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Last Updated: Wednesday, 7 November 2007, 13:40 GMT
Summit to cut conflict gem trade
By Dominic Laurie
Europe business reporter, BBC News, Brussels

Diamonds
Diamond trade has been fuelling civil wars
Governments, mining and trading firms and NGOs are meeting in Brussels to discuss the trade in conflict diamonds.

These are rough, uncut gemstones used by rebel groups to fund wars against legitimate governments.

Proceeds from their sale prolonged recent civil wars in Angola, Ivory Coast, the Democratic Republic of Congo and Sierra Leone.

The event takes place annually as part of the Kimberley Process, a protocol set up in 2002 to eliminate the trade.

The EU has been leading the process this year, so 2007's meeting is taking place in Brussels.

Diamond rules

An estimated 80% of the world's rough diamonds are sold in Antwerp, just a few miles north of the Belgian capital.

The Kimberley Process was born out of a 2000 UN resolution that demanded every rough diamond had a certificate to ensure its legitimacy.

Two years later - in the South African mining town of Kimberley - governments, industry and pressure groups agreed to a verification scheme of the type the UN was looking for.

So began the Kimberley Process.

At its basis is a legal agreement that needs to be incorporated into the law of each nation that signs up.

Among the rules, members are only allowed to trade rough diamonds with other members, each shipment must have a certificate attached, and stones must be exported and imported in tamper-resistant containers.

Since its creation, 46 countries, as well as the 27 members of the EU, have signed up.

Success story

Since 2002, the number of states exporting conflict diamonds has reduced greatly.

The Kimberley Process says the Ivory Coast is the only country where rebel groups still control diamond-producing areas.

They now make up less than 0.2% of the world's production. That compares with 15% at the beginning of this decade.

There are two main reasons for the drop.

First, most of the diamond-producing nations that were at civil war are now no longer conflict zones.

So the rebel groups that were profiting from the stones have now disbanded.

But the Kimberley Process itself has helped too. Its members make up the vast majority of the market for rough diamonds.

Their traders can no longer buy rough stones without a Kimberley certificate. In theory, that means the market for conflict stones has gone away.

Criticisms remain

Pressure groups who are part of the process say there are still problems in other areas of the trade, though.

Smuggling is one. Diamonds lend themselves perfectly to it.

Export tariffs can vary between the various producing countries. So if a smuggler succeeds in taking a gem illegally from a high-tariff nation to another which might have low duties, and giving it all the documentation there, he can save lots of money on export duties.

Diamonds are also very portable and rarely, if ever, go down in value.

The expose of conflict diamonds by the pressure group Global Witness in the late 1990s led in part to the setting-up of the Kimberley Process.

The London-based charity says the illicit trade in diamonds - and smuggling in particular - is now a significant issue.

"This is all happening in parallel to the Kimberley Process, sometimes between two countries who have signed up to it," says Global Witness campaigner Annie Dunnebacke.

"Any illicit trade undermines it. Since the Kimberley Process is still the only safeguard against the terrible diamond wars that happened just a few years ago, this is a concern."

The industry welcomes the virtual elimination of in the trade in conflict diamonds, but denies that the problem of smuggling is growing.

Moreover, according to Cecilia Gardner, the General Counsel for the World Diamond Council, it's not up to mining firms, or the Kimberley Process to fight it.

"There are already robust anti-smuggling laws in place in every Kimberley Process nation with criminal sanctions against them," she said.

"These need to be enforced by governments. We feel the Kimberley Process portfolio is sufficient and we are working very hard to make sure the system works well."

The conference ends on Thursday.

SEE ALSO
Mali's diamond-smuggling centre
31 Oct 07 |  Africa
Diamond warning over Congo trade
24 Oct 07 |  Business
'Curse' of Liberia's resources
22 Aug 07 |  Africa

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