U.S. GOVERNMENT PRINTING OFFICE

68–040 CC WASHINGTON : 2000

TRADE IN AFRICAN DIAMONDS

HEARING

BEFORE THE

SUBCOMMITTEE ON TRADE

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

SEPTEMBER 13, 2000

Serial 106–72

Printed for the use of the Committee on Ways and Means

(

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ii

COMMITTEE ON WAYS AND MEANS

BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

NANCY L. JOHNSON, Connecticut

AMO HOUGHTON, New York

WALLY HERGER, California

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JIM NUSSLE, Iowa

SAM JOHNSON, Texas

JENNIFER DUNN, Washington

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

PHILIP S. ENGLISH, Pennsylvania

WES WATKINS, Oklahoma

H.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

SCOTT MCINNIS, Colorado

RON LEWIS, Kentucky

MARK FOLEY, Florida

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

WILLIAM J. COYNE, Pennsylvania

SANDER M. LEVIN, Michigan

BENJAMIN L. CARDIN, Maryland

JIM MCDERMOTT, Washington

GERALD D. KLECZKA, Wisconsin

JOHN LEWIS, Georgia

RICHARD E. NEAL, Massachusetts

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

KAREN L. THURMAN, Florida

LLOYD DOGGETT, Texas

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON TRADE

PHILIP M. CRANE, Illinois, Chairman

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

AMO HOUGHTON, New York

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JENNIFER DUNN, Washington

WALLY HERGER, California

JIM NUSSLE, Iowa

SANDER M. LEVIN, Michigan

CHARLES B. RANGEL, New York

RICHARD E. NEAL, Massachusetts

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

XAVIER BECERRA, California

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records

of the Committee on Ways and Means are also published in electronic form. The printed

hearing record remains the official version. Because electronic submissions are used to

prepare both printed and electronic versions of the hearing record, the process of converting

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process

is further refined.

iii

C O N T E N T S

Page

Advisories announcing the hearing ........................................................................ 2

WITNESSES

U.S. Department of State, William B. Wood, Principal Deputy Assistant Secretary, International Organization Affairs ........................................................ 32

Diamond Manufacturers and Importers Association of America, Jeffrey Fischer ............................................................................................................................ 58

Gemological Institute of America, William E. Boyajian ....................................... 73

Global Witness, Alex Yearsley ................................................................................ 52

Hall, Hon. Tony P., a Representative in Congress from the State of Ohio ......... 7

Jewelers of America, Inc., Matthew A. Runci ....................................................... 39

McKinney, Hon. Cynthia A., a Representative in Congress from the State

of Georgia .............................................................................................................. 20

Payne, Hon. Donald M., a Representative in Congress from the State of

New Jersey ........................................................................................................... 17

Physicians for Human Rights, Holly Burkhalter .................................................. 61

Rough Diamond Consultancy, J.F. ‘‘Jack’’ Jolis .................................................... 69

Wolf, Hon. Frank R., a Representative in Congress from the State of Virginia 14

World Diamond Council:

William E. Boyajian ......................................................................................... 73

Matthew A. Runci ............................................................................................. 39

SUBMISSIONS FOR THE RECORD

Diamond Dealers Club, New York, NY:

Jacob Banda, letter ........................................................................................... 86

Mayer Herz, statement .................................................................................... 13

Liberia, Republic of, His Excellency William V.S. Bull, Ambassador to the

United States, letter and attachment ................................................................. 84

MONDERA.com, New York, NY, Mayer Herz, statement ................................... 13

Rosen, Elly, Appraisal Information Services, Brooklyn, NY, Gems and Jewelry

Reference, and Appraiser’s Information Network, statement .......................... 82

Women’s Commission for Refugee Women and Children, New York, NY, Mary

Diaz, statement .................................................................................................... 87

World Vision, Rory E. Anderson, statement .......................................................... 89

(1)

TRADE IN AFRICAN DIAMONDS

WEDNESDAY, SEPTEMBER 13, 2000

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

SUBCOMMITTEE ON TRADE,

Washington, D.C.

The Subcommittee met, pursuant to notice, at 9:35 a.m., in room

1100, Longworth House Office Building, Hon. Philip M. Crane

(Chairman of the Subcommittee) presiding.

[The advisories announcing the hearing follow:]

2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON TRADE

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721

August 10, 2000

No. TR–23

Crane Announces Hearing on Trade in African

Diamonds

Congressman Philip M. Crane (R–IL), Chairman, Subcommittee on Trade of the

Committee on Ways and Means, announced today that the Subcommittee will hold

a hearing on trade in African diamonds. The hearing will take place on Tuesday, September 12, 2000, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 a.m.

Oral testimony at this hearing will be from both invited and public witnesses. Invited witnesses will include officials from the U.S. Department of State and the U.S.

Department of the Treasury. Also, any individual or organization not scheduled for

an oral appearance may submit a written statement for consideration by the Committee or for inclusion in the printed record of the hearing.

BACKGROUND:

Recently, there has been intensified international focus on the trade in diamonds

and its link to illegal arms trafficking and civil war in Africa. Often called ‘‘conflict’’

or ‘‘blood’’ diamonds, such diamonds generally come from mines controlled by rebel

forces and are traded for arms to fuel civil war in Africa.

Many claim that the Sierra Leone rebel organization Revolutionary United Front

has engaged in atrocious acts against civilians and has been trading conflict diamonds to finance its war against the Government of Sierra Leone. On July 5, 2000,

the United Nations adopted a resolution calling for an 18-month embargo against

diamonds from Sierra Leone. The resolution calls on member States to ban the importation of rough diamonds from Sierra Leone unless those diamonds are exported

under a certificate system approved by a Security Council Sanction Committee. This

ban is similar to the U.N. embargo implemented against diamonds from Angola in

June 1998.

The United States has been actively involved in efforts to curb trade in conflict

diamonds. In May 2000 in Kimberly, South Africa, the United States, along with

South Africa, the United Kingdom, Belgium, and representatives of the diamond industry reached an agreement on key issues establishing a certification system, accountability and oversight for the industry. The United States has also taken a lead

in establishing Sierra Leone’s Commission on the Management of Strategic Resources and has committed over $1 million as well as technical advice for this effort.

In response to the international focus on conflict diamond trade and the U.N. ban

against diamonds from Sierra Leone, the World Diamond Congress (comprised of

the World Federation of Diamond Bourses and the International Diamond Manufacturers Association) adopted on July 19, 2000, a joint resolution laying out a proposal

for oversight, accountability and specific actions to track the flow of rough diamonds. The proposal requires each accredited rough diamond importing country to

enact ‘‘redline’’ legislation prohibiting the importation of any parcel of rough diamonds unless such parcel has been sealed and registered in a universally standardized manner by an accredited export authority from the exporting country. In addiVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
3

tion, the proposal does the following: (1) calls for the exporting country to implement

an accredited export system; (2) prohibits the importation of diamonds from countries that have not enacted redline legislation; (3) requires countries to adopt criminal penalties for trading in illicit rough diamonds; and (4) requires adherence to a

code of conduct. Under the proposal, compliance is to be monitored and controlled

by the industry, the International Diamond Council.

Under U.S. law, the origin of a cut diamond is the country where the diamond

was cut, and U.S. Customs does not require any information relating to the country

of mining of the imported cut diamond. Most experts agree that once a diamond has

been cut and polished, it is difficult to determine the country where it was mined.

There have been a number of legislative proposals in Congress seeking to address

the trade in conflict diamonds, including banning diamonds from specified countries

and requiring a certification of where the diamond sought to be imported was

mined. These proposals have not received the support of the Administration, largely

because of concerns that they are not administrable and have the potential to harm

legitimate diamond trade.

In announcing the hearing, Chairman Crane stated: ‘‘This hearing will provide

the Subcommittee with an opportunity to review the options available to curtail conflict diamond trade that is World Trade Organization (WTO) consistent and does not

impact legitimate diamond trade. We must break the link that makes diamonds a

rebel’s best friend, but we must also not harm legitimate diamond trade that is a

vital link to the world’s economy.’’

FOCUS OF THE HEARING:

The focus of the hearing will be to evaluate options available that are administrable and WTO consistent and will effectively curtail conflict diamond trade without impacting legitimate diamond trade. The Subcommittee is interested in receiving testimony on possible approaches to this issue, including testimony on current

and developing technology that can determine the country of mining of a cut and

polished diamond.

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

Requests to be heard at the hearing must be made by telephone to Traci Altman

or Pete Davila at (202) 225–1721 no later than the close of business, Tuesday, September 5, 2000. The telephone request should be followed by a formal written request to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House

of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515.

The staff of the Subcommittee on Trade will notify by telephone those scheduled to

appear as soon as possible after the filing deadline. Any questions concerning a

scheduled appearance should be directed to the Subcommittee on Trade staff at

(202) 225–6649.

In view of the limited time available to hear witnesses, the Subcommittee may

not be able to accommodate all requests to be heard.

Those persons and organizations not scheduled for an oral appearance are encouraged to submit written statements for the record of the hearing. All persons requesting to be heard, whether they are scheduled for oral testimony or not, will be notified as soon as possible after the filing deadline.

Witnesses scheduled to present oral testimony are required to summarize briefly

their written statements in no more than five minutes. THE FIVE-MINUTE RULE

WILL BE STRICTLY ENFORCED. The full written statement of each witness will

be included in the printed record, in accordance with House Rules.

In order to assure the most productive use of the limited amount of time available

to question witnesses, all witnesses scheduled to appear before the Subcommittee

are required to submit 200 copies, along with an IBM compatible 3.5-inch diskette

in WordPerfect or MS Word format, of their prepared statement for review by Members prior to the hearing. Testimony should arrive at the Subcommittee on Trade

office, room 1104 Longworth House Office Building, no later than Friday, September

4

8, 2000. Failure to do so may result in the witness being denied the opportunity

to testify in person.

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

Any person or organization wishing to submit a written statement for the printed

record of the hearing should submit six (6) single-spaced copies of their statement,

along with an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format,

with their name, address, and hearing date noted on a label, by the close of business, Tuesday, September 26, 2000, to A.L. Singleton, Chief of Staff, Committee on

Ways and Means, U.S. House of Representatives, 1102 Longworth House Office

Building, Washington, D.C. 20515. If those filing written statements wish to have

their statements distributed to the press and interested public at the hearing, they

may deliver 200 additional copies for this purpose to the Subcommittee on Trade

office, room 1104 Longworth House Office Building, by close of business the day before the hearing.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement

or exhibit submitted for the printed record or any written comments in response to a request

for written comments must conform to the guidelines listed below. Any statement or exhibit not

in compliance with these guidelines will not be printed, but will be maintained in the Committee

files for review and use by the Committee.

1. All statements and any accompanying exhibits for printing must be submitted on an IBM

compatible 3.5-inch diskette in WordPerfect or MS Word format, typed in single space and may

not exceed a total of 10 pages including attachments. Witnesses are advised that the Committee

will rely on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing.

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material

not meeting these specifications will be maintained in the Committee files for review and use

by the Committee.

3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments

by the Committee, must include on his statement or submission a list of all clients, persons,

or organizations on whose behalf the witness appears.

4. A supplemental sheet must accompany each statement listing the name, company, address,

telephone and fax numbers where the witness or the designated representative may be reached.

This supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing.

Statements and exhibits or supplementary material submitted solely for distribution to the

Members, the press, and the public during the course of a public hearing may be submitted in

other forms.

Note: All Committee advisories and news releases are available on the World

Wide Web at ‘‘http://waysandmeans.house.gov.’’

The Committee seeks to make its facilities accessible to persons with disabilities.

If you are in need of special accommodations, please call 202–225–1721 or 202–226–

3411 TTD/TTY in advance of the event (four business days notice is requested).

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.

5

***NOTICE—CHANGE IN DATE AND TIME***

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON TRADE

FOR IMMEDIATE RELEASE CONTACT: (202) 225–6649

September 6, 2000

No. TR–23-Revised

Change in Date and Time for Subcommittee

Hearing on

Trade in African Diamonds

Tuesday, September 12, 2000

Congressman Philip M. Crane (R–IL), Chairman of the Subcommittee on Trade

of the Committee on Ways and Means, today announced that the Subcommittee

hearing on trade in African diamonds, previously scheduled for Tuesday, September

12, 2000, at 10:00 a.m., in the main Committee hearing room, 1100 Longworth

House Office Building, will now be held on Wednesday, September 13, 2000,

beginning at 9:30 a.m.

All other details for the hearing remain the same. (See Subcommittee press release No. TR–23, dated August 10, 2000.)

Chairman CRANE. Welcome to this important hearing on conflict

diamonds. I especially want to thank the witnesses, many of whom

had to reschedule their plans so that they could testify. Some of

you have crossed oceans to get here and I know how important this

issue is to everyone present here today.

Africa is a continent of magnificent landscape, beautiful coastline, and abundant natural resources, including diamonds. Despite

its abundance in natural wealth, Africa remains poor and war-torn.

In order for Africa to move in the direction of economic prosperity,

we must ensure that its natural wealth is not used to keep African

countries fettered in rebel wars and poverty. This aim brings us to

the subject of trade and conflict diamonds, which are diamonds

controlled by rebel forces and traded to fuel their wars against civilians and governments, as is presently the case in Sierra Leone.

Eighty-five percent of the world’s rough diamonds pass through

Antwerp, Belgium, and then to central selling offices in London

and other places for sale to diamond cutters. Experts everywhere

agree that once a diamond is cut and polished, it is almost impossible to tell the country where the diamond was mined. To effectively end trade in conflict diamonds, the countries exporting and

importing rough stones in particular must work together to make

sure that these diamonds do not have a market, so that conflict diamond peddlers cannot stay in business. I am pleased that the diaVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00009 Fmt 6631 Sfmt 6602 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
6

mond industry based in Antwerp recognizes this and I applaud the

industry for taking steps toward achieving this goal. Legitimate diamond trade is worth about $55 billion per year

and estimates indicate that illegal diamond trade accounts for less

than 4.5 percent of the rough diamond production worldwide. Trade

in conflict diamonds is a portion of this 4.5 percent. However, even

this small percentage of conflict diamond trade is too much, but we

must ensure that the steps we take do not undermine legitimate

diamond trade through government bureaucracy and tightened

price controls. If this happens, the losers are consumers and the African countries engaged in legitimate trade. The winners are the

central selling offices of rough diamonds.

Accordingly, I will be looking at all proposals with an eye to determining whether they are administrable, effective, and consistent

with our WTO obligations. So let us work together so that we are

all winners and send a clear signal that conflict diamonds are not

forever.

Mr. LEVIN. Thank you, Mr. Chairman. I appreciate this hearing

and the opportunity to hear these distinguished witnesses. Thanks

to those of you seated at the witness table, also human rights organizations and others, we have been made aware in recent years of

the tragedy of conflict diamonds. Items that should be precious objects of beauty have become too often the currency that perpetuates

unthinkable human strife.

In Sierra Leone and Angola, rebel groups are appropriating

rough diamonds, selling them, using the proceeds to acquire arms

and otherwise continue violent internal conflicts. The practice of

trafficking in conflict diamonds has serious implications both for

U.S. foreign policy and U.S. consumer protection. This country

strives to conduct a foreign policy that emphasizes humanitarian

objectives. We take seriously the need to promote respect for

human rights around the world. For this reason, we cannot turn

a blind eye to this problem.

Further, we have an obligation to protect American consumers

from becoming unwitting supporters of gross human atrocities. Diamonds should enrich the lives of peoples in countries that are naturally endowed with them, but instead, peoples in Angola, Sierra

Leone, and others are being brought pain and suffering.

I am encouraged that the administration and the international

community are taking steps to prevent rebel groups from financing

their activities through illegal diamond sales. The two Security

Council resolutions are welcome first steps. Likewise, I believe that

the diamond industry’s efforts to curtail trade in these diamonds

are a positive development. So we look forward to listening to you,

our colleagues, as well as witnesses from the Department of State,

the private sector, human rights groups, and others.

A short time ago, Congress passed and the President signed into

law historic trade legislation making the nations of Sub-Saharan

Africa our partners in economic progress and prosperity. When

fully implemented, that legislation should help to promote increased trade and boost the economic development of those nations.

