Global Policy Forum

By Terry Macalister

When police raided the premises of a Lebanese businessman suspected of illegal diamond trading they also surprised a key member of the Revolutionary United Front, the rebel movement in Sierra Leone notorious for hacking off the limbs of its opponents.

Gibril Massaquoi, an RUF spokesman, was clutching a bag containing $15,000 and confiscated papers showed he had been organising diamond deals with the owner of the house, Bassem Mohamed, who was codenamed "Shark" by the RUF for his role in a vital trade.

This entrapment - highlighted in a recently published United Nations Security Council report on sanction busting in Liberia - is just another illustration of the way so-called "conflict diamonds" have been used to fuel some of the world's bloodiest civil wars.

The massive budget from precious stones for arms and equipment used by the RUF forced prime minister Tony Blair to release a contingent of UK troops to bolster government defences in Freetown, the capital of Sierra Leone. Up to $100m worth of diamonds are believed to have been mined annually from the Kono, Tongo and Kenema districts by the rebels.

Transportable

Illegal diamond mining and trading has also been providing cash for insurgency movements in Angola and the Democratic Republic of Congo. The Unita rebel army used to gain most of its riches from its diggings in the Cuango Valley of Angola, estimated to have produced annually over $150m worth of gems at the height of its power.

There is only one diamond mining area in Congo held by anti-government forces in the north east city of Kisangani. At its peak it is believed to have produced about $50m per annum though this figure is now thought to have been halved. There have been suspicions too that Osama bin Laden could have been funding his terrorist network on the back of illegal trading in precious stones, believed to make up 4% of the entire global business.

"Diamonds from conflict zones are so small, yet so valuable, and so transportable as a form of currency, that he [bin Laden] can move them around the world. He can have a stake in businesses and money launder alongside," said foreign office minister Peter Hain, who played a significant role in finding a solution to the conflict diamonds issue. Abu Brima, spokesman for the Just Mining Campaign in Sierra Leone, assesses the role of precious stones even more succinctly: "Diamonds are the currency of choice for Africa's warlords." Even where diamonds are mined and sold legally there is plenty of conflict. The reclusive Oppenheimer family, which controls the world's biggest diamond company, De Beers, is suing Russian oil group Lukoil in an effort to win back control of diamond deposits in the Arkangelesk region.

There have been claims of diamond cartels controlling prices but recent financial results from the leading miners show profits under pressure as demand is hit by the US recession.

This grim image of death and destruction emanating from conflict diamonds contrasts sharply with the glossy marketing undertaken by the industry to increase retail sales in the West. De Beers and other key producers have been keen to democratise diamonds and move away from elitism towards a wider market.

"Diamonds are ditching their dowager image. The most coveted jewellery of this party season is decorated with delicate diamond beads," gushed a recent British magazine article.

But growing fears that this sales bandwagon could be derailed by a possible consumer boycott was one of the reasons why more than 18 months of talks, named the Kimberley Process, resulted in a sudden diplomatic breakthrough with 32 countries, including Britain, South Africa and Russia, signing up to a regulatory system to curb unlawful business in the gems.

A statement from ministers after a meeting last month in Gabarone, Botswana said: "We recognise that the trade in conflict diamonds is a matter of serious international concern, which can be directly linked to the fuelling of armed conflict, the activities of rebel movements aimed at undermining or overthrowing legitimate governments, and the illicit traffic in, and proliferation of armaments, especially small arms and light weapons. We recognise that urgent action is imperative.

"We also recognise the devastating impact of conflicts fuelled by the trade in conflict diamonds on the peace, safety and security of people in affected countries and the systematic and gross human rights violations that have been perpetrated in such conflicts."

Certification

They have agreed to a certification scheme to prove that diamonds bought in shops are clean, and either have not come from countries involved in war or have come from areas of conflict which remain controlled by recognised governments.

Producers must export the gems in sealed containers with certificates showing exactly where they were mined. Further certificates would be needed for the rough stones to be shipped on from key trading locations such as Antwerp to a third country to be polished.

This should allow browsers looking in the windows of shops on Hatton Garden in London to be sure they know where the diamonds originated. This is not only important for companies such as De Beers but also vital for developing countries such as Botswana which derives almost all its export revenues from mining.

Botswana is the biggest rough diamond producer, in a world trade worth $7.5bn, followed by Russia and South Africa. De Beers and its partners control 40% of all diamonds mined while the largest markets for cut diamonds are America, Japan and Italy.

The deal has yet to be given the seal of approval from the United Nations General Assembly and this was originally expected to take place on Friday. But administrative problems have led to the UN putting off a decision until March, before which another meeting under the Kimberley Process is now scheduled to take place in Canada.

De Beers has given its endorsement to the certification system saying: "We will continue to do everything in our power to assist the international community in bringing an end to the trade in conflict diamonds." Last night a spokesman for the firm underlined the importance of solving the problems of the illicit gem trade. He said: "This is terribly important for the industry. Consumer confidence is vital."

Meanwhile Global Witness, the non-governmental organisation at the forefront of the campaign against conflict diamonds and the one deemed most likely to organise a boycott, shrugged off the delay in UN approval. Alex Yearsley, a spokesman for the NGO, said: "Obviously there was a cock-up but it might be a good thing in the end because it gives more time to tighten up crucial issues in the agreement such as monitoring, compliance verification and statistics."

He also noted that while the Kimberley Process started last May and has only just reached agreement, it took 10 years for the international community to strike a deal to outlaw the use of boy soldiers.

And the timing allows miners, traders and consumers to have a more conscience-free Christmas.

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