Friday, May 11, 2007

Africa’s diamond industry faces new threats to ethical practices

JERUSALEM -- Despite the attention the Leonardo DiCaprio thriller, Blood Diamond, brought to the issue, so-called conflict diamonds used to fund wars in Africa have all but disappeared from the international gem trade because of a global crackdown launched four years ago, industry experts agreed Thursday.

But this victory is now under threat from the prospect of new wars in Africa, the use of child labour in some Third World mines, and the possibility that the dazzling, highly portable stones might be used to fund terrorism and organized crime, delegates to the World Diamond Council’s annual meeting were warned.

Blood Diamond, which depicted events in Sierra Leone in 1999, "was an accurate snapshot in times,” said Graham Yearsley of Global Witness, a British-based group that brings public attention to the connection between the exploitation of natural resources and human rights abuses. “It highlighted a very real problem because of conflicts in countries such as Sierra Leone and Angola, but there are very few conflict diamonds being bought today."

The scourge of conflict diamonds has mostly been eliminated because of government and industry action and because there are fewer wars in Africa now, Yearsley said.

"A lot of countries have played by the rules and a lot more progress has been made than had been expected," agreed Kennedy Hamutenya, who is Namibia’s diamond commissioner. "Most of Africa is now at peace, although the legacy of war continues with social problems and poverty."

The Kimberley Process, which since 2003 has been used to certify diamonds that have not been used by rebel groups to overthrow recognized governments, was instrumental in cutting down on the trade in conflict diamonds.

Yearsley said public pressure convinced governments to launch the Kimberley Process.

"The industry really did not have a choice," he noted, “but I give these guys here credit. They are genuine and wanted to do the right thing. They are marketing men and they understood the power of negative publicity."

Gareth Penny, managing director of De Beers, the South Africa gemstone colossus that controls 45 per cent of the world’s diamond trade, acknowledged that the industry changed its policies because of public pressure.

"It is clear that diamond jewelry competes in an increasingly hostile environment where the consumer is becoming more sophisticated, better informed and more demanding, particularly on issues that effect our reputation," Penny said. "Turning a blind eye to where our diamonds come from will no longer be overlooked or tolerated by society."

But the success of the Kimberley Process doesn’t mean the job is done. On the contrary, delegates to the convention said, with new wars looming in countries such as the Central African Republic, the certification process must be broadened in order to tackle other dubious practices.

"The Kimberley Process is a first step, but it faces new challenges today," said Sergei Vybornov, who runs the state monopoly controlling all diamonds produced in Russia. "We do not know how many diamonds end up in the grey economy and are used by criminal and terrorist organizations."

Child labour is another area of growing concern, according to the World Diamond Council’s chairman, Eli Izakoff.

Diamonds were discovered just 16 years ago in the Northwest Territories. Since then, Canada has become the world’s third-largest supplier of the precious gem, and is expected to capture about 20 per cent of the global market within 20 years.

Although diamond exports are worth more than $2 billion yearly to the Canadian economy, there was virtually no Canadian presence at the diamond convention. Officials and dealers at the Israel Diamond Exchange in Tel Aviv praised the Canadian diamond industry for the quality and quantity of diamonds it is producing and were anxiously awaiting the arrival of more diamonds as new mines open in Canada’s north.

"Canada’s figures are just going to go higher and higher," predicted Yair Cohen, managing director of the Israel Diamond Exchange, where 12,000 workers handle nearly half of the annual $12-billion global trade in rough diamonds.

Trader Frieda Isakov, 69, flashed a six-carat stone from Africa worth at least $90,000, which she stores in a simple cardboard box with other diamonds from Africa, Russia and Canada that are collectively worth several million dollars.

"Canadian diamonds aren’t as big as the ones from Africa, but they are very good,” Isakov said. “They have a nice, true colour without too much blue. Every day they become a bigger part of our business."