By contrast, the trade in conflict diamonds is actually a set-back

to economic development. We must do our part to deter that trade.

So I hope today the witnesses will offer helpful suggestions on how

7

we might do just that, and I want to thank all of you in advance

for joining us today and we look forward to your testimony.

[The opening statement of Hon. Jim Ramstad follows:]

Opening Statement of the Hon. Jim Ramstad, a Representative in Congress

from the State of Minnesota

Thank you, Mr. Chairman, for holding this important hearing today. As a committed believer in international trade, I have consistently supported opening markets providing more access to goods from around the world.However, as civil war

has ravaged some countries in Africa, rebel forces, like the Revolutionary United

Front (RUF) in Sierra Leone, have captured diamond mines and used the income

from those mines not to help the poor, but to enrich themselves and provide arms

and munitions for war. They have also participated in horrific acts of brutality

against their opponents and against innocent citizens who happened to be in the

wrong place at the wrong time.

To combat this growing problem, the United Nations on July 5th of this year

adopted a resolution calling for an 18-month embargo against diamonds from Sierra

Leone unless the diamonds can be certified as coming from legitimate sources. Also,

the World Diamond Congress has also adopted a proposal to track the source of diamonds.

At this time, U.S. law does not require any information as to the origin of diamonds. I am extremely interested to hear my good friend Rep. Tony Hall’s proposal

to change that.

While I have concerns about enforcement of the legislation, I am anxious to hear

the reactions of the Administration and the industry. Rest assured I will give this

important legislation the consideration it deserves and I look forward to today’s testimony.

Chairman CRANE. Thank you, Mr. Levin. Now I would like to tell

our witnesses that if you can keep your oral testimony to in the

neighborhood of five minutes, we would appreciate it. All written

testimony, however, will be made a part of the permanent record.

With that, we yield to our distinguished colleague from Ohio, Mr.

Hall.

STATEMENT OF HON. TONY P. HALL, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF OHIO

Mr. HALL. Thank you, Mr. Chairman, Mr. Levin, members of the

subcommittee. I appreciate the chance to testify on a very, very important issue. I appreciate also that my full testimony will be part

of the record. I will read from parts of it and refer to parts of it.

Thank you.

My focus today is on the humanitarian cost, the human costs of

the trade in conflict diamonds. We also call them blood diamonds,

or trading of arms for diamonds. I have seen it in Angola. I am

aware of it in Liberia and in the DRC. But it has never been more

clear than in Sierra Leone, where Congressman Wolf and I had

traveled last year. What I want to focus on is the role diamonds

play in the butchery in some of the nations blessed with a resource

that has become really a curse.

1999 was a very good year for the diamond industry. DeBeers,

the monopoly which controls 65 percent of the market, posted profits 86 percent higher than in 1998. As a rule, 30 percent of those

profits come from conflict diamonds, even though these stones

make up between five and 15 percent of the total supply, because

they tend to be large and disproportionately valuable stones. In Sierra Leone, diamonds average two carats in size.

8

1999 was a bad year for the people of Sierra Leone and little better for many in Angola and the Democratic Republic of the Congo.

The billion or so dollars brought in by these countries’ diamonds

last year was used to buy the machetes that severed the limbs, the

weapons that have turned rag-tag gangs into their tormenters, and

military forces for the international community to reckon with.

When Frank and I were in Sierra Leone last year, we went to

the amputee camps. We saw the results of what can happen when

you take diamonds and you trade it for arms. We saw a rag-tag

army go from 500 rebels to 25,000 strong. We saw the kind of

games, or heard about the kind of games, that they played on the

people of Sierra Leone. One of the games is, you stick your hand

in a bag. You pull out a piece of paper. If it says ‘‘hand,’’ they chop

it off. If it says ‘‘ear,’’ the ear comes off. If it says ‘‘foot,’’ they hack

it off with a hatchet.

The year 2000 has not changed the equation much except in Sierra Leone. Now U.N. peacekeepers, whose deployment is costing

$1.5 million per day, have joined on the misery side of the equation. Five hundred were kidnapped in May and held for more than

a month. Today, 13,000 are reportedly holed up in fortified areas,

unable to open the country’s main road. The force’s commander

blames diamonds both for rebels’ refusal to disarm, as they promised, and for infighting that has paralyzed his peacekeepers.

Unfortunately, these wars have not stopped the diamond business. For other manufacturers, war threatens workers and factories

and farmers. For oil companies, war jeopardizes pipelines and

equipment. For a diamond trader, though, the economic incentives

are backwards. War favors traders who can deliver weapons and

supplies. It increases the supply of diamonds available. In fact,

wars have been great for business.

Consumer opinion should be an added incentive to do the right

thing for most businesses, and it would seem to make the diamond

industry particularly sensitive to any link between their product

and the savage wars that might stain its image. I think what we

see is that the worth of diamonds is pretty much what they symbolize, love and commitment. The image was created and is sustained by an advertising campaign worth hundreds of millions of

dollars a year. But it is only an image. Fur, which is another luxury product with an image problem, does keep you warm. Diamonds’ worth depends wholly on consumers’ perceptions. So sometimes diamonds are not a girl’s best friend.

American consumers, who buy two-thirds of all the world’s diamonds, have a very different understanding of diamonds than Sierra Leoneans or Angolans or Congolese people, and with the increase in media attention to the horrors of the diamond wars, reality is almost certain to make these conflicting images apparent.

Americans are smart and they want action, and they are going to

be outraged. I do not think they really know what has happened

with conflict diamonds. They are going to be outraged if we do not

do something about this.

I was encouraged to see the diamond industry finally do something to end its assistance to this blood trade two months ago. Last

year, Frank and I and Cynthia McKinney came up with a more traditional approach, giving consumers information to make their own

9

decisions. We had urged the industry to either support it or counter

it. I had hoped to introduce implementing legislation for their

counter proposal, but the industry has not yet finalized its approach.

To encourage this process, I have introduced the CARAT Act,

H.R. 5147. Title III expresses the sense of Congress that our government should do all it can to put this proposal or something like

it into effect. I believe it is critical that Congress express this now

because key countries and segments of the industry are dragging

their feet.

The United States is the largest market for diamonds. We have

a moral obligation to speak out and what we say will make a difference. Title II aims to add some encouragement to this process

in the form of requiring diamonds’ origin to be certified as soon as

that is technologically feasible and cost effective. Title IV requires

the administration to work more coherently on this problem. Under

Ambassador Halperin’s leadership, there has been more attention

and focus.

But much more effort is needed. Over the past decade, our government, has sent $3 billion in humanitarian aid to Angola, Liberia, the DRC, and Sierra Leone, while over the same period $10 billion in diamonds was smuggled out.

Several months ago, 70 American human rights and humanitarian organizations led by Physicians for Human Rights formed a

coalition to press for the industry to act on the problem of conflict

diamonds. I was not surprised to see their enthusiasm for this

work and pleased to learn that they are proceeding in a responsible

manner. Launching a boycott of diamonds would be the easiest

thing in the world to do on this issue, and this coalition has not

done that. Instead, they are waiting to see whether the diamond

industry will implement its proposal and what Congress is going to

do. I do not expect this coalition to wait forever. Christmas is coming and with it a golden opportunity to educate consumers about

where the money they spend on tokens of love goes.

Mr. Chairman, we are running out of time. This has been going

on for too long. We have little leverage over these countries in Africa. The threat of our taking away food aid or medicines is not

enough leverage. We are not going to commit troops to countries

in Africa. We have pretty much determined that. What leverage do

we have? I think the only leverage we have in this particular case

is to take the profit out of wars, by stopping the trade in blood diamonds. We have a chance to make a difference.

I urge the committee to mark-up H.R. 5147. I would also request

that you include the testimony of Mayer Herz, who is a member

of the U.S. diamond industry who was not able to testify. Thank

you.

[The prepared statement and an attachment follow:]

Statement of Hon. Tony P. Hall, a Representative in Congress from the

State of Ohio

Mr. Chairman, Mr. Levin, and Members of the Subcommittee: I appreciate your

focus today, and the opportunity to testify to you. My focus is on the human cost

of the trade in conflict diamonds. I have seen it in Angola, in Liberia, and in the

DRC but it has never been clearer or sadder than in Sierra Leone, where Congressman Wolf and I traveled last December.

10

Frank Wolf speaks eloquently about the people who lost their arms, and ears, and

lives to machetes wielded by rebels trying to overthrow this small country’s democratic government, so I’ll let him tell that story. And Cynthia McKinney can tell you

what she and other members of the International Relations Committee are trying

to do to stop the diamond wars and repair the damage they have caused.

What I want to focus on is the role diamonds play in butchery of people whose

nations are blessed with a resource that has become a grotesque curse.

Industry and People

1999 was a very good year for the diamond industry. DeBeers, the monopoly

which controls 65 percent of the market, posted profits nearly 90 percent higher

than in 1998.

As a rule, 30 percent of these profits come from conflict diamonds (even though

these stones make up between 5 and 15 percent of the total supply) because they

tend to be large and disproportionately valuable stones. In Sierra Leone, diamonds

average two carats in size.

1999 was an unspeakably bad year for the people of Sierra Leone, and little better

for many in Angola and the Democratic Republic of Congo. The billion-plus dollars

brought in by these countries’ diamonds last year was used to buy the

machetés that severed their limbs, and the weapons that have turned ragtag gangs into serious military forces their neighbors and international troops will

reckon with for years to come.

The year 2000 hasn’t changed the equation much—except in Sierra Leone. Now UN peacekeepers, whose deployment is costing $1.5 million per day, have joined on

the misery side of the equation. In May, 500 were kidnaped and held for weeks.

Today, 13,000 are virtually holed up in fortified areas—unable to open the country’s

main road, much less protect civilians. The force’s commander blames diamond profiteering both for rebels’ broken promise to disarm, and for in-fighting that has paralyzed his peacekeepers.

Incentives All Wrong

Unfortunately, until very recently, the diamond industry hasn’t considered any of

this to be its problem. For most manufacturers, war threatens their workers and

factories. For oil companies, war jeopardizes their pipelines and equipment. For the

diamond industry, though, the economic incentives are backwards. War favors traders who can deliver weapons and supplies, and war increases the supply of diamonds available. In recent years, war has been great for the diamond business.

The niceties of international law haven’t been much of a deterrent to the diamond

industry’s participation in these wars either. For eight years, traders dealt gladly

with rebels who tried to overthrow Sierra Leone’s elected government, and briefly

succeeded.

The business partners of a generally respectable industry there were rebels who

used the profits from their trade to turn children into their parents’ murderers, and

then into soldiers and sex slaves. . . rebels who spent their earnings on drugs to

make their young fighters fearless, and to buy the weapons that make this one of

history’s uniquely brutal wars on civilians. Traders reported these as Liberian diamonds—six million carats a year worth, when they knew full well that Liberian

mines can produce just 2 percent of that.

There are similar stories in the Congo and in Angola, whose people are now beginning to starve and whose land has been turned into a minefield. In Angola, DeBeers

bragged in a recent annual report about its prowess in being profitable enough to

buy enough rebel diamonds to keep prices from collapsing.

Consumer Opinion

So economic and legal incentives for peace failed. For most businesses, a third factor often is reason enough to do the right thing: customer opinion. The diamond industry would seem to be particularly sensitive to any link between its product and

savage wars that might stain its glittering image. Industrial diamonds (most of

which are man-made) have a real value—but diamond gemstones’ worth is in what

they symbolize: love and commitment. This image was created and is sustained by

an advertising campaign worth hundreds of millions of dollars a year. . . but it is

only an image. Fur, another luxury product with an image problem, does keep you

warm. Diamonds have no intrinsic value: their worth depends wholly on consumer

sentiment.

American consumers—who buy two-thirds of all the world’s diamonds—have a

very different understanding of diamonds than Sierra Leonean, or Angolan, or Congolese people. And with the increase in media focus on the horrors of the diamond

wars, reality is almost certain to reveal these conflicting views. As the situation now

11

stands, though, there isn’t much American consumers can do to cut off their support

for the diamond wars. Most diamonds are mined in South Africa, Botswana, and

other countries that—aided by a geological quirk of nature that makes it easier to

control their diamonds—have used these resources for their people’s benefit. And

most diamonds are cut in India, a poor country with a long history of democracy,

or Israel—two more places we would be loathe to hurt.

The people of these countries should not have to pay for the diamond industry’s

greed, its arrogance, or its refusal to follow accepted norms of responsible behavior.

But in fact, they probably will be the ones who will get burned once any spark ignites this tinderbox.

Whether Congress likes it or not, American consumers simply will not be a party

to this blood trade once the Benetton ads showing diamond bracelets on Sierra

Leone amputees start to run. That is the challenge we face. That—and not the industry-backed Antwerp plan, or other approaches—is the real threat. Just ask the

fur industry.

Industry Response

I was encouraged to see the diamond industry finally do something to end its assistance to this blood trade two months ago. Last year, when I came up with a more

traditional approach—giving consumers information to make their own decisions—

I urged the industry to either support my approach or counter with something better. I had hoped to introduce legislation implementing their counterproposal, but the

industry has not yet finalized its approach.

The CARAT Act

To encourage this process, I have joined Mr. Wolf and Ms. McKinney in introducing the CARAT Act, HR 5147. With your permission, I’m going to talk about it

a little out of order.

Title III

Title III expresses the Sense of the Congress that our government should do all

it can to implement the industry’s Antwerp proposal, or something like it. I believe

it is critical that Congress weigh in on this early, because key countries and segments of the industry are dragging their feet. The United States is the largest market for diamonds; we have a moral obligation to speak out, and what we say will

make a difference.

It is my understanding that some Members of this Subcommittee question the

wisdom of this approach, and have particular concerns about its compliance with the

WTO. I have a few qualms of my own, but I’ve been persuaded that—until technology advances—we need the industry’s cooperation to make any system work.

This is what the industry’s leaders have agreed to; unless we have a better idea,

I think we should support it.

Title II

Title II aims to add some encouragement to the Antwerp process, by requiring

diamonds’ origin be certified as soon as that is technologically feasible and cost-effective. It permits the Treasury Secretary to waive this if the system Title III envisions is up and running. I know the industry doesn’t like Title II; I hope that including it will motivate them to be sure it’s never needed. I also hope it will spur technologies that will let us determine the origin of a cut diamond because I sincerely

believe that consumers have the right to know that. We know where our cars are

from, and the parts in them; we know where are clothes and our cheese were made.

Why can’t we know where a diamond, which represents a significant investment of

money, was mined?

Title IV

Title IV requires the Administration to work more coherently on this problem.

Under Ambassador Halperin’s leadership, more attention has been paid to it, and

Ambassador Holbrooke’s focus probably has added momentum to this work. But, as

your Subcommittee has learned, Mr. Chairman, there is apparently not the sustained commitment from senior Administration officials this issue merits.

And much more effort is needed: over the past decade, our government has sent

more than $3 billion in humanitarian aid to Angola, Liberia, the DRC, and Sierra

Leone. Over the same period, $10 billion in diamonds was smuggled out of these

countries, turned into weapons, and turned against their suffering civilians.

As long as any criminal can capture diamond mines that generate that kind of

money, we will be stuck in this vicious cycle. It is above all a human crisis; but it

12

is a diplomatic and a financial one as well, and the Administration’s attention needs

to be sustained.

Title I

Finally, Title I implements two United Nations embargoes, on Sierra Leone and

Angolan rebels’ diamonds, and expands them to countries involved in the transshipment of diamonds banned by the United Nations.Congressman Wolf has taken

the lead on this provision, so I’ll let him explain it fully.

Because the United States imports very few rough diamonds, Title I’s embargoes

will only become as tough as they sound when the either Title II, or the system Title

III encourages, is implemented. But we have an obligation as members of the

United Nations to enact legislation to enforce these UN embargoes; doing so in the

context of a system for targeting the roots of this problem signals our seriousness.

And since more than ample waivers are included, this provision can remain current

and fair.

Congress Needs to Act

The CARAT Act does not bind the legitimate diamond industry, but it does send

a strong message that is urgently needed. Hopefully, it also will spur the technology

needed to empower consumers if the industry fails to control this blood trade.

