A Blow to Trade in Blood-stained Stones

Diamonds and war hardly have anything in common. Or do they?

In poor African countries such as Angola and Sierra Leone, rich in natural resources, the uncut gemstones can indeed prove deadly. The revenues from diamond-mining are often used to fund and sustain bloody civil wars, conflicts, murder, stockpile arms and displace and maim thousands.

For years rough diamonds have proved a lucrative funding source for corrupt government officials and ruthless rebel leaders in war-torn areas in Africa. The glittery gems are ideally suited for this "blood trade". They are of indeterminate origin, fairly easy to smuggle over porous borders and worth a fortune.

EU cracks down on conflict diamonds

The "bloody diamonds" as they are called are also exported to the western world, in particular to the European Union, the traditional centre of a flourishing business in precious stones.

But this could change soon. The EU has now decided to put up tough barriers to prevent rebel factions in Angola, Sierra Leone and the Democratic Republic of Congo from replenishing their arms supplies by selling their uncut diamonds on the European market.

In a proposal adopted on Thursday, the European Commission laid down that rough diamonds will only be allowed into the EU if they have a certificate stating they do not come from conflict zones. Under the Commission’s plans, rough diamonds imported into any EU state will be required to have a certificate of origin stating the country of extraction. Diamonds coming from conflict zones, or those without a certificate, will be denied entry.

The EU’s aim is to prevent the so-called conflict or blood diamonds from fuelling armed conflicts and from discrediting the legitimate market of rough diamonds.

The proposals are based on the premise of improving control mechanisms that currently exist in some member states and making them apply uniformly to the entire EU to protect the legitimate diamond trade. They are a further step in the two-year-old Kimberly process chaired by South Africa and involving more than 30 governments, the European community and the diamond industry to establish minimum acceptable international standards for national certification schemes for trade in rough diamonds.

Move in the right direction?

The bold move has been welcomed by civil action groups and is seen as significant in light of the fact that London and Antwerp account for more than 85 percent of the world-wide trade in uncut stones.

Belgium, which has a booming $23 billion diamond industry and sorts 80 percent of the world’s uncut diamonds at the port town of Antwerp, is reputed to have stringent import controls on rough diamonds. It endorses the Commission’s proposals which include physical checks on diamond imports at the outer borders of the EU.

"I welcome the fact that the Commission in its proposal considers physical checks of diamond parcels upon entering the EU as the rule, and I hope that exceptions to it will be limited," Belgium Foreign Trade Minister Annemie Neyts said in a statement.

Plan has obvious shortcomings

But despite the euphoria, questions are already being raised about the actual implementation and effectiveness of such a certification system.

The plan hinges on 45 national governments passing laws to punish those who violate the scheme and on producers agreeing on having their production monitored. Despite a meeting in March this year, where more than 50 governments agreed on implementing the certification plan, few have taken concrete action so far.

Critics also fear that the plan does not plug an important loophole in the existing diamond trade – the fact that unscrupulous producers could pass off "blood diamonds" as their own production.

Mauro Petriccone of the European Commission’s trade division admitted to Reuters that the plan is not fool-proof. "You can close the door, you can still slip an envelope under the door, but it’s better than having somebody carrying a couple of cases through an open door", he said.

Diamond industry keen on doing the right thing

Advocates of stopping the trade in blood diamonds also worry that gem smugglers could easily get around the system of an accompanying certificate of origin by passing the stones through at least one country before being exported. Another concern remains that diamond traders might now become lax about monitoring the origin of uncut diamonds, once the new system is in place.

The European Commission’s sanctions co-ordinator, Ton De Vries has brushed aside suggestions that the diamond industry might not be as particular about self-regulation considering that conflict or blood diamonds make up a mere 4 percent of the $7 billion a year global market in rough stones. He told Reuters that diamond firms had a strong interest in making the new rules work.

Addressing the World Diamond Council in London in January last year, the managing director of De Beers, the world’s leading diamond producer, Gary Ralfe said, "Although the trade in conflict diamonds is unquestionably small, just one diamond dealt with in such a way, is one too many. The diamond industry has clear moral and commercial reasons for wanting to rid the world of the trade in conflict diamonds".

If indeed the powerful diamond industry does unite behind the EU’s radical proposal, the guns might just fall silent in Africa.