INTERNATIONAL AND U.S. SOLUTIONS TO THE PROBLEM OF "CONFLICT DIAMONDS," GEMS WHOSE MINING AND EXPORT IS TAINTED BY VIOLENCE AND TERRORISM

By ANITA RAMASASTRY

Wednesday, Apr. 03, 2002

Diamonds may be forever - but in some nations, diamonds lead to perpetual conflict and even death. It is hard to imagine that the diamond in your own ring may be tainted with blood, but in some cases it may be.

Consumers have become increasingly aware of "conflict diamonds" ­- diamonds mined and exported from regions of violent conflict, where the proceeds may only go to fund more violence - as public relations campaigns by organizations such as Global Witness have made clear their human cost. Compelling photos of children who have lost limbs or suffered injuries due to such conflicts have gotten the message across: Diamonds can kill and wound.

Yet over the past few years, little progress had been made in ending the international trade in "conflict diamonds." Over the last few weeks, however, some hope has arisen - both on the international front, and in the U.S. Senate.

The Kimberley Agreement and World Diamond Council System

For more than three years, the topic of "conflict diamonds" has been debated in the United Nations. In December 2000, the U.N. required all states to prohibit the direct and indirect import of rough diamonds from Angola and Sierra Leone, unless the diamonds were controlled under specific "certificate of origin" regimes.

The question of how to implement the U.N. requirement then became the subject of nearly a dozen meetings of governments, industry, and nongovernmental organizations (NGOs) - known collectively as the Kimberley Process. The Process, chaired by South Africa, sought to establish minimum acceptable international standards for national certification schemes for the import and export of "rough" (uncut and unpolished) diamonds, in order to attempt to stem the flow of these diamonds from rebel-held conflict areas.

On March 21 of this year, the Kimberley countries reached agreement at the most recent of their meetings, in Ottawa. Although a few technical details remain to be worked out, the Chairman of the Kimberley conference, Abbey Chikane, remains confident that they will meet their end-of the-year deadline for implementing a new global regime to stop the trading of conflict diamonds by rogue regimes and warlords. One of the remaining issues facing the Kimberley countries is how to deal with monitoring and compliance with respect to alluvial diamonds - those that are washed up on riverbeds in countries like Sierra Leone.

Meanwhile, an industry group, the World Diamond Council (WDC), announced in late March that it would implement its own system of control. By a unanimous vote, the WDC membership elected to implement a system of warranties that would endorse every rough diamond transaction at trade centers around he globe. WDC claims that this will complement the Kimberley certification process. It has noted that post-September 11, the link between terrorism and trade in natural resources such as diamonds has increased, thus increasing the need for action.

The Kimberley process previously received criticism from various quarters. NGOs believe that transparency and independent auditing and monitoring of how diamonds are certified or warrantied by nations and the industry is essential. Thus, prior to the March meeting, 73 NGOs signed a petition addressed to the Kimberley conference demanding a mandatory monitoring program. The compulsory monitoring regime was ultimately adopted by the conference.

The United States General Accounting Office (GAO) issued a report in February 2002 criticizing the Kimberley process. The GAO Report states that the process suffers from various shortcomings such as the lack of formal risk assessment procedures and that many controls are recommended rather than mandatory.

For example, the GAO report notes that some activities, which are labeled high, risk by industry experts, such as the flow of diamonds from the mine or field to the first export, are subject to only recommended elements or controls. Furthermore, the period after rough diamonds entered a foreign port or a final point of sale will be dealt with purely by industry self-regulation. It is unclear from current reports and news accounts whether all of the GAO's concerns were dealt with in the most recent round of Kimberley meetings.

The GAO Report does applaud the Kimberley Process as achieving cooperation with the diamond industry, NGOs and governments, but noted that considerable challenges still remain. The report also notes that the U.S. system for diamond certification is also deficient. Current U.S. controls over diamond imports generally do not require certification from the country of extraction - just from the country of last import - and thus prove ineffective at identifying diamonds originating in conflict zones.