I am pleased this bill has won the support of the NGO community. I will look

to the industry to demonstrate its sincerity by helping me to win your support for

it. And I urge this Committee to mark it up in time for a vote by the House and

Senate before we leave town. Time is short, but this is an unusual opportunity to

make a difference. The media spotlight is on this problem; and human rights activists and the legitimate industry are on the same side—for now. We won’t have this

happy situation if we wait.

NGO Response

Which brings me to the human rights community. Several months ago, more than

70 respected American organizations—led by Physicians for Human Rights—formed

a coalition to press the industry to address the problem of conflict diamonds. I was

not surprised to see activists’ enthusiasm for this work: this would make great TV,

and it is one of the few straightforward ways to connect American consumers to a

problem in Africa.

I am pleased to see that activists are proceeding in a responsible manner, though,

and working out of the limelight for a lasting solution. Launching a boycott of diamonds would be the easiest thing in the world to do on this issue; this coalition has

not done that. Instead, they are waiting to see whether the diamond industry will

implement its ambitious proposal—which it promised to have in place later this

month.

I don’t expect the coalition to wait forever, though. Christmas is coming, and with

it a golden opportunity to educate consumers about where the money they spend

on tokens of love goes. Before then, two networks are planning exposes of conflict

diamonds that will be seen by tens of millions of Americans. It will be increasingly

difficult for these thoughtful but powerful organizations to continue to wait for industry and Congressional action.

Congressional Response

I appreciate that time for the 106th Congress to act is short; that is why I tried

to make the CARAT Act as flexible as possible. If the industry fulfills its promise

to devise a workable system, there will be time next year to come back to debate

how to implement that without running afoul of the WTO or prudence.

But this Committee and this Congress need to do something before we go home

next month.

I do not want to face constituents who’ve just seen 20/20 or 60 Minutes if we

haven’t done something. I do not want to face my local jewelers, who may be trying

to explain the human rights activists’ pickets to their customers, with the excuse

that we need to study the problem a little more.

And I do not want to tell taxpayers that we would rather spend billions of dollars

to treat the symptoms of the diamond wars, rather than try to get to the root of

the problem.

Thank you for your time, Mr. Chairman, and for your Committee’s work on this

issue. I particularly appreciate the efforts Savitri Singh has devoted to this matter,

and want to commend you for her diligence.

I would be happy to answer any questions.

13

Statement of Mayer Herz, Vice President, Diamond Acquisitions,

MONDERA.com, New York, New York, and Officer, Diamond Dealers

Club, New York, New York

A POSITIVE APPROACH TO SOLVING THE PROBLEMS OF CONFLICT DIAMONDS

The world diamond industry created the Antwerp Proposals, a sound effort to

stem the flow of conflict diamonds into legitimate channels. As I was involved in

drafting these proposals, I would personally recommend that we try to make them

WTO consistent so that rough diamonds can be traded like other commodities. This

will eliminate the need to create a whole new bureaucracy to implement the Antwerp Proposals.

The concept that I would like to discuss today is revolutionary in its approach to

the solution of conflict diamonds. To resolve any conflict or problem one needs to

deal with its root cause. The root cause of conflict in African diamond-producing

countries is that, for decades now, traders, major buyers and corrupt government

officials are illegally exporting the rough diamonds, robbing these countries of their

wealth, thus leaving the people and legitimate governments with no sustaining revenues to build on. Corruption and bribes are the norm.

Unscrupulous dealers become rich while legitimate governments and the general

population remains destitute. In the best of cases, export duties and taxes are collected only on a fraction of the value of the diamonds taken out of the country. The

governments are left with very little revenue to build the infrastructures of a nation

that will benefit all the people. The miners and diggers usually don’t get more than

20 percent to 35 percent of what their product is worth on the world market. In

this environment, the whole economic structure is derailed

Rice is a daily staple, yet unethical traders exploit the need to feed the hungry.

They are selling rice at highly inflated prices and making absurd profits. With these

profits, the traders buy rough diamonds and smuggle them out of the country. As

a result, both the country’s natural resources and the traders’’ ill-gotten financial

gains are drained out of the country. The tragic consequence is that there are very

few resources left to drive the local economy. The ordinary people of these countries

resent their exploitation, but there is little they can do against these powerful

forces. Conflict and war is what follows.

The problem has been growing unchecked for too long. Now that the world is focusing on the problem of conflict diamonds, thanks to NGO’s like Global Witness,

I would like to ask Congress and the Administration to address the root cause of

this problem. The State Department and its Agency for International Development

and the Department of Commerce and the Office of the Trade Representative for

Africa should help establish direct trade between the American diamond industry

and legitimate diamond producers in Africa. The foundation of this relationship

must be in educating these governments and their business people that unscrupulous deals and corruption in the long term is detrimental to a country’s stability and

its business infrastructure. We must start a process of dealing only through legitimate governments and we must make our dealings completely transparent, with

total accountability on the part of all involved. We must make people understand

that the only way that commerce in this trade will be stable is if it’s done legitimately.

The diamond resources of Africa are vital to the New York diamond industry. To

its credit, the American diamond industry has not been involved in trading in rough

diamonds that is not legitimate and transparent. We stand proud of our ethics and

high standards; and have taken the lead in transforming this industry. While we

strive to work ethically, others are abusing the existing system of exploitation. As

a result, the New York diamond industry has suffered financially. Large quantities

of rough diamonds from Africa change hands each day but these supplies are not

destined to reach New York. It is ironic that the American diamond industry, which

consumes more than 50 percent of the world’’s annual diamond production and is

still growing, has lost more than 70 percent of its diamond cutters. By working

closely with African governments we can import diamonds legally and at fair prices,

and we can re-invigorate the American diamond cutting industry while at the same

time giving the diamond producing nations the full benefit of their natural resources.

I believe that we can create a new way of trading in diamond rough, where transparency, accountability and legitimacy are the way of life. Diamonds can become the

commodity that will help to rebuild suffering African countries and that will enable

14

those nations to raise the standard of living of their people, who are now victims

of vicious wars fueled by diamonds.

Blood diamonds, conflict diamonds, the trading of arms for diamonds—these can

all be replaced with stability diamonds, and a fair exchange of diamonds for

healthcare, food and the staples of life. It is possible to create a diamond trade that

benefits everyone all around, if we are willing. Revolutionary ideas like these can

help us do it.

In closing, I would like to express my sincerest gratitude to Congressman Tony

Hall and his staff for always giving me a helping hand. To Ambassador Howard

Jetter, who was always willing to give advice, I wish him all the best in his new

posting as US ambassador to Nigeria. To Sylvia Fletcher of AID, thanks for the superb study on the Sierra Leone diamond industry revival. And last, but not least,

thanks to Rosa Whitaker, U.S. Trade Representative for Africa, for her constant encouragement.

I am available at 212–981–0279 and e-mail:mherz@banet.net

Chairman CRANE. Thank you.

Mr. Wolf.

STATEMENT OF HON. FRANK R. WOLF, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF VIRGINIA

Mr. WOLF. Thank you, Mr. Chairman. I want to thank you and

your staff for organizing the hearings and I also want to acknowledge Ms. McKinney and Mr. Payne for their efforts and also my

good friend Tony Hall, who has done more to bring this issue to

the public’s attention than anyone else.

Mr. Chairman, millions of people have died in Africa because of

the bloodshed surrounding conflict diamonds. Rebel groups and

military forces, Sierra Leone, Angola, Democratic Republic of

Congo, have committed horrible atrocities. At least $10 billion in

diamonds have been smuggled from these countries in the past decade. In the Congo in the last 20-some months, 1.7 million people

have died, 35 percent under the age of five.

Many in this room are familiar with the sad story of Angola,

where the rebel movement UNITA paid for weapons and kills people in order to maintain the control of the diamonds.

In Sierra Leone, aside from the shocking reality of live amputations and children soldiers, an estimated 75,000 people have died

because of the rebels’ vicious campaign to control the country’s diamonds.

Mr. Chairman, we speak many times in numbers and figures on

the atrocities of Africa and the reality just does not sink in. The

thought of a million deaths, it does not seem real. Rebel atrocities

is a term that may not sink in until we actually see it. The picture

behind me is of a two-year-old Sierra Leonean girl. She asks her

mom whether her arm will grow back. She will likely never wear

one of these diamond rings. To this little girl, diamonds have a

very different meaning than we are used to. Can you imagine if

this image were connected in the American consumer’s mind to diamonds, the symbol of eternal love and commitment?

Sierra Leone is a country that is blessed with diamonds and an

abundance of other natural resources, a scenic coastline, and wonderful people, and yet today is cursed as to be one of the worst

places in the world. The average lifespan is 25 years. Everyone on

15

the dais and everyone behind you would be dead if you lived in Sierra Leone.

I like to focus on that country because that is where the scramble

for diamonds and the link between diamonds and atrocity is the

most direct. As Mr. Hall said, we visited there and saw firsthand

these young children and older men with their arms and legs and

ears and noses cut off.

Certain countries around Sierra Leone play a major role in facilitating this. Many of these countries surrounding Sierra Leone have

few diamonds to mine, yet countries like Liberia, Burkina Faso,

Togo, and the Ivory Coast have exported millions of carats of diamonds—Sierra Leone diamonds—billions of dollars in value, to the

diamond cutting centers in Antwerp, Israel, India, Holland, and

New York. While officially denied by representatives of these governments, the U.S. intelligence community—and get the briefing

from the CIA—and numerous other sources possess a wide array

of evidence that documents this illicit diamond smuggling.

As of now, certain leaders have direct financial gain to keep this

rebellion going. Liberia and its President Charles Taylor supply

weapons to the rebels in exchange for diamonds. In 1998, Liberia,

whose natural resources would have allowed the exportation of approximately $10 million worth of diamonds, exported $297 million

worth of diamonds. Other countries in the area have served as direct arms suppliers or transit points.

The industry has long maintained the count of only four percent.

If this were true, it is four percent too much, but there are others

here today who will testify that the figure is likely higher. Whatever the figure, we believe that the industry has a responsibility

to stop this revenue incentive for African atrocities.

Also, the legitimate industry has a strong financial incentive, as

Mr. Hall said, to remedy the situation. The U.S. consumes 65 percent of the world’s diamonds. A U.S. consumer boycott similar to

the fur industry would cripple the diamond industry. Legitimate diamond-producing countries, such as Botswana and South Africa,

would seriously be destabilized and many of their citizens’ livelihood jeopardized.

I would ask you to mark up Mr. Hall’s bill and put it on some

omnibus bill. If you would give me the consideration, I would put

it on the transportation appropriations bill if we had the approval

of the leadership of both sides. We could use that as a vehicle to

move this. The transportation bill will be signed by the President.

It is relatively one of the non-controversial ones. We could put it

on that or some other. The time is urgent and failure to do anything, I think, will have disastrous consequences on all involved.

One last comment, Mr. Chairman, in keeping with the time. The

issue of conflict diamonds goes to a larger issue of Africa. The problems of Africa and the misery of Africa is our misery. We cannot

in the year 2000 ignore the tragedies that go on there. For hundreds of years, this continent has been exploited and the people

have suffered more than anyone has to suffer. Places like Sierra

Leone and the Congo and others that I have not mentioned, like

Sudan that Mr. Payne has done such a great job, seem distant from

the confines of this room.

16

I know the political realities of any large-scale U.S. involvement

in Africa, but we should take at least this minimal step. As Mr.

Hall said, we are not going to send troops and we ought not send

troops. We are not going to cut off humanitarian supplies and we

ought not do it. But Mr. Hall’s bill is something that we could really make a difference.

So in closing, Mr. Chairman, I thank you for the hearings. I

thank your staff. I would also like to remind the subcommittee that

on September 26 at 9:00 a.m., Mr. Royce will be sponsoring with

Mr. Hall and others several children whose hands were amputated

by the rebels. They will be in a briefing in Room 2172 and from

there they are going to go to see doctors in New York who are

going to help with prosthetic devices.

Again, thanks for the hearing and thank you to your staff.

[The prepared statement follows:]

Statement of Hon. Frank R. Wolf, a Representative in Congress from the

State of Virginia

Thank you Mr. Chairman. I would also like to thank the committee including the

staff for organizing and conducting this hearing on this extremely important issue.

First, I must acknowledge my fellow panel member and good friend Congressman

Tony Hall for doing so much to bring attention this important global matter. He has

been out front on this issue as long as anyone, and deserves the credit for moving

the process forward to address this immediate problem.

Mr. Chairman, millions of people have died in Africa because of the bloodshed

surrounding conflict diamonds. Rebel groups and military forces in Sierra Leone,

Angola, and the Democratic Republic of the Congo have committed horrible atrocities to gain control of and to profit from diamonds. At least $10 billion in diamonds

have been smuggled from these countries over the past decade.

In the Congo, some 1.7 million people have died because of the fight to control

Congo’s natural resources, primarily diamonds. Thirty-five percent of these deaths

are to children under the age of 5. There are currently eight countries involved in

this terrible conflict—many with a direct interest in the diamond trade.

Many in this room are familiar with the sad story of Angola, where the rebel

movement UNITA pays for weapons and kills people in order to maintain control

of Angola’s diamonds.

In Sierra Leone, aside from the shocking reality of live amputations and children

soldiers, an estimated 75, 000 people have died because of the rebels vicious campaign to control the country’s diamonds.

Mr. Chairman, sometimes we speak in numbers and figures on the atrocities of

Africa and the reality just doesn’t sink in. The thought of a million deaths—it

doesn’t seem real. Rebel atrocities is a term that may not sink in until we actually

see it. The picture behind me is of a 2 year old Sierra Leonean girl. She asks her

mom whether her arm will grow back. She will likely never wear a diamond ring.

To this little girl, diamonds have a very different meaning than we are used to. Can

you imagine if this image was connected in the American consumer’s mind to diamonds—the symbols of eternal love and commitment?

Sierra Leone is a country that is blessed with diamonds and an abundance of

other natural resources, a scenic coastline and beautiful people, yet today it is

cursed as one of the worst place in the world. The average life span is now about

25 years, the citizens are terrified and as one periodical described, it is a place

where angels fear to tread.

I would like to focus on Sierra Leone and West Africa. . .where the scramble for

diamonds and the link between diamonds and atrocities is the most direct.

Mr. Hall and I visited Sierra Leone last December and met and talked with hundreds of people who had their arms, legs or hands cut off by Sierra Leonian rebels—

all to scare and intimidate the local population so the rebels could gain control of

Sierra Leone’s diamond producing region.

Certain countries surrounding Sierra Leone play a major role in facilitating this

chaos. Many of these countries surrounding Sierra Leone have few to zero diamond

mines. Yet countries such as Liberia, Burkina Faso, Togo, and the Ivory Coast have

exported millions of carats of diamonds—Sierra Leone’s diamonds—billions of dollars in value—to the diamond cutting centers in Antwerp, Israel, India, Holland,

and New York.

17

While officially denied by representatives of these governments, the U.S. Intelligence community and numerous other sources possess a wide array of evidence

that documents this illicit diamond smuggling. As of now, certain leaders have a direct financial incentive to keep the ‘‘rebellion’’ in Sierra Leone going, to prevent

peace and therefore sustain their access to Sierra Leone’s precious stones.

Liberia and its president, Charles Taylor, supply weapons to the rebels in exchange for diamonds. In 1998 Liberia, whose natural resources would allow the exportation of approximately $10 million worth of diamonds, exported $297 million

worth of diamonds. Other countries in the area have either served as direct arms

suppliers or transit points for diamonds and arms into and out of Sierra Leone. This

incentive structure also existed for weapons exchanges between governments and diamond stealing rebel groups in the case of Angola and the Congo.

The industry has long maintained that conflict diamonds account for only about

4 percent of the world trade. If this were true I still believe that this is 4 percent

too much. There are others that will testify today that this figure is likely higher.

Plain common sense tells us that these diamonds are going somewhere—someone

is buying them and somehow the rebels are gaining access to arms and supplies.

