Conflict Diamonds: The Problem Persists Despite Progress
July 5, 2007
Diamonds, a global symbol of love and wealth, have also served as hard currency for conflict in Africa. So-called “conflict diamonds” have been a concern for humanitarian advocates and a complex issue before policy makers for almost a decade. But the December 2006 movie, Blood Diamond, starring Leonardo DiCaprio and Djimon Hounsou, introduced to the broader public conscience the real costs of the diamond trade. The movie is set in 1999, at the height of Sierra Leone’s grisly war. A large pink diamond is the focus of a desperate action plot, uniting a greedy diamond smuggler (DiCaprio) and a traumatized father (Hounsou) in search of his young son who is kidnapped by rebels and forced to become a child soldier. Because of Hollywood’s influence over consumer perceptions and choices, Blood Diamond raised concerns within the diamond industry, spawning a high-powered public relations response; while simultaneously stirring up media interest in the efficacy of the global diamond certification system and the possibility that consumer diamond purchases could be funding conflict.
Conflict diamonds are officially defined by the United Nations as diamonds that originate from areas controlled by forces opposed to legitimate and internationally recognized governments, and that are used to fund military action in opposition to those governments. A more rigorous definition developed by NGOs includes diamonds used to purchase weapons which fuel abuses against civilians.
Progress has been made on the conflict diamond problem since the 1990s, with the proportion of conflict diamonds in the global diamond market decreasing from approximately 15 percent to an estimated 1 percent today. According to some estimates, as much as 20% of the diamonds traded in the 1990s were in some way illicit – used for money laundering; to evade taxes; to buy drugs, weapons and other clandestine goods – or were simply stolen.
Two factors have led to the decrease in the conflict diamond trade: the peace agreements ending the wars in Angola and Sierra Leone, which had been leading sources of conflict diamonds; and the unprecedented establishment of an international diamond regulatory system. The regulatory system resulted from a major campaign that had been launched by World Vision and Amnesty International in the United States, and Global Witness and Partnership Africa Canada at the international level, for a diamond certification scheme. They were joined by a broad coalition of other advocacy and faith-based organizations. With global attention drawn to the issue, the diamond industry and the governments of leading producers of legitimate diamonds came to recognize that they, too, had an interest in a certification program. The result was the Kimberley Process Certification Scheme (KPCS), finally agreed to in November 2002. In conjunction with the KPCS agreement, the U.S. Congress enacted the Clean Diamond Trade Act, which was signed into law (Public Law 108-29) by President Bush on April 25, 2003. This legislation incorporated the Kimberley Process into U.S. law by directing the President to prohibit the import or export of any rough diamond that has not been controlled through the KPCS.
The diamond industry continues to minimize the significance of the conflict diamond issue, emphasizing the small percentage of conflict diamonds that are being traded. Yet this small percentage still has a big impact. The rough diamond trade grosses $10 billion annually; one percent of this total is $100 million dollars, which can go a long way in Africa where an AK-47 can be bought for as little as $10. The breakdown of law and order amid the chaos of war provides excellent cover for engaging in a profitable rough diamond trade — buying low, selling high, and reaping windfall profits. The United Nations reported in October 2006 that poor controls are allowing up to $23 million in conflict diamonds from Côte d’Ivoire to enter the legitimate trade through Ghana, where they are being certified as conflict-free, and through Mali, which is not a part of the Kimberley Process system. (For more information, see Global Witness, “The Truth About Diamonds,” Briefing Paper, November 2006.) Similarly, conflict diamonds and other natural resources have been a catalyst for regional instability and a widespread humanitarian crisis in eastern Democratic Republic of the Congo, where aid groups estimate over 1,000 people are dying per day. So even the smallest percentage of conflict diamonds in the global diamond trade should not be dismissed; instead, the persistence of the conflict diamond trade should be a cause for global alarm.
When properly implemented, the Kimberley Process Certification Scheme could result in the eradication of conflict diamonds. The KPCS for rough diamonds came into effect on January 1, 2003. Over 45 countries, including all those represented by the European Union, participate. Under the terms of the system, each participating government agrees to issue a certificate to accompany any rough diamonds being exported from its territory, certifying that the diamonds are conflict-free. As part of the internal controls, each country must be able to track the diamonds being offered for export back to the place where they were mined, or to the point of import, and it must meet a set of standards for these internal controls. All importing countries agree not to allow any rough diamonds into their territory without an approved KPCS certificate.
