Diamonds and conflict

 

 

International efforts to curb the trade in diamonds from conflict areas are likely to gain momentum as fighting for control of diamond mines in countries such as Sierra Leone, Angola and the Democratic Republic of Congo focuses increasing attention on the problem. Foreign Ministers of the Group of Eight (G-8) countries are likely to endorse new initiatives at a meeting in Japan shortly before the organisation's July summit. But any measures they decide upon are unlikely to have an immediate impact on the sale of diamonds by rebel armies.Gem diamonds are useless but valuable. In the Western world, where most of them are sold, they are a symbol of enduring love. In parts of Africa where they are mined, however, their trade can sustain rebel forces and exacerbate conflict. Easily transported, diamonds can be exchanged for military supplies and fuel. The scramble for diamonds has sometimes diverted combatants from their original aims.

 

The dilemma for Western governments is tackling the problem without undermining the economies of developing countries such as Botswana and Namibia, whose well-regulated diamond-production industries could be crippled by a general consumer boycott of the gems or by the introduction of expensive procedures aimed at proving the diamonds' origin.

 

In Angola, the UN has tried to prevent the the União Nacional para a Independência Total de Angola (UNITA) movement from waging war by targeting its ability to trade in diamonds, the group's main source of funds. In June 1998, the UN imposed a world-wide ban on importing diamonds from Angolan mines that were not under government control.

 

But the movement of diamonds is difficult to police. In South Africa, Namibia and Botswana, where diamond production is not fuelling local wars, the gems are mined from volcanic pipes called kimberlites, which are easy to fence off and secure. Diamonds mined in such places represent around 70% of Botswana's foreign exchange and as much as 40% of Namibia's.

 

Diamonds are also numerous, however, in areas impossible to fence off – in the gravel terraces of old water courses or on the bottom of river beds, where they are easily mined with simple tools. For most Africans, a diamond the size of a little fingernail is worth many times what they will own or earn in a lifetime.

 

Any effort to regulate the diamond trade depends on support from the South African diamond company, De Beers. The company controls about half of world diamond production and about 65% of sales, which last year were worth some $5.2 billion. De Beers has its own mines in South Africa and exclusive buying contracts with the governments of Botswana and Namibia. Diamonds not bought by De Beers at source tend to end up in the Belgian city of Antwerp, Europe's diamond centre.

 

De Beers initially vigorously opposed the UN ban on UNITA diamonds, arguing that it was difficult to distinguish the origin of diamonds and therefore that controlling their flow would be almost impossible. Once a diamond is cut and polished its origin is indiscernable. But given a parcel of rough diamonds, experts can tell exactly where they come from. De Beers argued that diamond traders were mixing up parcels of diamonds from different places to disguise their source. To complicate matters, some of UNITA's main buyers were Angolan government officials who, quite legally, were buying UNITA diamonds and giving them an official certificate of origin. De Beers says it never knowingly bought diamonds from UNITA, but acknowledges that it may have bought diamonds from UNITA areas.

 

Late last year, De Beers' policy began to change amid a growing campaign against conflict diamonds. America, which once supported UNITA in Angola, had long since changed sides and grown closer to the oil-rich government. Britain too had begun to support sanctions against UNITA and was helping to fund a London-based non-government organisation (NGO), Global Witness, to research and publicise the connection between diamonds and Angola's bloody wars.

 

The Global Witness campaign raised fears within the diamond industry of a possible consumer boycott of all diamonds, not just the small proportion from conflict areas. If mounted as successfully as the anti-fur campaign, such a boycott would destroy De Beers, devastate the diamond-dependent economies of Botswana and Namibia, and cost the jobs of hundreds of thousands of diamond workers, especially in India. About 96% of world production last year did not emanate from conflict areas.

 

De Beers not only began to cooperate with the UN committee investigating breaches of sanctions, but also announced in October 1999 that it would only buy Angolan diamonds from a company part-owned by the government, with which De Beers had a contract. In March this year, De Beers announced the closure of its buying offices in Angola, the Democratic Republic of Congo and Guinea, and stated that the company's diamonds would henceforth carry an invoice proving that they did not come from areas of Africa controlled by rebel movements. De Beers says that all the diamonds it sells now originate from its own mines or from Canada and Russia.