Whatever the figure, we believe that the industry has a responsibility to stop this

revenue incentive for African atrocities. Also, the legitimate industry has a strong

financial incentive to remedy this situation. The U.S. consumes over 65 percent of

the world’s diamonds. A U.S. consumer boycott, similar to the fur industry, would

cripple diamonds. Legitimate diamond-producing countries such as Botswana and

South Africa could become seriously destabilized and the many of their citizens’ livelihoods jeopardized. I joined Congressman Tony Hall in introducing the Consumer

Access to a Responsible Accounting and Trade Act of 2000. This legislation, which

combines elements of Congressman Hall’s earlier diamond certification legislation

with language that was in the FY 2001 Treasury/Postal Appropriations bill combines import restrictions from known conflict diamond areas in West Africa with a

implementing a certification scheme for diamond origin, something the industry has

already expressed an interest in achieving. This legislation also goes further than

previous legislation by creating a permanent representative within the executive

branch to deal with conflict diamonds.

Mr. Chairman, this legislation is urgently necessary. It is flexible and takes into

account the technical realities of tracing diamond origin. This panel will hear testimony today on some of the specific implementation issues that are involved and the

feasibility of enforcing any import restriction. I am not hear to testify about the

technology that could potentially be used for enforcement.

However, I will say that a failure to do anything will have disastrous consequences for all involved. The status quo will mean more death, more suffering and

more instability on a continent that has suffered too much.

Mr. Chairman, in closing I would like to make one more comment. The issue of

conflict diamonds goes to the larger issue of Africa. The problems of Africa, the misery of Africa, is our misery. We cannot in the year 2000 ignore the tragedies that

go on there. For hundreds of years this continent has been exploited and the people

have suffered more than anyone should have to suffer. This beautiful and vast continent has been cursed by its abundance.

Places like Sierra Leone, the Congo and others I haven’t mentioned like the

Sudan seem distant from the confines of this room. I know the political realities of

any large scale U.S. involvement in Africa, but shouldn’t we at least take minimal

steps to alleviate massive suffering? Addressing conflicts diamonds is one such step.

Our affluence should not be someone else’s nightmare.

I want to again thank you, Mr. Chairman, and the committee for holding this

hearing, and I look forward to helping in any way I can to keep the process moving

to bring an end to this urgent problem.

Chairman CRANE. Thank you, Mr. Wolf.

Mr. Payne?

STATEMENT OF HON. DONALD M. PAYNE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. PAYNE. Thank you, Mr. Chairman, and thank you for allowing me to present my testimony here today. I would like to commend my colleagues Hall, Wolf, and McKinney for their longVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00021 Fmt 6631 Sfmt 6602 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
18

standing support for the right thing to do.As the ranking member

on the Subcommittee on Africa, the issue of conflict diamonds is

one I have been concerned about in our committee for many years.

The Subcommittee on Africa held a hearing entitled, ‘‘Africa’s Diamonds: Precious, Perilous, Too’’ on May 9 of this year. At that hearing, we heard from a number of witnesses, including Mr. Holoi,

Special Advisor to the Minister for Minerals and Energy of the Republic of South Africa. We extended an invitation to the representatives from DeBeers, but they declined our offer to participate.

I wanted to participate in this hearing for a couple of reasons,

but mainly to bring attention to the issue of dirty or conflict diamonds. I am very concerned, however, that legitimate markets of

Botswana, South Africa, and Namibia that depend almost exclusively on the diamond revenues to sustain their local economies do

not experience backlash from the boycott of illegal diamonds of Sierra Leone, Angola, and the Democratic Republic of the Congo.

As you already know, the RUF, a brutal rebel army, has committed egregious violations of human rights by maiming, injuring,

and killing many of the innocent men, women, and children living

in Sierra Leone. The RUF receives its revenues from neighboring

countries, but the real commodity driving the war comes from diamonds inside the country. The rich diamond areas of the Kailahun,

Kenema, and Bo are controlled by the RUF and the so-called West

Side Boys. In Angola, UNITA, headed by Jonas Sivimbi, controls

Lundi, Malange, and Bie.

I am pleased, though, that the United Nations passed a resolution on July 5 banning the sale of and exportation of diamonds

being bought from Angola’s UNITA, Sierra Leone’s RUF, and hopefully one will be introduced that condemns Zimbabwean soldiers’

excavation in Mbuji Maya in the Democratic Republic of Congo.

Let me say that I agree with the reports that getting control of

the diamond mining areas only ends the conflict. We have to deal

with several other issues, including sustainable poverty. We must

deal with these tremendous issues that Africa is faced with and

debt relief.

Several African countries have made substantial changes to their

mining laws to try to attract private sector investors. Botswana is

one country that has done just that. On a recent visit in July to

Gaborone, Botswana, I had an opportunity to tour the main operating diamond facility in the heart of downtown. At independence

in 1966, this patch of the Kalahari Desert in Southern Africa was

one of the world’s poorest countries. Botswana, nearly as big as

Texas, now is one of the few real democracies in Africa, richer than

Russia in per capita income and boasting to have the second-fastest-growing economy in the world. Diamond mining was and still

is a primary driver of its boom, and former President Masire and

now President Mogae said at the visit recently that in order for

Botswana to survive long term, though, they need to diversify.

With the passage of the Growth and Opportunity Act this year,

the United States will be importing and trading more with our African partners. The diamond regime needs a major overhaul so it

does not affect our industry or the industries of those countries I

previously mentioned, the countries that are dealing in this industry the way they should not, the conflict diamonds.

19

At the subcommittee hearing, Eli Haas, president of the Diamond Dealers Club, said that ‘‘while there is discussion of the development of a technology to come up with identifying marks or fingerprints to determine particular countries of origin of diamonds,

no such technology is currently available.’’ I find it hard to believe

that the central selling organization of DeBeers, an organization

that Botswana supplied over $2.05 billion to last year and whom

South Africa supplies over $850 million, cannot develop the technology to mark the origin of diamonds.

New diamond fingerprint technology is being developed in consultation with the Royal Canadian Mounted Police. The RCMP

states that the potential difficulties in applying the technology are

reduced, however, by the fact that the bulk of the rough diamonds

trade is centralized in only two organizations and two locations, the

HRD in Antwerp and DeBeers’ CSO in London.

In conclusion, I agree that there is a need to be sure that these

rebel groups cannot continue to acquire diamonds and sell them to

fuel home-grown wars. Also, we need to have the fact that proliferation in diamonds and other mercenary groups who are also

benefitting, like Executive Outcomes and Sandline, who are mercenary groups who also get their pay from the diamond industry.

This all must end.

I would just propose, one, a permanent independent international standards commission should be created under the United

Nations in order to establish and monitor codes to regulate the

global diamond industry, and a more effective auditing system is

desperately needed to control where the flow of these diamonds

come from. Presently, the CSO audits itself. It needs to have external auditing.

Thank you, Mr. Chairman. I appreciate this opportunity.

[The prepared statement follows:]

Statement of Hon. Donald M. Payne, a Representative in Congress from the

State of New Jersey

Good morning. Thank you Mr. Chairman for allowing me to present my testimony

today before this Committee. As the Ranking Member of the Subcommittee on Africa of the Committee on International Relations, the issue of conflict diamonds is one

that I have been concerned with for many years now. The Subcommittee on Africa

held a hearing entitled, ‘‘Africa’s Diamonds—Precious, Perilous Too?’’ on May 9th

of this year. At that hearing, we heard from a number of witnesses including Mr.

Nchakna Moloi, Special Advisor to the Minister for Minerals and Energy of the Republic of South Africa, and Ms. Gooch, Director from Global Witness. We extended

an invitation to the representative from De Beers but they declined our offer to participate.

I wanted to participate in this hearing for a couple of reasons but mainly to bring

attention to the issue of dirty or conflict diamonds. I am very concerned, however,

that the legitimate markets of Botswana, South Africa, and Namibia that depend

almost excessively on the diamond revenues to sustain their local economies, do not

experience backlash from the boycott of illegitimate diamonds of Sierra Leone, Angola and the Democratic Republic of the Congo.

As you already know, the Revolutionary United Front, a brutal rebel army, has

committed egregious violations of human rights by maiming, injuring and killings

many of the innocent men, women and children living in Sierra Leone. The RUF

receives its revenues from neighboring countries but the commodity driving the war

comes from diamonds within the country. The rich-diamond areas of Kailahun,

Kenema and Bo are controlled by the RUF and the so-called West Side Boys. Similar to Angola, I am pleased that the United Nations passed a resolution [5 July

2000] banning the sale and exportation diamonds from being bought from Angola’s

UNITA’s, Sierra Leone’s RUF and hopefully one will be introduced that condemns

Zimbabwean soldiers excavation into Mbuji Mayi. Let me say that I agree with the

20

reports that getting control of diamond mining areas only ends the conflict; it is not

a catalyst for real democratic change. That requires a great deal more.

Mining is the most important economic sector in several African countries, and

it is vital to the economies of many others. For example, the minerals sector accounted for 10 percent of South Africa’s gross domestic product and 51percent of its

export earnings. Several African countries have made substantial changes to their

mining laws to attract private-sector investment. Botswana is one country that has

done just that. On a recent visit in July to Gaborone, Botswana, I had an opportunity to tour the main operating diamond facility in the heart of downtown. At

independence in 1966, this patch of the Kalahari Desert in Southern Africa was one

of the world’s poorest countries. Botswana, nearly as big as Texas, had 2 paved

roads, one public secondary school and life expectancy for its people of 40 years.

Now it is one of the few real democracies in African—richer than Russia in per capita income and boasting to have the second-fastest economy in the world. Diamond

mining was and still is the primary driver of its boom and former President Sir

Ketumile Masire and now President Festes Mogae—told me during my visit—in

order for Botswana to survive long term, we need to diversity our economy from

being overly dependent on our mineral revenue. He said that he understood that

nations in which a single mineral dominates production have proven especially vulnerable to cyclical drops in world prices.

According to a recent survey by the Mineral commodity, 25 percent of African cobalt, the main substance in diamonds, is imported to the United States. With the

passage of the Growth and Opportunity Act this year, the U.S. will be importing

and trading more with our African partners. The diamond regime needs a major

overhaul so it does not effect our industry and the industry of the countries I previously mentioned. At the Subcommittee hearing Eli Haas, President of the Diamond Dealers Club, said that ‘‘while there is discussion of the development of a

technology to come up with identifying marks or fingerprints to determine particular countries of origin of diamonds, no such technology is currently available.’’

I find it hard to believe that the Central Selling Organization (CSO) of De Beers,

an organization that Botswana supplied over $2.05 billion to last year and whom

South Africa supplies over $850 million can not develop the technology to mark the

origins of the diamonds. New Diamond fingerprinting technology is being developed

in consultation with the Royal Canadian Mounted Police (RCMP). The RCMP state

that the potential difficulties in applying the technology are reduced, however, by

the fact that the bulk of the rough diamond trade is centralized in only two organizations and two locations, the HRD in Antwerp and De Beer’s CSO in London.

In conclusion, I would like to submit for the record the testimony of Ian Smillie

from Partnership Africa Canada. I agree that there needs to be oversight from rebel

groups acquiring diamonds fields to fuel their home grown wars and also we need

oversight from the proliferation of diamond revenues to pay international security

firms such as Executive Outcomes and Sandline, mercenaries groups operating in

Africa. This is short-term. In the long-term, the international community must establish:

• A permanent Independent International Standards Commission should be created under the United Nations in order to establish and monitor codes to regulate

the global diamond industry and.

• A more effective auditing system is desperately needed. Presently, the CSO audits itself.

Thank you once again Mr. Chairman for allowing me to testify before this Committee today.

Chairman CRANE. Thank you, Mr. Payne.

Ms. McKinney?

STATEMENT OF HON. CYNTHIA A. McKINNEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Ms. MCKINNEY. Thank you, Mr. Chairman, Ranking Member

Levin, other members of the committee. I want to thank you for

scheduling this very important hearing on the role diamonds play

in the conflicts of Sub-Saharan Africa. I would also like to thank

Congressman Hall for his leadership, as well, in introducing the

21

Consumer Access to a Responsible Accounting of Trade Act, or as

many of us know it, the CARAT Act, or the Blood Diamond Bill.

As the ranking member of the Human Rights Subcommittee on

the International Relations Committee, I fully support the intentions to implement a coding system that would stop the illicit diamond trade. With this, the diamond’s origin can be certified in

order to sever the funding link that has allowed mercenary groups

and so-called rebel groups in Sierra Leone, Angola, and elsewhere

to enrich themselves and commit gross abuses against governments

and unarmed people.

The illicit diamond trade has assisted a few bad men to create

anarchy and chaos on the African continent, but it has made all of

us complicit in the crimes against humanity and the suffering that

these men create. In order to break that complicity, we need a

prompt review of U.S.-Africa policy. We need to pass Tony Hall’s

bill and we need to implement sanctions against countries and individuals who have already been named as diamond traffickers.

I would also like to ask the committee to seriously consider action against diamonds that are certified as having come from Liberia, as well. While Liberia has not been the subject of any U.N. Security Council resolutions or reports, it is physically impossible for

Liberia to produce the diamonds that it says it does. It is clear that

Sierra Leone’s diamonds are being laundered through Liberia and

on to the legal market and then to our jewelry, most likely right

here to the United States, since the U.S. consumes two-thirds of all

the diamonds produced.

In the Congo, forces allied with Uganda and Rwanda have occupied nearly half that nation, including the Congo River city of

Kisangani, a major trading center for the diamonds pulled from the

surrounding jungles. The battle is for Mbuji Mayi, the capital of

the southeastern province of East Kasai and the center for Congo’s

diamond mining.

In Angola, sanctions busting led to a report released by the

United Nations panel on March 15 carefully documenting the ways

in which UNITA has been able to circumvent the U.N. sanctions

against its trade of diamonds extracted from UNITA-controlled

areas in Angola. We all know the objectives of UNITA, to foment

chaos in Angola and render it ungovernable. They pretty much

were able to do that due to their trade in illicit diamonds. They

even went so far as to shoot down U.N. planes carrying individuals

committed to making peace.

The resultant Fowler Report of the United Nations Security

Council, named after Robert Fowler of Canada who led the investigation team, took the bold step of naming names of individuals

and countries that were sanctions busters. Some of the sanctions

busters are our allies. If we were really serious about the diamond

trade, our leadership could make a difference, and we should lead

the effort to implement the Fowler recommendations, not to just

study them. People are losing their homes and their lives while

this administration studies. Ambassador Harold Jeter acknowledged support for the Fowler recommendations, yet to my knowledge, not much beyond that has been done to implement them.

U.N. Secretary Robert Fowler’s report recommends that anyone

trading in illicit diamonds will be expelled from the industry and

22

that any country knowingly involved in smuggling will lose its export accreditation. Under the proposal, all rough diamonds are to

be exported in sealed packages certified by the authorities in exporting nations and verified by a new international diamond council, made up of governments, industry, and non-governmental organizations.

At the World Diamond Congress, which took place in Antwerp,

Belgium, in July, the International Diamond Manufacturers Association and the World Federation of Diamond Bourses agreed to establish a system of certificates of origin to identify the provenance

of diamonds.

The United States and Europe must also begin bilateral and

multilateral discussions with Israel, a leading destination for the illicit diamonds. The U.S. must also show leadership and act more

swiftly against other countries mentioned in the Fowler Report.

Countries such as Burkina Faso, Togo, and Rwanda were named

in Fowler’s report as being involved in the illegal trading operations with Mr. Savimbi’s forces.

Also, another important move in the right direction that was

thwarted was the British move to deny the State Controlled Corporate Entity in which the Democratic Republic of Congo and

Zimbabwe attempted to form an autonomous, State-owned, joint

venture to market independent of anyone else’s control Democratic

Republic of Congo’s diamonds. I view this as an effort to further

entrench the current State and non-State actors and to deny African governments the right to control their own diamonds.

I would like to commend Namibia, a nation that is doing things

right. The first thing they did was to deny the mercenary companies a foothold in their diamond industry, and as Congressman

Hall has pointed out, we owe passage of this bill to those who depend on the legitimate trade in South Africa, Botswana, Namibia,

and who will be hurt by a consumer backlash against the entire diamond industry.

Why should we care that Africa is being ravaged by war as we

speak? Because we bear a good deal of the responsibility for what

is happening there. The diamonds that we wear to adorn our bodies and the oil that we pump into our SUVs has a direct bearing

on the quality of life that someone in another part of the world in

some far-away place. We do not need to hurt people or to allow our

allies to hurt people to have diamonds or oil, but too often we do.

