Why Diamond Sanctions Do not Work

De Beers, with their 'Diamonds are forever' slogan are the biggest player in the diamond industry, controlling 60 per cent of the world's uncut diamonds, a trade worth $7 billion pounds a year. When their lucrative industry was threatened by controversy, De Beers examined its buying strategy. From being a 'buyer of last resort' they repositioned themselves as 'supplier of choice' and in June 1998 insisted they would only buy Angolan stones with Angolan government's certificates. Evidently this did not work and a year later they stopped buying diamonds from Angola altogether and closed their buying offices in West and Central Africa to avoid the risk of mixing illicit and legal diamonds. De Beers guarantees their diamonds do not originate in rebel-controlled areas, but pressure groups remain sceptical of their real intentions. "They simply stuck their head in the sand, then they realised the market edge they could get with branding, and the more diamonds that stay in the ground the better. They were scared of a consumer boycott and backlash," says Yearsley.

minesite.com the leading internet paper for the mining industry, said: "It was good timing for De Beers to combine the announcement of its change in policy from 'buyer of last resort' to supplier of choice, threatening to withdraw CSO (Central Selling Organisation) site-holder status from anyone found to be involved in the trade. But that is all it was - timing. Anything that can persuade the authorities in the States [the US district court of New York ruled on 7 August that De Beers had violated a number of anti-trust laws from April 1995-April 2001] that it is now the holy joe of the diamond industry, not just some monopolistic exploiter, has to be utilised."

What is being done?

NGOs generally refuse to call for a diamond boycott, fearing it would harm clean diamond trading countries such as South Africa and Botswana. A boycott could tarnish the 'purity' of the diamond image, "It works better as a threat, an advertising campaign with a picture of a diamond dripping with blood, says David Earnshaw, Oxfam adviser in Brussels. "Jewellers are aware of the threat of public campaigning, this would be very powerful argument, and they know the dangers of not behaving responsibly."

Last year the diamond industry and a group of NGOs created a certification scheme whereby diamonds would only be exported from producer countries in sealed containers, accompanied by certificates stating the country of extraction.

The US passed the Clean Diamonds Act through the House of Representatives. Supported by the Jewellers of America, it will allow only diamonds exported from countries with 'rough controls' (an internationally recognised warranty that rough, cut and jewellery diamonds are mined legitimately), into America. Jewellers will then be able to assure customers they are purchasing 'clean diamonds'. The act was introduce to the Senate in March 2002, where Senator Dick Durbin claimed it would "help put an end to the atrocities that have devastated the lives of so many innocent men, women and children."

But in the UK, jewellers, according to Yearsley, are not campaigning on the same scale. Indeed one source in the diamond industry referred to conflict diamonds as 'old hat'. While the source welcomed a certification scheme, they felt it was difficult to follow the line from a supplier from start to finish, acknowledging, "there is an old rogue in any trade."

Global Witness believes there is still time to develop a strong regulatory system, but some countries may not be prepared to open up their diamond industries to international scrutiny. China and Russia especially have reservations. A Partnership Africa Canada (PAC) report criticised Belgium's Diamond High Council, the Belgian system is not neutral and an invitation to corruption. PAC, develops policies beneficial to African and Canadian societies and point to links between Antwerp and the Russian Mafia. Russian organised crime has found it easy to work within this poorly regulated market economy since communism collapsed. "Cases of fraud in the Antwerp diamond and banking trade are legendary and Antwerp has become one of the primary world centres for Russian organized crime." The Russian President has, however signed a decree to extend the ban on uncertified Sierra Leone diamonds.

International implementation of the Kimberley Process (KP) legislation, will introduce tougher background checks on those applying for exploration licenses and mining permits in South Africa. Amelia Bookstein, policy adviser at Oxfam, feels even watered down; KP would result in stronger campaigning against the diamond industry, perhaps even a diamond goods boycott. Recently De Beers and the Jewellers of America (JA) responded to the Al-Qai'da tie to diamonds by urging a swift conclusion to the Kimberley Process.

In the film Diamonds are Forever, baddies Mr Kidd and Mr Wint, after killing a middleman with a scorpion, remarks, "Curious how everyone who touches those diamonds seems to die." Consumers should be aware that this does not just apply to fiction - many diamonds are helping to fund conflict and terror just as lethal as a scorpion sting.

What Consumers can do

USA
65 percent of the worlds diamonds are bought in the US. In 2001, The US House of Representatives passed a compromise version of the Clean Diamonds Act (HR 2722). This gives the president authority to impose sanctions against countries, which don't have system of controls on rough diamonds if they are deemed to be a matter of national security. The bill awaits approval from the congressional committee, but there is little doubt that this will happen. Matthew Runci, the Executive Director, of the World Diamond Council says, "The diamond and jewellery industries have been in the forefront of those who have fought for this legislation. Our goal is to keep conflict diamonds out of the United States, which is the world's largest diamond market. By taking this essential step, we will be on the way toward drying up the profits of those who traffic in conflict diamonds and of ensuring jewellery purchasers throughout the United States that the stones they are purchasing truly are symbols of love and beauty."

The Jewellers Association of America along with NGOs campaigned relentlessly for conflict-free diamonds with grass roots campaigns and lobbying. Contact global witness for more details.

UK

In 1991 Britain imported 107m in rough diamonds. For almost 41% of these imports Switzerland was recorded as the 'country of origin'. Switzerland is not known for its diamond mines, which means it is impossible to judge the actual provenance of these diamonds.

The UK government's policy on conflict diamonds has come under attack from a leading Botswana diamond businessman, Louis Nchindo, the head of Desman (a joint venture between De Beers and the Botswana government) says that the policy is destroying economies counting heavily on legitimate diamond sales, like Botswana. In an interview with the Financial Times, Mr Nchindo says the former UK Minister for Africa, Peter Hain, used the issue to support the Labour governments claim to have an ethical foreign policy.

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