 

Angola is widely seen as a test of whether the UN and national governments have the will, expertise and power to ensure that the origins of diamonds can be certified, and smuggled diamonds from war zones blocked. If the ban on UNITA diamonds works, then perhaps a similar policy could be applied to Sierra Leone, where, every year, diamonds worth tens of millions of dollars pay for weapons and ammunition.

 

Diamond-industry sources say that the ban has not made UNITA diamonds unsellable – they still seem to be trickling through – but it may have made them cheaper. De Beers' new policy may also induce other dealers to stop buying UNITA diamonds. Weaknesses in the sanctions system, however, were exposed in a report published in March by an independent panel appointed by Canada's representative at the UN, Robert Fowler. It found that diamonds continued to be the main source of funding for UNITA and alleged that Togo, Rwanda, Burkina Faso, Gabon and Côte d'Ivoire had allowed UNITA to travel through or trade in their territory.

 

The panel recommended that diamonds whose origin could not be proved should be forfeited and dealing in them made a criminal offence. Dealers who traded in UNITA diamonds should be blacklisted. In April, the Security Council established a committee to investigate sanctions-breaking further, and declared that in November it would decide on 'appropriate action' against violators.

 

Critics of the panel's report said that it downplayed the role of Israel and Zambia in diamond smuggling. While the Belgian authorities have tried to clamp down on smuggled diamonds – so far they have seized five packages of diamonds of dubious origin – the Israelis have done little. Tel Aviv and Bombay, which have substantial diamond-cutting industries, would be the most likely destination for smuggled diamonds if Antwerp were closed to them.

 

As conflict diamonds attract increasing global attention, a consensus is emerging among Western governments that international controls over the trade must be strengthened. Regulations must target diamonds produced in any area under the control of rebel forces fighting elected, internationally recognised governments.

 

In mid-May, officials, industry leaders and NGOs from the main diamond-producing and -consuming countries, including the Democratic Republic of Congo and Angola, took part in an unprecedented meeting in Kimberley, South Africa, aimed at exploring new ways of regulating the diamond trade. They agreed to set up a working group that is to submit detailed proposals later this year to a ministerial-level conference of the countries concerned. Western officials regarded the Kimberley talks as an important step forward.

 

At the G-8 foreign ministers' meeting in July, Britain will seek endorsement of this initiative, particularly proposals to introduce:

 

• a code of conduct for the diamond trade that would require greater transparency and commitments not to buy from conflict areas, similar to that given by De Beers; and

• a system whereby imported rough diamonds would require a certificate of origin issued by the government of the country where the diamonds were mined.

 

These approaches have the support of the major producing countries and De Beers. But there are potential loopholes. Diamonds from war zones can readily be transported to countries where corrupt officials willing to sell false certificates can disguise their origins. Liberia, Côte d'Ivoire and Guinea are major trans-shipment centres for diamonds from Sierra Leone. Gems exported from these countries considerably exceed their known mining capacities. For certification to be effective, therefore, importing countries would have to conduct rigorous checks of the diamonds themselves in order to verify their documentation.

 

Global Witness suggests that rough and polished diamonds above a certain size be marked with a code or logo to enable dealers and consumers to be sure of their origin. But tagging would require expensive technology that could impose an enormous financial burden on producers from stable countries who mine the overwhelming majority of the world's diamonds. Well-regulated African producers, such as Namibia and Botswana, are particularly concerned about such proposals.

 

No technology currently exists that would enable a mark to survive the cutting and polishing process. De Beers argues that most diamonds are of a size and quality that would make it economically unfeasible to mark them. It also contends that if consumers were to insist on buying only marked stones, diamonds already in circulation could lose their value overnight.

 

Another possible measure is targeting the bank accounts of those who sell them to finance their wars. But this too is problematic. Under the 1998 UN sanctions, UNITA's bank accounts abroad were supposed to have been frozen. But the UN panel in March concluded that the bulk of UNITA's assets had been retained in the form of rough diamonds, which were being sold as needed. The proceeds go either to UNITA officials or to representatives abroad who deposit the money in banks for short periods in order to facilitate particular transactions.

 

Given the potential profits of trade in conflict diamonds and the endemic official corruption of some diamond-producing countries, it is far from certain that any new measures would eradicate the problem. Ill-considered moves could even trigger instability in currently stable areas of diamond production. Any new regulations will therefore have fully to take into account the risk of harming the vast majority of the trade that is legitimate.