I know we can do better and we must.

Finally, I would like to call your attention to a very important

book that details our Africa policy during the Clinton administration. It is explosive in its content and in its accuracy, from my

point of view. I would commend it to all of you and hope that you

would purchase it and read it personally and then move to change

that which is wrong in our policy and save that which is right. The

book is Genocide and Covert Operations in Africa from 1993 to

1999 by Wayne Madsen, just recently published.

Diamond certification is an important step in the right direction

to stem the tide so innocent Africans will not continue to die. Making this bill the law of our land is an important step in the right

direction.

Thank you very much.

23

[The prepared statement follows:]

Statement of Hon. Cynthia A. McKinney, a Representative in Congress from

the State of Georgia

Mr. Chairman:

Let me begin by thanking the leadership of the Ways and Means Trade Subcommittee for scheduling this important hearing on the role diamonds play in the

conflicts of sub-Saharan Africa.

I am pleased to give testimony today with this distinguished bipartisan panel who

are imploring you to take decisive action to stem the entry into this country of illicit

or ‘‘blood diamonds.’’

I would also like to thank Congressman Hall for his leadership in introducing the

Consumer Access to a Responsible Accounting of Trade Act, or as many know it,

the CARAT Act; or the ‘‘Blood Diamonds’’ Bill.

I fully support his intentions to implement a coding system the would stop the

illicit diamond trade. With this legislation, a diamond’s origin can be certified in

order to sever the funding link that has allowed mercenary groups and so-called

rebel groups in Sierra Leone, Angola, and elsewhere to enrich themselves and commit gross abuses against governments and unarmed people.

The illicit diamond trade has assisted a few bad men to create anarchy and chaos

on the African Continent. But it has made all of us who fail to act complicit in the

crimes against humanity and the suffering that these men create. In order to break

that complicity we need a prompt review of US Africa policy, we need to pass Tony

Hall’s bill, and we need to implement sanctions against countries and individuals

who have already been named as diamond traffickers.

I would also like to ask the Committee to seriously consider action against diamonds that are certificated as having come from Liberia as well. While Liberia has

not been the subject of any UN Security Council Resolutions or reports, it is physically impossible for Liberia to produce the diamonds that it says it does: it is clear

that Sierra Leone’s diamonds are being laundered through Liberia and onto the

legal market and then to our jewelry. Most likely, right here to the United States

since the US consumes two-thirds of all the diamonds produced for jewelry.

In Angola, sanctions-busting led to a report released by a United Nations panel

on March 15th of this year carefully documenting the ways in which UNITA has

been able to circumvent the U.N. sanctions against its trade of diamonds extracted

from UNITA-controlled areas in Angola. We all know the objectives of UNITA: to

foment chaos in Angola and render it ungovernable. They pretty much were able

to do that due to their trade in illicit diamonds. They even

went so far as to shoot down UN planes carrying individuals committed to making

peace.

The resultant Fowler Report of the United Nations Security Council, named after

Robert Fowler of Canada who led the investigation team, took the bold step of naming names of individuals and countries that were sanctions busters.

We should lead the effort to implement the Fowler recommendations, not just to

study them. People are losing their homes and their lives while this Administration

studies.

U. N. Secretary Robert Fowler’s report recommends that anyone trading in illicit

diamonds be expelled from the industry and that any country knowingly involved

in smuggling lose its export accreditation.

Under the proposals, all rough diamonds are to be exported in sealed packages

certified by the authorities in the exporting nations and verified by a new international diamond council, made up of governments, industry, and non-governmental

organizations.

Some of the sanctions-busters named by Ambassador Fowler are our allies. If we

were really serious about the diamond trade our leadership could make a difference.

The U. S. must show leadership and act more swiftly against all the countries

mentioned in the Fowler Report including Burkina Faso, Togo, and Rwanda who

were named in Fowler’s Report as being involved in illegal trading operations with

UNITA’s Jonas Savimbi.

In the Congo, Uganda and Rwanda have occupied nearly half of that nation including the Congo River City of Kisangani, a major trading center for the diamonds

pulled from the surrounding jungles. The battle now rages for Mbuji-Mayi, the capital of the southeastern province of East Kasai and the center for Congo’s diamond

mining.

Rwanda is ‘‘running’’ diamonds looted from Congo and Angola and wreaking havoc

on the people of Eastern Congo in reckless pursuit of its own policies, encouraged

24

by the United States and the international community, as we all stand and do nothing.

At the World Diamond Congress, which took place in Antwerp, Belgium in July,

the International Diamond Manufacturers’ Association and the World Federation of

Diamond Bourses agreed to establish a system of certificates of origin to identify

the provenance of diamonds.

I would encourage them to move swiftly or a boycott of all diamonds might occur.

I note that DeBeers is already running ads to encourage Christmas diamond purchases.

The United States and Europe must also begin bilateral and multilateral discussions with Israel a leading destination for the illicit diamonds. The sad fact is that

diamonds from Africa have helped to build and enrich the cities of Antwerp, Brussels, Tel Aviv, and New York. Yet Africans remain hopelessly impoverished and are

even going backward. Something is terribly wrong with this industry. And that

should be addressed too.

Africans should control their precious resources. But the West actively thwarts

such efforts. For example, an important move in the right direction was recently

halted when the British refused to list on their stock exchange a joint venture between Zimbabwe and Democratic Republic of Congo so that Congo could market its

diamonds independent of anyone else’s control.

I view this blockage as a direct effort to further entrench the current State and

non-State actors and to deny African governments the right to control their own diamonds

Chairman CRANE. Thank you, Ms. McKinney.

The Customs Service has stated that it is impossible to administer the CARAT Act, which requires a certificate of origin where

the diamond was mined, given the amount of transshipment that

occurs in Africa. Could you please comment on how country of mining can be traced so the requirement is enforceable, to one and all?

Mr. HALL. I heard that argument about a year ago and I heard

that argument mostly from diamond dealers and DeBeers themselves. They kept saying it the whole year. We cannot do this. We

cannot do this. It is impossible. It is very interesting, at the Antwerp meeting of a few weeks ago of which I was at, they passed

this global certification program which pretty much says that they

can do it and they can do it through a process of once the legitimate diamonds leave the country, they are sealed, they are certified, they are entered, and they stay in this packet. I cannot explain every aspect of it, Mr. Chairman, but the fact is that they can

do it. They denied it all year and said it cannot be done, but it is

very interesting, they are all saying, or a lot of them are saying

that they can do it, and that is what they passed in Antwerp.

These are the diamond dealers of the world.

So the fact is that it can be done and it should be done. I do not

know why we cannot do it, especially on rough diamonds. If I

looked at your shirt and the suit that you are wearing today, the

cheese that you are going to eat, I know where that is coming from

because it is marked. We can mark diamonds. Because we buy 65

percent of all the diamonds in the world here in this country, we

ought to have a right to say, where did this diamond come from?

We are not talking about every little diamond, because that is impossible. We are talking about the rough diamonds that are

chopped up into pretty sizeable diamonds.

Yes, I believe it can be done. I believe that technology is coming.

And I know that diamond dealers believe this because they passed

it in Antwerp.

25

Chairman CRANE. We will later, after you folks, have William

Wood, who is the Principal Deputy Assistant Secretary of International Organization Affairs at the Department of State, testifying

after you folks. Someone else here, Miles Harmon, is the supervisory attorney advisor with the U.S. Customs Office. So I would

hope that you folks might, if you are not under tight time constraints, have a chance to at least talk to them on that issue to try

and resolve it.

Mr. WOLF. Mr. Chairman, on that, we have a paper, too, called

‘‘Possibilities for the Identification, Certification, and Control of

Diamonds,’’ which we would like to submit for the record.

Chairman CRANE. Absolutely.

[The attachment is being retained in the Committee files.]

Mr. WOLF. And also, as I made the point, in 1998 in Liberia, whose natural resources would only allow the exportation of $10

million of diamonds, they exported $297 million. So the people who

bought the $287 million knew that they were buying conflict diamonds, but I will just submit this for the record, Mr. Chairman.

Chairman CRANE. Very well.

Ms. MCKINNEY. Mr. Chairman, I would also like to submit some

additional paperwork for the record. Studies have been done by

Global Witness that talk about bar coding, and also I would like

to submit the Fowler Report with its recommendations to the

record, as well.

Chairman CRANE. Without objection, so ordered.

[The information was not received at the time of printing.]

Mr. PAYNE. Mr. Chairman, the work that is being done by the

Canadian Mounted Police, we are going to try to get the origin of

that and have that submitted also for the record.

Chairman CRANE. Yes, indeed.

[The information was not received at the time of printing.]

Chairman CRANE. Mr. Levin?

Mr. LEVIN. Thank you, and thank you so much for your testimony. I think it would be helpful if in the next few days, as soon

as we can get into this, with all the other work that is before us,

if you would work with us to work out the issue that Mr. Crane

has raised. As I understand the legislation, it would start a certification process before the Antwerp or other public/private proposal

is complete. So I think we need to discuss the feasibility of that.

You need to help us work through that. That is the first issue. If

we can do that, it would be highly necessary and valuable.

Secondly, I think it would be useful if you could work with some

of us and USTR relating to the question of WTO consistency, because that has been raised at least indirectly relating to your bill.

So let us work in the days ahead on those two key issues.

I do not believe that anybody can challenge the need for action.

I do not think anybody can challenge the descriptions that you

have given so graphically and to others as to what is going on in

Africa relating to this. I think that is unchallengeable. It simply

lays down before us the task of determining what we can do quickly, feasibly, effectively. So let us work together on those issues as

intensively and intensely as we can.

Mr. HALL. Mr. Levin, I think all of us here at the table are very

willing to sit down and work with all of you on this piece of legislaVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00029 Fmt 6631 Sfmt 6602 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
26

tion. Nothing is in concrete here. Actually, the bill, according to my

opinion, has too many waivers in it. I think there are too many

outs in it. I would make it much tighter than what it is if I thought

we could pass it. This is a piece of legislation that has waivers for

the President and the Secretary of Treasury and they have waivers

to be able to overlook the certification problem if, in fact, the technology is not there.

As far as the WTO, none of us here, especially me—I am not an

expert relative to the WTO, how this affects it. I have to leave that

up to the trade experts, yourself and people on this committee, others. But failure to act on this and failure to act and to implement

the Antwerp agreement will be, I think, disastrous for the diamond

industry. I really believe that because there will be a consumer

boycott, in my opinion, if we do not act on this.

So this bill has a lot of waivers. It has too many as far as I am

concerned, but I am willing to go along with it to get something in

the record to start to stop the flow of some of these conflict diamonds.

Mr. LEVIN. Let us work on it. We are going to have a vote, I

think, fairly soon, and then the marriage penalty, and we probably

could not resolve these issues today, but I think your testimony

makes it clear we have to confront them and as quickly and as effectively as we can.

Mr. Payne?

Mr. PAYNE. Yes, Mr. Chairman. Let me just reiterate what we

have all said. They are the countries of South Africa, Botswana and

Namibia, that depend on this industry that are doing the right

thing. They are very, very concerned. As I indicated, I went to Botswana and the overriding discussion with the president was the

fact that if there is a boycott on diamonds, already he is hit with

an AIDS pandemic and trying to put resources in that, but he said

if there is a boycott on diamonds, they are really right back down

to where they were 40 years ago.

So we are not opposed to diamonds. They claim they are a girl’s

best friend. I do not bother with them. But the fact is that we have

got to separate them. We saw what happened in the furs. We do

not want that to happen. We owe it to the African countries that

have this resource to be able to have a clean commodity.

And secondly, it is the most controlled industry in the world. Diamond prices are controlled, as you know, because the number of

diamonds that are allowed to come out on the market is controlled

by just one or two or three organizations. That is why the price of

diamonds never varies. It is not like OPEC. They do not go up and

down. They stay the same. They determine how many they are

going to put out, and if they are not selling, they simply do not put

any more out. They just store them for decades until the time

comes that they will buy them.

So I believe that there is such an internal control that there can

be something, and if we push this, then we see the industry tends

to step forward and come up. They know best what can be done.

I think this would be a catalyst to having them do the right thing.

Mr. LEVIN. Thank you. Well said. Thank you very much.

Mr. RAMSTAD. [presiding]—I believe I am next. I have been handed the gavel and I believe I am next in the line of questioning. I

27

want to make a couple of comments and then ask one question before yielding to my friend from Louisiana.

First of all, I want to state for the record my deep respect for all

four of you. No members of Congress have done more to further the

cause of human rights than the four of you sitting at this witness

table today and I applaud you for that.

The horrific acts of brutality that are occurring in Sierra Leone

and other parts of Africa are unspeakable crimes against humanity, obviously against innocent people who happen to be in the

wrong places at the wrong time and something that concerns or

should concern not only every member of Congress but every citizen of this country and of the world.

I was also, secondly, encouraged by the summary statement of

Chairman Crane when he said conflict diamonds are not forever.

I also share the concerns raised by the ranking member, my good

friend Mr. Levin, and Chairman Crane as to the—which is the

same concern of the administration—how we are to enforce this

proposal.

Let me just ask any of the members of the panel for my edification. I think there is an education job that needs to be done here.

With respect to rough diamonds, Tony, you mentioned that there

are means to identify and certify. Are there geological markers that

differentiate diamonds mined in different parts of the world as far

as rough diamonds are concerned? I really am ignorant as to

whether there are geological markers or how exactly are they to be

identified and certified.

Mr. HALL. You should look at the Antwerp agreement where

there would be a global certification, that once the diamonds came

from a country and the government that we recognize that is legitimate, it is something that they will declare for their country. These

would be sealed. I am not sure how they would seal it. They would

seal it in an envelope or some kind of container where it could not

be broken and it would be registered. These would be legitimate

diamonds. As they find their way to either Antwerp or Israel, et

cetera, then they would be cut up and the certificate would follow

it.

Once you cut and polish a diamond, there is no way you can tell

where it came from. Some diamond dealers can tell you on the

rough diamonds pretty much the area that these diamonds might

have come from, but you cannot depend on that, not at all.

Mr. RAMSTAD. Is this a process——

Mr. HALL. They can be marked by lasers. There are people that

are working on it in Canada, as I understand from Mr. Payne’s testimony, from my own testimony, that they are working on technology to market. That technology is probably not there yet. But

even before you market, it can be done. If it could not be done, they

would not have passed that resolution, that plan of action in Antwerp a few weeks ago.

Ms. MCKINNEY. If I could add to that, we had testimony, I believe it was in the Africa Subcommittee, and Donald, you can help

me on that, on this issue. There was testimony from South Africa,

Charmian Gooch, I believe is the woman, from Global Witness who

spoke specifically to the issue of the geological indications of the origin of a diamond. That is why I want to make all of their reports

28

available to the committee, because it is my understanding that

there are, indeed, ways with geological markings to determine

whether or not a diamond is from South Africa or Namibia or Sierra Leone.

Mr. RAMSTAD. This agreement that you are describing, is this the

same proposal to track the source of diamonds that the World Diamond Congress adopted? Is that the same proposal?

Mr. HALL. Yes.

Mr. RAMSTAD. That is the Antwerp agreement?

Mr. HALL. Yes.

Mr. RAMSTAD. Okay. Mr. Payne?

Mr. PAYNE. Also, about two years ago, on one of my trips to

South Africa, I met with one DeBeers official, and although he indicated it was an informal meeting and discussion, he indicated that

there are ways that they believe you can mark somehow the bulk

of them. Like I said, there is new technology. They call it fingerprints. It is too technical for me, too. I am still on my AOL. But

they claim they have really a lot of new possible developments.

My point is this, as I indicated. It is a most controlled business.

They have ways of being able to know exactly the weight of diamonds. I went to a diamond facility run by the government of Botswana. You had diamonds all over a bench that was almost as long

as this. They weigh them when they come in and they weigh them

when they go out and bells simply ring because the weight remains

the same. It is just amazing. So they have evidently done a lot with

diamonds that we do not know about and I think that this is the

challenge to them. If they want to preserve this controlled economy

that they have and has been good to them, then I think that they

will come forth.