The Kimberley Process has, indeed, played a critical role in stemming the tide of diamond-funded wars. A major success has recently been achieved in Liberia, which once trafficked conflict diamonds originating from Sierra Leone. The country is now under new leadership and has made significant progress in establishing a system to combat the trade in conflict diamonds. As a result, at the end of April 2007, the United Nations Security Council lifted its ban against Liberian diamonds.
Nonetheless, as noted above, large amounts of illicit rough diamonds continue to slip into the pipeline every year. Clearly the Kimberley Process regulatory system is not yet rigorous enough. As an unpublished briefing paper from Partnership Africa Canada makes clear, if the KPCS is not strengthened, the loopholes that currently permit illicit diamonds of various sorts into the market could facilitate a resurgence of the trade in conflict diamonds and of the horrors that accompany that trade.
A significant flaw in the global diamond regulatory system is the polished jewelry loophole. The Kimberley Process only certifies rough diamonds from “mine to factory;” there are no codified controls from “factory to finger” for polished diamonds and jewelry. Any rebel group could cut two facets on a rough diamond, call it “polished”, and render that diamond exempt from KPCS regulations.
Although the Clean Diamond Trade Act was enacted four years ago, the U.S. government and the diamond industry have failed to live up to their obligations to prevent the importation of conflict diamonds into the United States. The Administration is falling short of full implementation of the legislation in part because of limited resources to perform the necessary border checks for smuggled blood diamonds. Nor has the Administration funded or exercised proper oversight of the diamond industry. Indeed, certification of diamonds has been left up to the industry itself, which issues the KPCS certificates on behalf of the U.S. government. The issue is not among the top policy priorities for the Administration, and this, combined with the claim heard in some quarters that the Clean Diamond Trade Act is an “unfunded mandate,” has resulted in lax internal controls. These surely violate the spirit of the Act and are making the United States a weak link in the global regulatory system. A U.S. Government Accountability Office report issued in September 2006, found evidence of industry tampering with KPCS certificates, and virtually no controls for diamonds entering into the United States. Yet the American market consumes 66 percent of the world’s diamonds, and unless controls are strengthened the effectiveness of the entire Kimberley Process will come into question.
The diamond industry has joined with NGOs in calling for strengthening the KPCS, but industry too has failed to fully implement its own 2003 commitments to an auditable chain of warranties from “factory to finger,” which would guarantee that polished diamonds and diamond jewelry are conflict-free. According to an October 2004 report by Global Witness and Amnesty International, 58 percent of diamond retailers in the United States and the United Kingdom had no policy on conflict diamonds. Retailers are dependent upon their suppliers to provide KPCS guarantees; however, suppliers will only provide these guarantees if retailers demand them.
African countries dependent on diamond exports remain fearful that the conflict diamond issue will one day lead to an all-out consumer boycott, or to a shift in consumer preferences toward polished diamonds that can reliably be shown to have been produced in Canada or elsewhere. No one concerned for Africa’s future and for Africa’s development should advocate a boycott of African diamonds. Better regulations, stronger compliance on the part of industry and the U.S. government, and the reinvestment of diamond revenues by African governments in sustainable development will go much farther than a boycott. Advocates for Africa should continue to insist on these measures as the bare minimum of a responsible international diamond regime. Meanwhile, because polished diamond sales are entirely dependent on consumer tastes, consumers themselves ultimately have the power to improve international diamond policy by demanding that both their governments and the diamond industry live up to their commitments to completely end the trade in conflict diamonds. Consumers can insist on a Chain of Warranties for the polished diamonds they purchase, which would lead back to the original Kimberly Process Certificate, and if one is not provided, they can to take their business to retailers who do provide this. Hollywood can help, again not by promoting a boycott, but by encouraging consumers to empower themselves. Retailers will not long be able to resist such a campaign, which would be aimed, after all, only at pressuring them to live up to obligations already accepted by the diamond industry and the international community.
Rory E. Anderson is the Senior Policy Advisor for Africa for the U.S. office of World Vision, one of the largest, privately funded humanitarian relief and development organizations. World Vision gives direct humanitarian assistance to local populations in over 95 countries worldwide, and is operational in 24 countries in sub-Saharan Africa. _____________________________________________________________________
The Center for Strategic and International Studies (CSIS) is a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions; accordingly, all views, positions, and conclusions expressed in these publications should be understood to be solely those of the authors.