Trading, Cutting and Polishing Centres

The issue of conflict diamonds is not restricted to Africa. Without buyers, there would be no conflict diamonds at all, and as most buyers reside in the industrialized world, that side of the industry is of equal interest in the halting and prevention of Africa's diamond conflicts. Several recent studies have focused on the giants - De Beers and the Antwerp trade. But the diamonds arrive in, or spread out from these centres through Switzerland, the United States, Israel and elsewhere. Israel's net exports of polished diamonds in 1999, for example, totaled $4.5 billion, up from $3.6 billion the year before. The Indian cutting and polishing industry is very large and growing. An estimated 700,000 Indians work in the cutting and polishing industry. India exports over $6 billion in polished diamonds annually, accounting for 50 per cent by value of the world's production. More than half of the world's diamonds are sold in the US each year. In 1998, US diamond jewelry sales totaled $22 billion.

The December 2000 United Nations Panel of Experts Report on Sierra Leone discussed the issue of rough diamonds transiting through Swiss freilager or 'free trade areas' at Zurich and Geneva airports. Because parcels could be opened, repacked and reinvoiced, this made it difficult to know where the diamonds - now marked as 'Swiss' - had originated. De Beers Managing Director, Gary Ralfe, referred directly to the UN report in saying that 'persistent ignorance about the diamond trade sometimes fuels unfounded suspicion and mistaken allegations'. The report, he said, 'states that Switzerland is not a diamond producer, but none of the goods bear any description of where they were mined. It is, therefore, implied that some complex method of smuggling diamonds on a large scale was being carried out and unfortunately, the media found it only too easy to infer this.

'The truth, as it so often is, is rather less exciting. The majority of goods referred to belong to De Beers. Those we import from Africa, via Switzerland for reasons of security and insurance, have for some time stated clearly that they originate from South Africa, Botswana, Namibia and Tanzania. Shipments from London to our affiliate office in Lucerne for sorting and sale, returned to London after sorting or unsold, or that are transfers to and from Lucerne between wholly owned companies within De Beers Group, are mixed diamonds coming from our own mines in South Africa, Botswana, Namibia and Tanzania, or from our contractual supply sources in Russia and Canada, and are thus clearly conflict free.'

The issue raised in the UN Report was not whether De Beers was using the Swiss system as 'some complex method of smuggling diamonds'. In fact De Beers was barely mentioned in the Report. The issue was that the origin of diamonds passing through Switzerland was not being recorded, and that this arrangement provided one of many loopholes in the global diamond trading system which make it possible for conflict diamonds to travel undetected. The issue was not De Beers or Switzerland, but transparency in the diamond trade.

In addition to changes in Swiss regulations which came into effect in March 2001, Mr Ralfe told a London meeting of the World Diamond Council in January 2001 that he had 'directed that the movement of diamonds between our Group offices in the UK and Switzerland be reduced to an essential minimum and be clearly marked as "mixed goods originating from South Africa, Botswana, Namibia, Tanzania, Canada and Russia".'

The issue of greater transparency will be tracked as the Kimberley process unfolds. The 'Kimberley Process' refers to a series of intergovernmental meetings initiated by the Government of South Africa in May 2000 in an effort to deal with the issue of conflict diamonds. During 2000, meetings were held in Kimberley, Luanda, Windhoek and London, with increasing numbers of governments joining the discussions, but with little in the way of concrete action. The UN General Assembly Resolution 55/56 of Dec. 1, 2000 mandated an 'expanded' Kimberley Process in order to develop a detailed proposal for an international certification scheme for rough diamonds, known more generally as 'rough controls'.

The first meeting of the expanded process, held at Windhoek in Namibia in February 2001, coinciding with the launch of an Amnesty International advocacy campaign in the US, injecting a sense of urgency into the proceedings. Some industry representatives termed the situation a 'crisis', calling the campaign a 'direct shot' at the industry, rather than what Amnesty had described as a 'warning'.

During the governmental meeting, dissatisfaction was expressed with the lack of a plan, and with the slow progress made so far. In an effort to clarify matters, the Canadian Government proposed a 'roadmap' which, following some revision, was accepted and introduced to the general meeting. The 'roadmap' aims to speed the process, and defines the topics to be researched and discussed at each of four future meetings. The goal is a formal and agreed proposal for an international certification scheme, completed for presentation to the UNGA in December 2001.

To this end, a series of meetings were scheduled:

• April 2001 - Belgium: Analysis of import/export controls, with a view to developing of minimum standards for an international certification scheme for rough diamonds.
• June 2001 - Russia: Definition of proposals for minimum standards.
• September 2001 - UK: Develop detailed proposals for the international certification scheme for rough diamonds based on the agreed minimum standards.
• October 2001 - Angola: Finalize detailed proposals for the international certification scheme and consolidate input for report back to the UN General Assembly.
• November 2001 - Botswana: Possible Ministerial Meeting.

The meeting established a Task Force to assist the Chair of the Kimberley Process in the development of all proposals for the international certification scheme. The Task Force will conduct research and present detailed working papers at each of the future meetings. The Task Force will comprise diamond producing, exporting and manufacturing countries, the World Diamond Council and the EU. Civil Society representatives will participate as observers.

This area of study will follow the Kimberley Process and the efforts to establish a global certification system. It will also examine additional areas relating to the trade in rough diamonds, including the development of a common international statistical database. Further reports will be posted in the RESOURCES section of this site. Search Resources using key words such as "diamond" or "polishing centres".

April 2001