Mr. WOLF. Mr. Ramstad, very briefly, there is a book, following

up with what Ms. McKinney said, called The Genesis of Diamonds

by Alpheus Williams. In it, the book gives a detailed analysis of

diamonds from the production of different mines in South Africa

and demonstrates the level of detailed information that can be

gathered on surface features. Also, as Mr. Hall said, there is a

waiver in the bill that if it is not available, there is a waiver.

Mr. RAMSTAD. Speaking of bells ringing and going off, I want to

get Mr. Jefferson’s questions in so this panel can be excused before

we go to vote.

The enforceability issue and then the WTO question that Mr.

Levin raised, I think those are the two issues, and you have gone

a long way certainly in explaining the enforceability aspect of this

legislation.

Let me now yield to my friend from Louisiana, Mr. Jefferson, and

then following Mr. Jefferson’s line of questioning, we will dismiss

this panel and recess to go vote.

Mr. JEFFERSON. I thank you, Mr. Chairman. I want to ask my

colleague, Don Payne, a question. All of us have seen the suffering

that goes on because of these diamonds, which we call conflict or

blood diamonds, whatever. The big issue is what to do about it.

How can we really step in and provide an effective answer or an

effective solution to it?

One of the concerns is how does it affect the countries that have

the clean diamonds? How does it affect Botswana and South Africa

29

and so on? I want to know, in your talks with them on your recent

visit, how do they feel about this legislation? Do they want us to

go forward with this? Do they think it presents no risk for them

or do they think it provides a remedy for their countries?

Mr. PAYNE. Yes, that is a very good question. One of the purposes for our visiting and having discussions with the leaders of

the country was to find out how do you really feel about this.

Festes Mogae, who was elected last year, as you know, Botswana,

the most stable government, they have had because of diamonds

about a billion dollars in surplus almost over a decade. They have

had a surplus each year because of that and they have been very

frugal in the manner in which the government has been spending

money in a planned way.He is extremely concerned about the fact

that people are saying diamonds are rebels’ best friends. Now, if

you use a general statement like that, that simply means that all

diamonds tend to be bad diamonds. So they, of course, are not

aware of exactly what can be done, but they really want to see

their diamonds continue to move forward and that there be some

distinguishing way that their diamonds can be segregated from

those blood diamonds.

So I could speak very specifically about President Mogae, who

once again last week at the millennium, I had an opportunity to

talk to him about this issue, extremely concerned, probably the

number two issue in his country because the AIDS pandemic, he

says, is number one. But this is something that he definitely wants

to see something happen. He does not have the answer, but he

knows that his diamonds are clean, are good, it is helping his country along. He wants his diamonds to be separated from those Sierra Leonean, Democratic Republic of Congo, and Angola diamonds.

Mr. JEFFERSON. Does he support the approach that the bill takes

or supporters take or the U.N. takes or does he support the selfregulation that is going on with Antwerp?

Mr. PAYNE. He simply supports the concept in general. I am not

sure that he has the details of the legislation, and Tony may know

better than that, but we may ensure that those embassies do get

copies of the legislation.

Mr. JEFFERSON. Mr. Hall?

Mr. HALL. Let me just say that this piece of legislation really

protects legitimate diamonds, diamonds coming from Botswana,

South Africa. As a matter of fact, that is pretty much what the

Antwerp agreement is, that legitimate diamonds coming into the

various diamond centers, they will be protected. What they are trying to stop is the conflict diamonds.

I want to reiterate again, if we do not pass something and if the

diamond dealers do not implement the plan they just agreed on a

few weeks ago in Antwerp, there will be a consumer boycott and

people will ask the question, where is that diamond from? Countries like Botswana, South Africa, Namibia, legitimate diamond

dealers in our own country, will be affected. These are legitimate

businesses. They will be affected in a very adverse way.

So I am saying that there are consumer groups, consumer boycott groups that are ready. We must pass something and we must

implement that plan that they passed in Belgium or we will see a

30

boycott, and we do not have to worry about whether this bill is

technically correct or not because it is all over. I mean, it will be

a disaster for the diamond business.

Mr. JEFFERSON. Frank, I want to ask you a question, if I could,

about the U.N. resolution. What is happening with that? The U.N.

passed it. What are they doing to enforce it, because your bill calls

for the Congress to pass the bill to pick up the U.N. legislation, the

U.N. sanctions and so on. What is happening under that provision?

How is it working?

Mr. WOLF. I think unless the United States participates actively

by passing something like Mr. Hall is talking about, for all practical purposes, it is just not going to work. Now, I have been supportive of the U.N. effort. I have been supportive of the U.N. effort

with regard to the peacekeepers in Sierra Leone. Unfortunately,

the Congress has not seen that. But the U.N. has been ineffective

in even dealing with peace in Sierra Leone or getting arms cut off.

So the resolution is interesting and it is helpful, but until the

United States, which is 65 percent—two-thirds of every diamond

sold in the world is sold right here in the United States—until we

act, frankly, I think it will not be very, very effective.

Ms. MCKINNEY. Basically, the United Nations is studying, as is

this administration, studying. But I would just like to add further

to what my colleague Tony Hall has said, and that is that there

are groups out there—we have been working with them—who are

ready to do a boycott, and a boycott, I believe, is the last thing that

any of the legitimate, the leaders of the legitimate diamond industry and countries want.

Mr. JEFFERSON. And you believe that if we do not act this session

on this bill, that this boycott will occur? That is what you are saying?

Ms. MCKINNEY. Absolutely. That is my opinion.

Mr. JEFFERSON. Does this bill, Tony, does it have a companion

in the Senate? Is it moving somewhere over there? Does this bill

have a companion in the Senate? Is it moving in the Senate?

Mr. HALL. Yes. I do not know if the bill has been introduced, but

we do have a couple Senators very interested in it. Senator Gregg

originally put together a much tougher piece of legislation that

Frank and I favored, added it to the bill. That is when we had the

debate on the floor with Mr. Crane, when he agreed to have the

hearing. So this bill is not a perfect bill. To me, it has too many

waivers. If I could, I would make it much stronger. But it will stop

many conflict diamonds, not all, because this sets up a system for

the first time.

I am very unhappy with our State Department, the way they

have handled this. Before, under Mr. Morrison, they had some people that were very out front on it. But I think they are being very

soft and kind of neutral on this. Mr. Holbrooke has been great. He

has been wonderful. Everybody can be neutral, but if we do not do

something and the Antwerp agreement is not carried out, there will

be a boycott and I think all of us will be very disappointed. I am

not sure I will not be part of it.

Ms. MCKINNEY. I know I will be a part of it, but I would like

to also just recommend once again to the panel the book by Wayne

Madsen, Genocide and Covert Operations in Africa, 1993 to 1999.

31

There, it clearly spells out the role of our own government in this

whole issue.

Mr. PAYNE. I just could not reiterate it any more. I think it is

essential that we do something. We have been, as a country, in the

past decade standing on the side of too many issues that if we had

acted—the genocide of Rwanda would not have occurred if we had

moved in and given the green light for something to happen. We

did nothing. We had hearings, four hearings. Genocide was not

mentioned once in the Africa Subcommittee.

So we have a responsibility, because from the Rwanda situation,

the Congo situation was created, and you have spillovers that keep

going. Sierra Leone actually should be a receivership. The U.N.

should come in and actually run the country to put it back like it

is trying to do in Cambodia or something. There is no government.

The diamond people are stronger than the Nigerian forces that

were there. We can win that battle if we have the proper resources,

but we are not going to be able to dilly-dally and send untrained

troops and inadequate numbers in order to secure peace in that

country.

Mr. JEFFERSON. One last thing. Short of this bill passing, given

the time that we have to get this done, do you think some sort of

a statement about this, some sort of, as Tony is talking about, expression by the State Department is helpful in this regard, and if

so, what form should that take?

Mr. HALL. Did you say, Mr. Jefferson, that some kind of a statement from the State Department would help?

Mr. JEFFERSON. No, I was asking you that. I was saying, short

of this bill passing, and there is a decided likelihood that it might

not given the time we have to deal with it, would some expression

from the State Department be helpful, and if so, what form should

it take?

Mr. HALL. I do not think it would be helpful at all. We have been

making statements for a year and a half. I do not think it will do

anything.

Mr. JEFFERSON. You just criticized them for not doing the right

thing, for not saying anything, not doing anything, and I am asking

whether there is anything they can do or say that makes any difference.

Mr. HALL. Unless you have some kind of certificate of origin, unless you have some kind of sense of Congress, unless you do embargoes on these countries that we know are dealing in conflict diamonds, there have been a lot of statements and the statements

have not worked.

Ms. MCKINNEY. The Fowler Report, the report of the Secretary

General on the sanctions busting with respect to UNITA and the

illicit diamond trade that has funneled money and arms into

UNITA, had specific recommendations. My recommendation to the

State Department would be to not just study the Fowler recommendations but to implement them. The Fowler Report went

farther than any other report. It named names. It named countries.

So we know who is helping to launder these diamonds. Put them

on a list and deny them entry into this country. We have not done

that. Freeze their assets. We have not done that. So there are

things that can be done. It is in the Fowler Report and it needs

32

to be done. The State Department needs to do it and stop talking

about it.

Chairman CRANE. [presiding]—I want to thank all of our panelists here for their presentations and we look forward to continuing

working with you. With that, this panel can be excused.

I would now like to ask William Wood, the Principal Deputy Assistant Secretary with our International Organization Affairs of the

U.S. Department of State to come forward and testify. Mr. Wood,

if you could, try and keep your oral testimony to in the neighborhood of five minutes. Any written testimony will be made a part

of the permanent record and you may proceed.

STATEMENT OF WILLIAM B. WOOD, PRINCIPAL DEPUTY ASSISTANT SECRETARY, INTERNATIONAL ORGANIZATION AFFAIRS, U. S. DEPARTMENT OF STATE

Mr. WOOD. I would like to express my thanks to the subcommittee for inviting the State Department to testify on this very

important issue. It is an issue that is a growth industry, if I may

say so, gathering both diplomatic momentum and practical expertise as nations, private sector, and non-governmental organizations

work together to develop an effective way to prevent some of nature’s most beautiful objects from being used for some of mankind’s

most hideous purposes.

My written testimony details the history since, in essence, 1998

of U.S. efforts in this regard. The United States is proud to really

have been a leader in both the theory and in the implementation

of measures to block the illicit trade in diamonds and their use to

support insurgencies against legitimate governments in Africa. We

have mentioned here the resolutions in the Security Council. The

United States supported those strongly. We have mentioned the

Antwerp meeting. The United States supported that strongly. We

have mentioned the Kimberley process. The United States supports

that strongly and, indeed, will be attending the ministerial level

meeting convening in South Africa next week, which is the next

key step in this process.

The administration is committed to working with governments,

private industry, and non-governmental organizations to end the

large-scale diversion of internationally traded diamonds by unlawful, violent, and destabilizing elements. We believe we have seen

good cooperation. The diamond industry, both because of its desire

to distance itself from the misuse of the product and to avoid being

identified with that misuse, has actively participated. We believe

that non-governmental organizations, several of which are going to

be testifying later today, have provided both impetus and technical

insight into the issue.

We believe that the ministerial in South Africa next week, which

will build on the proposals developed in Antwerp, will be an important step in laying the groundwork for an international regime creating certificates of origin that are reliable and that are effective

in controlling the illicit trade in diamonds by insurgent movements.

Mr. Chairman, my formal testimony started out by noting that

the illicit trade in rough diamonds bears some resemblance to the

illicit trade in narcotics. The most crucial similarity is that in both

33

cases, the illicit trade destroys lives. This is a crucial and tragic situation.

Unlike, unfortunately, the illicit trade in narcotics, the illicit

trade in diamonds exists side by side with a large, flourishing, and

important legitimate trade, and it is very important as we work

through the techniques of restraining and rechanneling the illicit

trade into licit channels that we not damage the legitimate trade,

the legitimate trade which is important to countries like Botswana

in Africa, Namibia, to countries like Israel in the Middle East and

India in Asia, to allies like the Dutch and the Belgians in Europe,

and to our own active legitimate diamond trading industry.

I think I will cut it off there, Mr. Chairman, in the interest of

getting to questions and answers, but the one last thought I want

to leave you with is, the administration is proud of its efforts and

creativity to advance this issue. We believe that diplomatic momentum and practical techniques are building and we continue to continue this effort as we did in the Security Council and we did in

the G–8, both foreign ministers and summit meetings, as we did

in the Security Council summit that occurred last week and as we

will do in South Africa next week.

Thank you very much, Mr. Chairman.

[The prepared statement follows:]

Statement of William B. Wood, Principal Deputy Assistant Secretary,

International Organization Affairs, U. S. Department of State

The Administration has been concerned for some time about the role the illicit

trade in diamonds can play in motivating and fueling conflict, especially in Africa.

Illicit trade in diamonds has played a particularly pernicious role in the internal

conflicts in Angola, Sierra Leone, Liberia, and elsewhere in Africa. Diamonds, like

illicit drugs, frequently are found in isolated regions, bear little or no evidence of

their origin, and embody a high value in a relatively small and concealable volume.

Unlike illicit narcotics, there is a large, legitimate market in diamonds in Africa,

Europe, Asia, and the United States.

As conflicts in Africa proliferated in the mid–1990’s, and especially following the

breakdown of the Luanda Peace Accord in Angola and the resumption of fighting

there, international attention focussed on ways to reduce these conflicts by eliminating the illicit trade in diamonds which fueled these insurgent movements.

To address this problem, the United States and the United Kingdom worked together to launch a series of consultations with leaders from the governments of diamond-trading nations, legitimate private diamond enterprises, and non-governmental organizations.

In June, 1998, the United States supported Security Council resolution 1173

which, inter alia, prohibited the direct or indirect import from Angola of all diamonds not controlled through the Certificate of Origin regime of the Angolan government. Subsequently, with the assistance of Canada, Chairman of the UN Sanctions Committee for Angola, the Security Council explored and approved new steps

to reduce the substantial evasions of sanctions which continued to finance UNITA

operations. This effort still goes on.

This year, following the breakdown of the Lome Agreement which provided a

framework for peace in Sierra Leone, the Security Council acted again. In July,

2000, the Security Council in Resolution 1306 placed a mandatory prohibition on the

purchase of diamonds from Sierra Leone not certified by the government of that

country. Since, at that time, there was no regime for certification of diamonds, the

practical effect was a mandatory boycott on all diamonds believed to originate in Sierra Leone. Subsequent to the UN resolution, the United States participated in a

mission to Sierra Leone with the UK and Belgian governments and the Belgian Diamond High Council and continues to support the government’s efforts to design a

credible and effective certification regime.

We see the effort in Sierra Leone to create a certification system for rough diamonds, based on an improved version of the system used in Angola, as a model for

other diamond exporting countries. These country-specific certification regimes could

then be linked into a network with key importing and cutting and polishing centers

34

in Belgium, Israel, India, and elsewhere, forming the basis for an eventual international certification system for rough diamonds.

As you can see, the effort to halt the illicit use of diamonds to sustain armed conflict is a serious effort and also quite new. We are working hard to develop the techniques and mechanisms to put an end to the misuse of some of nature’s most beautiful stones to serve some of mankind’s most hideous purposes.

We are also working hard to ensure that measures to block the illicit trade in diamonds do not have the unintended effect of damaging the legitimate diamond industry. Botswana, a democratic nation with one of the world’s highest incidences of

HIV/AIDS, is dependent on an active diamond sector for its economic health. South

Africa relies on its diamond sector. Close allies in Europe, such as the Belgians and

Dutch, rely on a healthy, legitimate trade in diamonds for part of their national income. Israel is an active participant in the legitimate international diamond trade.

And the United States, the largest consumer of diamonds in the world, is the home

of a substantial diamond-trading sector. Equally important, nations in crisis such

as Sierra Leone and Angola would benefit enormously if diamonds, now traded illegitimately by insurgents, could be rechanneled through legitimate markets to provide employment, taxable income, and another source of stability for the country.

The Administration is committed to working with governments, private industry,

and non-governmental organizations to end the large-scale diversion of internationally traded diamonds by unlawful, violent, or destabilizing elements. We have seen

good cooperation. The diamond industry, both because of its desire to distance itself

from the misuse of its product, and to avoid being identified with that misuse, has

actively participated. I am pleased to report that the resolution adopted by the Congress of the World Council of Diamonds in Antwerp in July, which Congressman

Hall addressed, constitutes a very constructive initiative to address the problem of

conflict diamonds.

