Global Policy Forum

Tainted Gems Lose Sparkle as Prices Fall


By Kate Dunn

Christian Science Monitor
October 27, 2000

A two-year international campaign to dim the glitter of "blood diamonds" appears to be working, though methods for tracking suspect stones are still being honed.

Gems mined in the war-torn areas of Sierra Leone, Angola, and the Democratic Republic of the Congo are fetching prices about 30 percent below those from reputable mines in South Africa, Botswana, Namibia, Australia, Canada, and Russia, according to Global Witness, a United Kingdom-based non-governmental organization that investigates and opposes the use of natural resources to fund war.

Antwerp, Belgium, the world's main diamond trading center, "is starting to turn down conflict diamonds," says Alex Yearsley of Global Witness. Diamond traders are "scared of the police, of UN and NGO investigations, of being reported on," Mr. Yearsley says.

The campaign against the sullied stones is uniting the UN, activists, government officials, and the diamond industry in a rare marriage of humanitarian concerns and profit motives.

Falling prices on the blood diamonds are viewed by many as a timely bonanza for DeBeers, the South African company that controls about 60 percent of the world diamond market. "The stock markets have told DeBeers to get rid of its stockpile, which doesn't earn it any money if it's just sitting in the vault, and along comes this conflict-diamond campaign at just the right moment," says a manager of a large state-owned diamond mine in southern Africa, who asked not to be named. According to Hilton Ashton, a diamond market analyst in Johannesburg, DeBeers has reduced its stockpile from $4.8 billion in late 1998 to $2.7 billion at mid-2000.

While DeBeers denies that the conflict-diamond issue has been a factor in its stockpile reduction, Global Witness' Yearsley says "it is true that DeBeers has used the conflict-diamond issue to their commercial advantage.... But if that is what it takes to get the issue sorted out, then so be it."

Next month, South Africa is expected to introduce a UN General Assembly resolution to initiate a global treaty that would govern the diamond trade.

Depending on which estimates are used, blood diamonds represent 4 to 15 percent of the world's $6.8 billion annual diamond production. The stones are mined by rebel groups to buy guns and fund wars against democratically elected, internationally recognized governments.

For the campaign against blood diamonds to be truly effective, reliable, internationally accepted tracking standards must replace country-by-country approaches led by industry working with weak governments, Yearsley and other activists say.

But is there a practical, crook-proof way of tagging and tracking diamonds? Such a system would have to engage staff and systems in mines, in government diamond evaluators' offices, in customs offices, in diamond polishing and jewelry manufacture, and in jewelry stores - a web reaching all the way from gem lodes in the earth to the counters of Wal-Mart, the biggest diamond buyer in the US. The trick will be to tag "legitimate" diamonds so their movement can be tracked, as Global Witness puts it, "from mine to finger" and thus differentiated from conflict diamonds.

Global Witness is campaiging for an international treaty that will make those distinctions in diamonds, ban the import of uncertified diamonds, and impose technical requirements and an "audit trail" for identifying, certifying, shipping, importing, and selling the stones.

Mark Van Bockstael, director of international affairs for the Belgium-based High Diamond Council, known by its Flemish acronym HRD, is in charge of developing certification systems for Angola and Sierra Leone. He says a new system just introduced in Angola "is forgery-proof," although Global Witness is skeptical, given a previous failed attempt, the degree of corruption in Angola and earlier, unkept promises by industry to stop buying rebel stones.

Here's how the new system would work: Diamonds typically are sold in parcels of a few hundred to a few thousand carats (1 carat equals one-fifth of a gram). Each parcel of rough (unpolished) diamonds coming out of government-controlled mines in Sierra Leone is to be accompanied by: a certificate of origin printed on forgery-proof paper from a supply stored in the central bank; a numbered label for each tamper-proof box of parcels; forgery-proof import confirmation certificates that are returned to Sierra Leone once importation (say, in Antwerp) is confirmed; and a set of digital photos of each parcel. Van Bockstael said the photos are of such quality that it is easy to compare the diamonds in the picture with those in the package. Additionally, the government is to regularly tally its mine production figures with export figures to be sure that conflict diamonds are not straying into certified exports.

Van Bockstael says because of differences in geological origin, diamonds from rebel-held areas can be identified by experts if they stray into regular parcels. Van Bockstael calls the Sierra Leone system "the first of an evolution" in devising an international diamond monitoring system, but added that it will not be completely refined until the UN passes an international convention on diamond certification, something he considers imminent.

Many liken the diamond convention's prospects to the highly successful international antilandmines treaty. Since May, South Africa has been leading governments of diamond-mining countries to resolve technical and legal issues so that a UN convention would be both practical and enforceable.

The diamond industry is anxious to keep profits healthy by freeing itself from the stain of the blood gems.

Diamond traders, polishers, and retailers and nongovernmental organizations (NGOs) also are involved in the South African intiative, called the "Kimberley Process," after the South African mining town where participants first met in May.

More Information on Diamonds in Conflict


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