Professional Jeweler Archive: Conflict Diamonds Update

April 2002


Conflict Diamonds Update

New Congressional hearings and several criticisms of the Kimberley Process focus on conflict diamonds

When the conflict diamond issue surfaced in 1999, it was about gems sold to fuel conflict in African nations such as Sierra Leone, Angola and the Democratic Republic of Congo. In late 2001, The Washington Post reported diamonds were being used also to fund the al Qaeda terrorist network.

The potential terrorist link, still under investigation, makes the Kimberley Process and passage of U.S. legislation to ban conflict diamonds critical, say industry leaders. The World Diamond Council and others will press for both projects’ completion in 2002.

The Kimberley Process

The United Nations was scheduled in March to review the initial recommendations of the Kimberley Process, a group working for almost two years to create a secure trading network for legitimately mined and traded diamonds. Under the plan, certificates would accompany sealed rough diamond containers when exported from mining countries. The importing nation would check the certificates and sealed containers again to ensure no uncertified diamonds had been added.

The 35 nations, industry representatives and human rights groups comprising the Kimberley Process were to meet in Ottawa, Ontario, Canada, March 18-20 to address criticisms issued by a group of human rights organizations led by Amnesty International and by the U.S. General Accounting Office:

Administration: The Kimberley Process has not designated an administrator to oversee the worldwide certification program. Human rights groups say many nations, including the U.S. and Russia, have raised concerns over the cost and the authority necessary. The administrator would collect data about the program, review how it was working, identify problems and inflict deterrents on those caught violating the rules, say the groups.

Monitoring Compliance: Existing proposals to monitor compliance are weak, say human rights groups and the GAO. Compliance will be toughest to monitor at the beginning and end of the supply chain. Safeguards are needed to ensure conflict diamonds aren’t mixed in with legitimate diamonds during this journey, said the GAO. Human rights groups and GAO also said there must be outside auditing of the proposed system that will track diamonds after being vetted conflict-free during import into diamond trading and cutting countries. All diamond traders down to the retail level will be required to maintain records and submit them to business auditors, says Cecilia Gardner, executive director and general counsel of the Jewelers’ Vigilance Committee. Gardner has worked closely on the Kimberley Process.

World Trade Organization Concerns: The Kimberley Process hopes all diamond-trading nations will participate in its certificate-of-origin program. Dissenters would lose the right to trade with other diamond-mining and -cutting countries. But some nations, including the U.S., say such an exclusion could violate agreements like those of the World Trade Organization.

Sharing Data: The Kimberley Process has not determined how countries in the program will share data, say human rights groups and GAO, and this is central to success.

U.S. Legislation

The U.S. Congress also plays a vital role in the Kimberley Process. To comply with the international system, the U.S. must pass legislation to bring itself into compliance, says Matthew Runci, executive director of the World Diamond Council and president of Jewelers of America. Last year, the U.S. House of Representatives, with the support of the industry and human rights groups, passed the Clean Diamond Trade Act. The passage followed haggling with the White House about protecting U.S. interests in the war against terrorism and complying with WTO standards. But the Senate said the bill was too weak and that it should have been involved in talks with the White House. It failed to become law.

In February, the Senate held hearings to assess the risks of inaction and the U.S. position on the international system. Runci is closely involved in the effort and says it’s unlikely the Senate would succeed in introducing a new bill and getting consensus from key players. More likely to succeed is a joint effort of the House and Senate to pass legislation like last year’s House bill. Senators who opposed the old bill are reconsidering, he says.

If the Senate doesn’t go along with the White House-approved bill, the executive branch may plan its own bill. Currently, there is no mandate to authorize the U.S. Customs Service to bar diamonds not certified by the Kimberley Process.

– by Peggy Jo Donahue

Copyright © 2002 by Bond Communications