A key element of the evolving U.S. approach has been cooperation with the concerned diamond-producing States in southern Africa, spearheaded by South Africa.

Beginning with the convening of a technical forum in Kimberly, South Africa in May

of this year, the South Africans have led what has come to be known as the Kimberly Process, a series of working group meetings made up of a wide variety of key

governments, industry, and NGOs, which will culminate in a Ministerial meeting

in Pretoria South Africa on September 21. As an active member, the U.S. has

worked to broaden the participation of this group so that it now includes not only

Belgium, but also the other key producing and manufacturing countries, specifically

Canada, Russia, Israel, and India.

The broad proposal which will be discussed at the Ministerial meeting next week

is an international certification system for rough diamonds, building on the systems

in Sierra Leone and Angola. Similar to the industry’s proposal, such a system would

require that all rough diamonds have to be accompanied by a forgery-proof certificate of origin or legitimacy issued by a State diamond authority. Each country

would be responsible for registering its exports and imports in a database to enable

verification and reconciliation.

The key to making such a system effective is to gain the agreement of all countries which trade in rough diamonds to participate in and enforce it. This is where

the Kimberly process has played a critical role in bringing together the major players in the diamond trade. However, we are well aware that we must next move to

a broader inter-governmental forum, possibly under the auspices of the UN, which

engages all the countries which trade in diamonds.

Under such a system, consumers buying a diamond in any jewelry store would

have the assurance that the diamonds they were buying are in fact legitimate, and

are not playing a role in perpetuating devastating wars in Africa.This approach is

in line with our efforts in the Group of 8 which resulted in a call by the Heads of

State and Government this summer for an ‘‘international conference, building on Security Council Resolution 1306 and the ’Kimberly’ process launched by the Government of South Africa, to consider practical approaches to breaking the link between

the illicit trade in diamonds and armed conflict,’’ including a possible international

agreement on certification for rough diamonds.

More recently, in the declaration adopted last week by the UN Security Council

Summit, the Heads of State and Government decided to take resolute action in

areas where illegal exploitation and trafficking of high-value commodities contributes to the escalation or continuation of conflict.

I know all of us wish that we had readily available technology for marking diamonds or determining their origin geologically, but unfortunately that does not

exist. That is why we have turned to a certification system. Nevertheless, we do believe that such technology could be available in another few years and will work to

encourage and support these research and development efforts.

35

We have already achieved a remarkable level of collaboration between governments, industry and NGOs—thanks in large part to the efforts of organizations like

Global Witness—that we would not have dreamed possible a year ago. While we

have some hurdles ahead of us, particularly in getting broader international participation and ensuring compatibility with prevailing international trade obligations, I

am confident that we will overcome the remaining challenges.

Thank you for your interest. I welcome any questions you may have.

Chairman CRANE. Thank you, Mr. Wood.

Customs has stated that it would be impossible to enforce H.R.

5147, the revised CARAT Act, because of the difficulty relating to

the certificate of origin requirement for the country where the diamonds were mined and that there is simply no practical means effectively to enforce this. Can you comment on this? Is H.R. 5147

consistent also with the WTO?

Mr. WOOD. A couple of points there, Mr. Chairman. First of all,

we certainly applaud the dedication, commitment, and energy of

Congressman Hall, Congressman McKinney, Congressman Payne,

and Congressman Wolf in this regard and we have complete sympathy and support for the objectives that gave rise to the legislation you have referred to.

We do, however, believe, as Mr. Levin indicated, that there are

elements of that legislation that may be getting ahead of the international consensus that will be required to make any regime work.

We do have concerns relating to the enforcement and the implementation provisions in that legislation, relating to creation of a

certificate of origin, a regime that is not yet in place internationally, relating to certifications regarding transshipment, which is a

certification that at present there is no technical way to make because there is no technical way to accumulate the information.

We have interests in some of the countries that are mentioned

in Title I. Just to mention one, Ukraine. Ukraine, of course, is on

the Security Council and, indeed, supported the Security Council

resolution banning non-certified diamonds produced in Sierra

Leone. I think that this is a classic illustration of the kind of complexity within the international environment regarding this very

difficult issue. We believe that we can work successfully with

Ukraine as we worked on the Security Council to come up with a

positive regime that will control illicit diamonds and rechannel

them into legitimate channels.

We are not immediately sure that creating a negative list is the

best approach at this time. I do not want to rule it out at some

time in the future. But right now, that is not the direction in which

the international effort is moving. We will, again, know more following the ministerial in South Africa next week.

Regarding the question on the WTO, we are still in the initial

phase of developing a system, so it is difficult to be really precise.

But we are working closely with our trading partners to devise an

approach that will both effectively address the problem of illicit

trade in diamonds and minimize any potential WTO concerns.

For example, by focusing on rough diamonds, we are seeking to

limit the complexity of the certification system to the extent possible and at the same time to limit the universe of countries that

would be directly impacted by the regime. By focusing on a simple,

36

transparent process of certification, we are attempting to ensure

that the system will be non-discriminatory and that it will impose

relatively little burden on exporting and importing countries.The

responsibility for enforcing the system will be vested in sovereign

governments. That is identical with the system used by the United

Nations in which the enforcement of sanctions is vested in sovereign governments acting individually or collectively. Governments will retain the ultimate responsibility for deciding what actions to take.

I would like to go slightly further than that, though, and say the

predominant characteristic of the international discussion on illicit

trade in diamonds right now is one of growing consensus and commitment across sectors by national governments, by private industry, by non-governmental organizations.

Mr. Chairman, I have some experience, indeed, too much experience in supporting sanctions regimes in the U.N. that looked terrific on paper but did not do the job. We think that a regime that

genuinely has wide international backing, that is enforced by sovereign governments, implemented largely by the diamond industry,

and that has governments, diamond industry, and non-governmental organizations as watchdogs can be an effective regime. But

I think that we need to keep pace with the pace of international

dialogue on this subject so that we can come to a regime that meets

all of our criteria and fulfills all of our objectives. Thank you.

Chairman CRANE. Do you see establishing direct trade between

the American diamond industry and legitimate diamond producers

as a practical solution to the illicit diamond trade?

Mr. WOOD. Direct trade, sir?

Chairman CRANE. Direct trade between the American diamond

industry and legitimate diamond producers.

Mr. WOOD. We certainly think that there should be full dialogue

among both the American consumers and the legitimate producers.

I am not sure that we are calling for a, if I understand your question, sir, a reorganization of the industry so to cut out, for instance,

the diamond middlemen in our allied nations of Belgium or the

Netherlands or the diamond cutting industry in India or something

like that, if I understood your question, sir. I would be glad to take

the question and get a fuller response back to you.

Chairman CRANE. Does the State Department intend to take action concerning the U.N. Security Council resolution requiring

member States to prohibit rough diamond imports from Sierra

Leone unless certified by the government?

Mr. WOOD. Absolutely. We are taking steps in two directions.

One, we have got technical experts in Sierra Leone who are helping

them to develop a diamond certification regime that is technically

sound. Right now, there is no such certification regime so the prohibition on certified Sierra Leonean diamonds amounts to a boycott, a mandatory boycott of Sierra Leonean diamonds at the moment.We are trying to assist them to develop a certification regime

and, of course, for our part, the administration will be putting forward implementing regulations to make sure that the United

States adheres to the mandatory provisions of that resolution for

which we voted and which we fully support.

Chairman CRANE. Mr. Jefferson?

37

Mr. JEFFERSON. Mr. Wood, were you in the room a minute ago

when we heard some complaints from members of Congress that

the State Department has done, well, nothing in this area as far

as they are concerned? You take issue with that, I take it, but in

what respect and what has the State Department done in this

area?

Mr. WOOD. Thank you for asking me that question. I do take

issue a little bit with that perspective. The issue of controlling illicit trade in diamonds is a new area. The question of trying to find

effective sanctions to contain conflict, to bolster legitimate governments, and to weaken the rebels and insurrectionists and the brutal elements that are conducting so much violence in Africa and

elsewhere right now is one of the administration’s highest, highest

objectives. We believe that sanctions can be effective, as a way of

putting pressure on the bad guys short of military means, which

is both highest cost, highest risk, and also is likely to have the

most collateral damage. So we think that sanctions are important.We think that creative ways to control the illicit trade in diamonds offers real potential to get at a resource that not only fuels

but also motivates rebellion. It allows these movements to purchase

weapons and it allows the leaders of these movements to amass a

level of personal wealth that in many cases may well be their principal motivation for leading an insurrection. So we think that this

is an important element.Starting in 1998 with the adoption of the

prohibition on purchase of uncertified Angolan diamonds, the

United States began to conduct with the United Kingdom a dialogue with interested national governments, the private sector, and

non-governmental organizations to see how we could make this

more effective. The fact of the matter is, the certification regime in

Angola has not worked all that successfully. It is being strengthened with our assistance. And the international controls over Angolan diamonds that may not have passed through that certification

regime was not effective at all.So we began this dialogue. We

broadened this dialogue, among other places, to the Group of Eight.

The Group of Eight is fairly important because they represent a

block of the principal consuming countries in the world and, therefore, exercise some influence over not only the industry but also the

producing countries, and over a six-or eight-month period, we developed a major proposal within the Group of Eight which was formalized at the foreign minister’s meeting in Osaka in July and endorsed at the head of State level in Okinawa that same

month.Similarly—and that is sort of the formal government-to-government process, with the one addition of our strong support for a

resolution also in July, if memory serves, banning or prohibiting

the purchase of uncertified diamonds from Sierra Leone. I guess

that was June.That is sort of the formal government process. At

the same time, some of our policy planning people, some of our Africa experts, some of our economic experts have been engaged in

parallel discussions of the kind that governments do not very often

have in which you sort of say, look, we all know what the objective

is. We all know that it is a complicated equation. Let us figure out

how we can together, your country, my country, your industry, my

private sector, your non-governmental organizations, our non-governmental organizations, how we can all get together and put toVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00041 Fmt 6631 Sfmt 6602 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
38

gether a regime that is not rhetorical, that does not inflict high collateral damage on either an innocent legitimate diamond industry,

innocent producers, or innocent countries, but at the same time can

have a real impact on the illegitimate, illicit trading of diamonds

to support brutal insurgent armed groups. That process is not complete.

Mr. JEFFERSON. But it is an ongoing process?

Mr. WOOD. The ministerial meeting in South Africa next week,

which is the culmination of the Kimberley process, which has been

a process of working groups meeting over the last several months,

will be another key step. We expect this issue, which was mentioned in the Secretary General of the U.N.’s report to the Millennium Summit, to be discussed in the General Assembly of the

United Nations this fall. This is a live issue. It is one in which the

momentum is growing.

We, frankly, from the State Department’s view, would welcome

a sense of the Congress statement urging further progress or something like that. We are not sure that the specifics contained in

draft legislation on the table right now is going to conform ultimately with the end result of the Kimberley process and the international dialogue. But as is so often the case, there is a genuine

coincidence of objectives in this regard and it is important that we

not allow differences of tactical nuance to undermine what is genuinely a common effort to achieve that goal.

Mr. JEFFERSON. You are saying that the State Department would

welcome urging by the Congress to complete the Kimberley process

and complete the international dialogue between the various countries with respect to these issues?

Mr. WOOD. And to find effective measures to control the illicit

trade of diamonds as it supports insurgent elements. But again,

this would be a declaration of, if I may say so, a common objective

rather than a more specific recipe of measures.

Mr. JEFFERSON. Thank you, Mr. Chairman.

Chairman CRANE. Thank you. Mr. Wood, I want to apologize for

our members not being here, but on the floor right now is being

debated the effort to override the President’s veto of the marriage

penalty tax elimination and for that reason our colleagues are over

there participating.

With that, I want to thank you for your participation and we will

be back in touch with you.

Chairman CRANE. With that, I would now like to convene our

panel from the private sector, Matthew Runci, President and Chief

Executive Officer, Jewelers of America, Inc.; Alex Yearsley, Campaigner, Global Witness, from London, England; Jeffrey Fischer,

President, Diamond Manufacturers and Importers Association of

America; Holly Burkhalter, Advocacy Director, Physicians for

Human Rights; Jack Jolis, President, Rough Diamond Consultancy,

Antwerp, Belgium; and William Boyajian, President, Gemological

Institute of America. Please take seats.

Folks, if you could please contain your oral presentations to five

minutes or less, your written statements will all be made a part

of the permanent record. With that, we will proceed with Mr.

Runci.

39

STATEMENT OF MATTHEW A. RUNCI, PH.D., PRESIDENT AND

CHIEF EXECUTIVE OFFICER, JEWELERS OF AMERICA, INC.,

NEW YORK, NEW YORK, ON BEHALF OF WORLD DIAMOND

COUNCIL

Dr. RUNCI. Thank you, Mr. Chairman, members of the subcommittee. I am Matthew Runci, President and Chief Executive Officer of Jewelers of America, the national association of more than

12,000 professional retail jewelers in the United States. I appear

before you today on behalf of the World Diamond Council, an international body formed in July to rapidly develop and implement a

comprehensive plan to curtail trade in conflict diamonds. Membership of the council is comprised of all segments of the international

diamond industry, producers, manufacturers, traders, and retailers,

as well as financial institutions, governments, and relevant international and civil society organizations.

The WDC is dedicated to the eradication of the trade in conflict

diamonds, allowing the legitimate diamond industry, which handles 96 percent of world rough diamond production and gives employment to more than two million people, to continue the promotion and sale of diamonds as a symbol of love and as an agent

for economic growth and prosperity. A framework for effectively

curtailing conflict diamond trade without adversely impacting legitimate businesses and national economies must, in our opinion,

adhere to six principles.

First, while industry efforts already underway are making and

will continue to make a difference, industry efforts alone will not

be sufficient to end the trade in these products completely. Cooperative and coordinated initiatives between all stakeholders will

greatly improve the prospects for ending this illicit trade.

Second, the origin of individual diamonds cannot be reliably determined by non-destructive analytical means. Contrary to certain

popular misunderstandings, it is not a matter of devising or perfecting a tool for diagnostic measurement. The necessary distinguishing properties are simply not present in the stone from nature

to begin with.

Third, certifying that the origin of a diamond is conflict-free may

only be achieved through the systematic tracking of shipments, beginning with controls in the country of rough extraction. Unless

rough diamonds can first be certified as conflict-free at the time

they are exported from the country of mining, there is no method

by which to verify their origin as conflict-free afterward.

Fourth, a system of tracking rough diamond shipments from

mining sources through cutting centers is ambitious but feasible,

because while the volume of stones produced annually is large, the

number of export and import control points is small.

From that point onward, however, the task of tracking polished

diamonds is neither feasible nor necessary. Fossils of polished

stones are routinely sorted, mixed, and repackaged at each level of

the distribution chain as economics drives the selection and supply

is continually adjusted to meet demand in a way that yields profit.

Diamonds often pass through as many as a dozen hands before

they ultimately reach the retail counter.

Sixth, most diamonds are sold in an undifferentiated manner in

the marketplace. The current trend toward identifying some polVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00043 Fmt 6631 Sfmt 6602 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
40

ished diamonds by a brand name should not be confused with a

system of market controls that would be required to establish a

chain of assurance certifying that diamonds are conflict-free in origin. At this time, in fact, only one or two companies in the world

possess the wherewithal to establish and maintain the requisite

system of controls from the mining source onward, as well as the

trade distribution network required to validate a chain of assurance through to the consumer.

Statutory authority possibly will be required in the United States

in the future to implement necessary controls. However, it is imperative that the provisions of U.S. legislation be fully consistent

with a broad international framework of rough diamond controls.

It is not possible to legislate a national solution to the conflict diamond problem without inflicting significant economic damage on

the diamond and jewelry industries of the U.S., Israel, India, Belgium, Botswana, South Africa, Namibia, and Russia.

Mr. Chairman, a transnational problem requires an international

solution. For this reason, we respectfully request that Congress

defer action on pending legislation until an assessment has been

made of the outcome of the ministerial meeting on this topic scheduled in London in October. At the same time, however, we do propose an international system to control the flow of rough diamonds

and there are four simple points in summation.

