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Diamond Trade Often Finances Civil Wars in Sub-Sahara Africa - 2003-08-06

Ronny Mervis is genuinely proud of the latest shipment of cut and polished diamonds he has received from his native South Africa: “all right, now look at this. This is a beautiful, beautiful, light yellow radiant cut diamond. You see all the brilliance there?”

Mr. Mervis operates several diamond retail stores in and around Washington D.C., where he runs the American branch of his family's South African-based gem business. “It's graded as ideal,” says Mr. Mervis. “Its size is a carat and three quarters, and the most interesting thing is that it has this fabulous sparkle to it. It's alive, it's brilliant with fire. When you look at it, it dances.”

On August 1st, the United States began implementing the Clean Diamond Trade Act, a law which requires the Mervis diamond business and all others in the United States to adhere to the rules of the Kimberley Process or face civil and criminal penalties. Under the Kimberley Process, an arrangement named after a South African diamond mining town, more than 50 countries have taken legal steps since the beginning of the year to end the illegal trafficking in so-called 'conflict diamonds.' The goal is to stop rebel and terrorist groups from financing their activities by selling rough diamonds from war zones on the international markets.

Matt Runci is Executive Director of the World Diamond Council, a New York-based association of diamond dealers. He says that in order to comply with the new U.S. law, diamond traders must sign certificates showing that their merchandise does not come from conflict areas: “the only rough diamonds that can be imported into the United States must be accompanied by a Kimberley Process certificate from a participant country which has these controls in place. In connection with the export of rough diamonds from the United States, these diamonds may only be exported if they are accompanied by the U.S. Kimberley Process certificate in accordance with a very strict regimen of requirements and criteria.”

Corinna Gilfillan is a researcher for Global Witness, a non-governmental organization that has done extensive research on the conflict diamond trade. She says the London-based organization has been able to confirm allegations of diamond trading by RUF insurgents in Sierra Leone and by Angola's UNITA rebels.

“Diamonds are a very lucrative commodity to go into because they are so valuable and they are so easy to smuggle,” says Ms. Gilfillan. “The RUF, because of their ability to sell diamonds, were able to purchase arms and, as a result of that, carried out a very brutal campaign to overthrow the government. And that involved very brutal treatment of civilians. We're talking about mutilation of women and of children. Tens-of-thousands of deaths resulted and many more had limbs amputated.”

Ms. Gilfillan also says the al-Qaida terrorist network began laundering its financial assets into diamonds following the bombings of the U.S. embassies in Kenya and Tanzania in August 1998: “Since the bombings, there was a government clampdown on funding of terrorist organizations. As a result of those efforts, al-Qaida was looking for other ways of being able to finance their activities. And investigations by Global Witness and others have revealed that al-Qaida, after those bombings, went into using diamonds and actually converted 20 million dollars' worth of money into diamonds.”

The U.S. reaction to the allegations by Global Witness has been mixed. The Central Intelligence Agency has stated that there is no evidence to substantiate the claims. But in 2001, The Washington Post newspaper quoted the Defense Intelligence Agency, the military wing of the U.S. intelligence community, as saying al-Qaida is actively involved in the illicit trade of West African diamonds.

Jay Bruns is the U.S. State Department's Special Negotiator for Conflict Diamonds, in charge of coordinating U.S. enforcement of the Kimberley Process Certification plan. While he would not directly comment on the allegations by Global Witness, he says he is confident the Kimberley Process will help to prevent asset laundering by terrorist organizations. “The background of the Kimberley Process was that there was a lot of violence in West Africa and these rebel groups enriching themselves because they controlled the diamond mines or diamond trade. Nonetheless, I believe that the process does make it more difficult for anyone who is trading in diamonds illegally, be they terrorists, be they people who were trying to circumvent the laws and the tax regimes of various countries, because of the certification scheme that we major producers and traders have now agreed to.”

But Corinna Gilfillan of Global Witness believes the Kimberley Process may not be as effective as it should be, in large part because the diamond industry was very late in helping to create it. She says that for many years, the industry did not want to disrupt its supply networks by asking tough and embarrassing questions. “There needed to be a lot of pressure on the industry for them to agree to move forward and do something on this issue,” says Ms. Gilfillan. “In the 1990's there was a lot of campaigning by NGO's that basically forced the industry and governments to tackle this issue. And I think it was something the industry did not want to do or was not used to having to deal with.”

Ms. Gilfillan says she is troubled by the way the guidelines are being implemented in the United States: “One concern is that there is a U.S. Kimberley Process Authority which is to issue U.S. export certificates. The real problem there is that this Kimberley Process Authority is run by industry. They are the ones issuing the certificates and we have a real problem with an industry body issuing certificates. We think that is the role of government to make sure that it is done in a fair and consistent manner.”

But Jay Bruns at the U.S. State Department says that although the diamond industry plays a significant role in the U.S. certification process, final authority does rest with the federal government: “I would argue, first, that the U.S. government is taking a tremendous amount of responsibility in implementing the Clean Diamond Trade Act. Both our importing authority and the exporting authority are making sure that we monitor the program very carefully that and we do what we can to ensure that diamonds that are not controlled under the Kimberley Process do not come in to the U.S.”

And for Diamond Importers like Ronny Mervis, the Kimberley Process is a good attempt at balancing the interests of business and the need to stem civil wars and terrorism.

Most diamond industry specialists say conflict diamonds make up no more than one to two percent of all gemstones traded worldwide. Nonetheless, all those involved in the Kimberley Process hope the number will diminish over the next several years.