Much work does remain to be done. It will be up to national governments to implement the regulatory framework and monitoring system for the Kimberley process. The United States, the EU, and other nations need to act expeditiously to devise proper systems to deal with assessing the diamonds they import; press for accurate systems of certification in diamond-producing and diamond-exporting countries; and create effective enforcement mechanisms. Among other measures, the U.S. and Europe must impose penalties on importers to deter them from continuing to accept conflict diamonds, or even uncertified diamonds.

These steps will allow trade in legitimate diamonds to flourish, helping many developing nations in Africa. Unless the United States and other nations act promptly, countries that trade in legitimate diamonds, including Botswana, Namibia, South Africa and Tanzania, may suffer. At the same time, these measures will help eliminate the ability of terrorists and armed rebels to line their pockets by trafficking in precious gems.

Trade in Conflict Diamonds Has Devastating Human Cost

Diamonds represent many things, including love, romance and wealth. In some parts of the world, they also represent blood and violence - for these precious natural resources be bought and sold to finance violent armed conflict, and can spur battles over the lands on which they are mined.

In three countries in particular - Angola, Sierra Leone, and the Democratic Republic of the Congo - rebels, state actors, and terrorists alike have financed armed conflict by trading in so-called "rough" diamonds. Wars have been waged in diamond mining areas, and civilians have been displaced from these areas as groups battle to control them.

Indeed, recent statistics indicate that 6.5 million people from these three countries have been driven from their homes by wars waged in large part for control of diamond mines. A million of the displaced have become refugees. Other victims have lost not only their homes, but also their lives. Some estimates indicate that 3.7 million persons have died during these wars - at least 500,000 of whom, over the past decade, were civilians.

Simply banning diamonds from the three offending countries would not be enough, for routing diamonds through "third counties" can evade the bans. According to the industry, only four percent of the world's diamonds are conflict diamonds. Without proper certification systems, these diamonds can easily blend in with the rest.

Massive number of diamonds reaches the international trading centers of Belgium, Israel, and India from countries such as Rwanda, Uganda, Gambia - but these countries have no diamonds of their own.

In addition, Belgian diamond imports from Guinea, Central Africa Republic, and Cote d'Ivoire apparently exceed the production capacities of those countries - suggesting that diamonds are being routed through these countries as well. Illicit diamonds have also been mixed with clean diamonds, in a process of "diamond laundering," to suggest all are clean.

Prompt U.S. Legislation Is Needed To Address the "Conflict Diamonds" Issue

Last year, several pieces of draft legislation concerning conflict diamonds were put on Congress's legislative agenda. This year, a Senate Bill, S. 2027, the Clean Diamond Trade Act (CDTA), has been introduced. It is currently before the Senate Finance Committee. The bill enjoys bipartisan sponsorship, from Republican Senator Michael DeWine and Democratic Senator Russell Feingold.

The new legislation is to be applauded. It expands the definition of "conflict diamond" from definitions used in previous legislation before the House and Senate. Importantly, finished jewelry is not exempted; importing jewelry containing conflict diamonds is sanctioned under certain circumstances.

Under the CDTA, civil and criminal penalties will be available for importers of rough diamonds, polished diamonds, or jewelry from a country that has not taken effective measures to stop trade in conflict diamonds. The penalties applicable are to be the same as those applied to other violations of U.S. customs and navigation laws.

Concerted Action on "Conflict Diamonds" Is the Best Solution

Meanwhile, the European Union (EU), the largest importer of rough diamonds, needs to take prompt, similar action. During 2002, the EU needs to devise its own system for certification among member states. EU member states will need to implement proper border controls for the transport of diamonds as well.

There are many reasons for the U.S., the EU, and the rest of the world to act: to save lives, to promote development, and to allow the diamond industry to profit only when the diamonds are clean. The main reason, however is to end gross human rights violations. The life of a child in Sierra Leone is worth far more than any diamond.


Anita Ramasastry is an Assistant Professor of Law at the University of Washington School of Law in Seattle and the Associate Director of the Shidler Center for Law, Commerce & Technology.

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