cannot
be
guaranteed
to
come
from
SL
at
point
of
export

9. From
control/interven'onist
approaches
to
facilita'on
and
incen'vising
formalisa'on
• Many
approaches
have
failed,
principally
because
they
have
not
taken
into
account
capacity
constraints,
informa'on
asymmetries,
size
of
sector,
geography
of
the
country,
and
the
mechanics
of
an
already
func'oning
trade,
which
has
an
unrivalled
resilience
• This
is
the
reason
for
a-­‐legal
trade
• New
Approach:
Emphasise
incen;ves
to
formalisa;on
of
exis;ng
structures
rather
than
the
imposi;on
of
an
unenforceable
control
regime

10. Final
thought
• Make
it
easy
and
desirable
and
cheaper/
profitable
for
traders
to
work
legally
• Head
of
the
Dealers
Associa'on
in
Kono,
Sierra
Leone
-­‐
Open-­‐Yai
members
will
only
formalise
their
ac6vi6es
once
it
is
cheaper
to
deal
formally
than
informally,
i.e.
when
licensing
costs
are
cheaper
than
the
cost
of
paying
bribes