First, all polished diamond imports entering the U.S. in commercial quantities would be required by law to originate in countries

that have rough diamond controls in place.

Rough diamond controls should be defined as, second, that all

countries that export or import rough diamonds should have official

import/export offices with data on shipments registered in an international diamond database. Rough diamonds would be sealed in

standardized tamper-proof containers, accompanied by counterfeitproof documentation.

Third, all countries that import commercial quantities of polished

diamonds should adopt legislation requiring certification that imports of commercial quantities of polished diamonds may only come

from countries that have implemented rough controls.

And finally, fourth, all countries should adopt legislation to authorize the criminal prosecution of those who are found to be knowingly dealing in conflict diamonds.

Mr. Chairman, it is imperative that the U.S. coordinate its efforts with other stakeholders in order to ensure that our shared

goal will be achieved. Preemptive U.S. legislation, however well intentioned, will not achieve the desired outcome and will instead adversely impact legitimate diamond economies all over the world

and tens of thousands of small businesses throughout the United

States, while perhaps benefitting only a few large diamond producers who possess the internal capacity to self-guarantee the origin of their products.

Mr. Chairman, let us work together in solving this terrible problem. Thank you.

[The prepared statement follows:]

41

Statement of Matthew A. Runci, Ph.D., President and Chief Executive Officer, Jewelers of America, Inc., New York, New York, on behalf of World

Diamond Council

The World Diamond Council (WDC) is the international body chartered in Antwerp in July by the World Federation of Diamond Bourses and the International

Diamond Manufacturers Association, solely for the purpose of rapidly developing

and implementing a comprehensive plan to curtail trade in conflict diamonds while

minimizing impact on the legitimate diamond industry. Membership of the Council

is comprised of all segments of the international diamond industry—producers,

manufacturers, traders, and retailers—as well as financial institutions, governments

and relevant international and civil society organizations.

The World Diamond Council is dedicated to the eradication of the trade in conflict

diamonds, allowing the legitimate diamond industry—which handles 96 percent of

world rough diamond production and gives employment to over 2 million people—

to continue the promotion and sale of diamonds as the ultimate symbol of love and

as an agent for economic growth and prosperity in stable African democracies such

as Botswana, Namibia, and South Africa.

The Council held its inaugural meeting on Thursday, September 7, in Tel Aviv

to begin implementation of its plan. The main features of the plan, detailed later

in this testimony, include:

1) Establishment of dedicated import/export offices for rough diamonds closely supervised by individual government authorities;

2)Adoption of a uniform international certification system of sealing and authenticating each parcel of rough diamonds prior to export;

3) Monitoring industry wide compliance with ethical codes of conduct that prohibit

the trade in conflict diamonds;

4) Obliging banks, insurance companies, shipping companies and other providers

of auxiliary goods and services to cease business relations with any company or individual knowingly involved in dealing in conflict diamonds;

5) The result of these steps will be to support a chain of assurance for traders

of polished diamonds based on rough controls.

The WDC calls upon the governments of those countries involved in the diamond

trade to enact and enforce the measures described above. The WDC offers its expertise and assistance to governments in drafting appropriate legislation.

In addition the WDC calls on all relevant governments, and the United Nations,

to initiate with utmost urgency an international embargo on the trade in weapons

that provides rebel forces in Africa with the means to wage war.The WDC invites

the UN, governments and NGO’s, in the pursuit of international peace and security,

to examine the role of other natural resources and, most importantly, the arms

trade, in perpetuating conflict in Africa.

Introduction

Mr. Chairman and members of the subcommittee, I am Matthew Runci. the President & CEO of Jewelers of America (JA), the national association of professional retail jewelers in the United States. Our membership of more than 12,000 stores encompasses large national chains such as the Zale Corporation and Sterling Jewelers,

luxury brands such as Tiffany and Cartier, and nearly ten thousand independent

family-owned retail jewelry stores in all fifty States.

I appear before you today on behalf of the newly formed World Diamond Council

(WDC), an international body chartered in Antwerp in July, solely for the purpose

of rapidly developing and implementing a comprehensive plan to curtail trade in

conflict diamonds while minimizing impact on the legitimate diamond industry.

Membership of the Council is comprised of all segments of the international diamond industry—producers, manufacturers, traders, and retailers—as well as financial institutions, governments and relevant international and civil society organizations.

The World Diamond Council is dedicated to the eradication of the trade in conflict

diamonds, allowing the legitimate diamond industry—which handles 96 percent of

world rough diamond production and gives employment to over 2 million people—

to continue the promotion and sale of diamonds as a symbol of love and as an agent

for economic growth and prosperity in stable African democracies such as Botswana,

Namibia, and South Africa.

A list of Council members is appended to this statement as Attachment 1.

The Council held its inaugural meeting on Thursday, September 7, in Tel Aviv

to begin implementation of its plan. The main features of the plan, detailed later

in this testimony, include:

42

1) Establishment of dedicated import/export offices for rough diamonds closely supervised by individual government authorities;

2) Adoption of a uniform international certification system of sealing and authenticating each parcel of rough diamonds prior to export;

3) Monitoring industry-wide compliance with ethical codes of conduct that prohibit

the trade in conflict diamonds;

4) Obliging banks, insurance companies, shipping companies and other providers

of auxiliary goods and services to cease business relations with any company or individual knowingly involved in dealing in conflict diamonds;

5) The result of these steps will be to support a chain of assurance for traders

of polished diamonds based on rough diamond controls.

The WDC calls upon the governments of those countries involved in the diamond

trade to enact and enforce the measures described above. The WDC offers its expertise and assistance to governments in drafting appropriate legislation.

In addition the WDC calls on all relevant governments, and the United Nations,

to initiate with utmost urgency an international embargo on the trade in weapons

that provides rebel forces in Africa with the means to wage war.

The WDC invites the UN, governments and NGO’s, in the pursuit of international

peace and security, to examine the role of other natural resources and, most importantly, the arms trade, in perpetuating conflict in Africa.

The Situation

Legitimate and socially responsible businesses in the diamond and jewelry industries deplore the fact that even a very small portion of the world’s annual rough

diamond production is being used to fuel conflict in Sierra Leone, Angola, and

Congo.

Diamonds are a symbol of love and purity, and most definitely should not be exploited as a means to commit violence. Diamonds stand as timeless symbols of romance, mystery, eternity, beauty, prestige, tradition, purity and rarity. That diamonds have been exploited to enable the purchase of weapons that serve to brutally

extend the suffering of people in parts of Africa is truly appalling to socially responsible business people in this industry.

We must keep in mind that informed estimates today agree that 96 percent of

the world’s rough diamonds come from legitimate sources—that is from mines certified by local authorities. Conflict diamonds—that is rough diamonds illicitly seized

and sold by representatives of rebel movements for the purpose of buying weapons—

constitute an estimated 4 percent of the world’s annual gem production-a share believed to be still declining. See Attachment 2—Conflict Diamonds Estimate Against

Total World Production, 1999.

We must remember too that natural resources like diamonds are in fact morally

neutral. Thus legitimate diamonds—that is 96 percent 0f the world’s annual diamond production—are an important source of economic vitality worldwide. Nowhere

is this more apparent than in southern Africa, where in the economies of Botswana,

Namibia and South Africa, diamonds have fueled economic growth and prosperity.

Take Botswana, for example, a country that serves as a model not only for Africa

but also for all developing countries. As reported in Time Magazine Europe (July

10, 2000), since the discovery of its diamond deposits, Botswana has achieved record

economic growth. Last year it was again one of the fastest growing economies of the

world with real GDP growth of 9 percent. Diamonds provide 75 percent of foreign

exchange earnings, 65 percent of government revenue, and 33 percent of GDP.

Today Botswana stands as a model of the way mineral wealth, in this case diamonds, can be deployed for the benefit of a country as a whole.

Similarly, in Namibia, where the organized diamond industry dates back to the

beginning of the 20th century, diamonds today account for 40 percent of the country’s foreign exchange earnings. In South Africa, the diamond industry as a whole

gives employment to 30,000 people and is vitally important to the country as a

whole.

Clearly, a solution to curtailing world trade must not come at the expense of the

remarkable positive achievements that diamonds have brought to this region. At a

conference in Kimberley in May, Inge Zaamwani, a Namibian, spoke on behalf of

all three southern African countries when she said:

The linkage of civil strife with the diamonds industry threatens our economic livelihood in a very serious way. . .Realism demands that we put the conflict diamonds

issue in perspective.

Diamonds are not the principal source of all too numerous armed conflicts on this

and other continents. The principal blame must lie with those who started the wars

and the arms merchants who supplied them with the weapons. The manufacturers

and suppliers of automatic weapons, landmines, missiles and other essentials of

43

modern bush warfare are not Africans. Diamonds must not become the scapegoat

for the world’s failure to stop atrocities or rebellions or the arms that abet such rebellions. Long after the question of conflict diamonds has faded from political or

press attention we on the ground in Africa will be left to grapple with the challenges

of war and peace, justice and injustice, poverty and prosperity, and the complex role

that resources of every kind should play in contributing to one or the other.

Current Industry Actions

The world diamond industry is currently doing everything possible to address this

problem in a timely, responsible and effective manner. Leading producers, such as

DeBeers, have been working in close collaboration with the governments of southern

Africa, the U.S. Department of State, the United Nations, and the British Foreign

Office, as well as NGO’s such as Global Witness, and diamond industry associations,

to advance workable and practical solutions that could be applied immediately.

Leading diamond industry associations, the International Diamond Manufacturers

Association (IDMA) and the World Federation of Diamond Bourses (WFDB), representing all principal diamond manufacturing and trading centers of the world,

adopted an historic joint resolution at the World Diamond Congress in Antwerp in

July. This document, now known as the Antwerp Resolution, laid out a plan to curtail world trade in conflict diamonds and established a new permanent body, the

World Diamond Council (WDC), comprised of producers, manufacturers, traders, retailers, banks, and relevant international and civil society organizations, to monitor

compliance with the plan. See Attachment 3—The Antwerp Resolution.

In the United States, which today accounts for approximately half of the $56 billion in diamond and diamond jewelry retail sales in the world annually, diamond

and jewelry trade organizations formed a working group almost one year ago to

share information and coordinate industry action in support of curtailing the trade

in conflict diamonds.

The Jewelers of America (JA) have prioritized this matter for the past year,

issuing a continuing series of communications to the trade to inform and sensitize

retail jewelers to the vital importance of this issue; developed and issued a guidance

agreement for use by all retail jewelers with their diamond vendors; and established

training programs for deployment in stores and for presentations to trade audiences

at industry events. As signatories to a code of ethics as a requirement of membership in the association, all members of the Jewelers of America have pledged to

their customers that they will not knowingly sell these illicit diamonds and will undertake reasonable measures to help prevent the sale of such diamonds in the U.S.

Most importantly retail jewelers are requiring the explicit commitment of their diamond vendors (diamond wholesalers, diamond taders, and jewelry manufacturers)

not to knowingly sell illicit diamonds and to undertake reasonable measures to help

prevent the sale of such diamonds in the U.S. In turn, their vendors are requiring

identical assurances from their suppliers as well.

Demonstrated responsible behavior by ethical and socially responsible members of

the U.S. retail jewelry community, together with the demonstrated commitments

and actions of diamond producers, manufacturers and traders alike worldwide, have

begun the process by which trade in conflict diamonds will be effectively curtailed.

The International Framework for Curtailing Trade in Conflict Diamonds

Any effective framework intended to curtail conflict diamond trade without adversely impacting legitimate businesses must, in our view, adhere to six principles:

1) While industry efforts already underway are making a difference, industry efforts alone will not be sufficient to end the trade in these products completely. Cooperative and coordinated initiatives between industry, governments, international organizations, and civil society organizations will greatly improve the prospects for

curtailing the illicit trade.

2) Scientific expertise tells us that origin of individual diamonds cannot be reliably determined by non-destructive analytical means. Diamonds do not present useful evidence for this diagnostic purpose. Contrary to misunderstandings that have

been circulating, it is not a question of devising or perfecting a tool for diagnostic

measurement. Scientists advise us that the necessary distinguishing properties are

not present in the stone to begin with. This is critical because, when retail jewelers

purchase diamonds—polished diamonds—from their trade vendors, neither they nor

their vendors can determine through any type of examination from what source of

mining or extraction those diamonds originated. Any attempt to impose upon the

industry a requirement to identify the specific country of origin of a polished diamond at the retail counter is doomed to fail and will cause unnecessary hardship

on an industry comprised almost entirely of small businesses.

44

3) Certifying that an individual diamond’s origin is conflict free may, therefore,

only be determined through the systematic tracking of shipments with controls extending from the country of rough extraction forward through the diamond pipeline.

Unless rough diamonds can first be certified as conflict-free in origin at the time

they are exported from the country of mining or extraction, there is no method by

which to verify their origin as conflict free afterward.

4) A system of tracking rough diamond shipments from mining sources through

cutting centers is a huge undertaking, but is at least feasible, because while the volume of stones produced annually is large, the number of export and import control

points that would be required is limited. Gem quality diamonds are mined in twenty-two countries and the bulk of manufacturing (i.e., cutting and polishing) takes

place in seven countries. This point is illustrated in the Table of Diamond Mine Production (Attachment 4) and diagram of The Diamond Pipeline (Attachment 5).

5) From that point onward, however, the task of tracking is simply not feasible.

Transactions involving commercial quantities of polished diamonds from the cutting

centers onward do not routinely occur in a linear sequence from producers to manufacturers to traders to retailers. In fact the pattern is quite irregular, with manufacturers and traders routinely selling back up, across, as well as down, the pipeline.

Parcels of stones are routinely sorted, mixed, and repackaged as economics drives

selection and supply is adjusted to meet demand in a way that yields profit. Thus,

diamonds often pass through as many as a dozen hands before they ultimately

reach the retail counter. Given the characteristics of the pipeline as described above,

it is easy to understand why most diamonds are sold in an undifferentiated manner

in the marketplace.

6) Formal branding of diamonds is a new phenomenon and represents only a

small fraction of the market today. The current trend toward identifying diamonds

by a brand name should not be confused with a system of market controls such as

would be required to establish a chain of assurance certifying that diamonds are

conflict-free in origin. At this time only one or two companies in the world possess

the wherewithal to establish and maintain the requisite system of controls from the

mining source onward, as well as the trade distribution network required to validate

the chain of warrants through the pipeline, with marketing programs to support the

product through to the consumer. Thus, any effort to impose requirements on the

industry through legislation that cannot be achieved will not only fail to curtail conflict diamond trade, but will almost certainly bring considerable advantage to the

one or two producers in the world who possess that capacity. In light of the above,

the Council has proposed that an effective worldwide framework to control trade in

rough diamonds must contain the following elements:

1) All countries that export rough diamonds should have official dedicated import/

export offices for rough and/or polished diamonds closely supervised by government

authorities that register data on export shipments in an international diamond

database (IDD). Furthermore, the diamonds are to be sealed in standardized

tamperproof containers, which will include an officially signed document capturing

all the information entered into the IDD and thereby certify the origin of the contents of the shipment.

2) All countries that import rough diamonds should have official dedicated import/

export offices for rough and/or polished diamonds closely supervised by government

authorities that register import shipments in the IDD. No rough diamonds are to

be imported unless they are in a standardized sealed tamperproof container from

the country of export and the export shipment information in the international diamond database corresponds to the enclosed official documentation. The importing

country will enter date and country of importation in the IDD.

3) All countries that import commercial quantities of polished diamonds should

adopt legislative programs requiring certification that imports of commercial quantities of polished diamonds may come only from countries that have implemented

rough controls, as defined in #1 and #2 above, and allowing criminal prosecution of

those who are found to be knowingly dealing in conflict diamonds.

The Need for U.S. Legislation

Statutory authority possibly will be required in the United States to implement

those controls that would be required to bring this market into compliance with an

international framework such as the one proposed. We believe that a well-timed and

properly focused legislative initiative in the United States could influence positively

the actions of other countries in connection with this matter and help drive worldwide compliance, and thereby further curtail the trade in conflict diamonds.

However, it is imperative that if the US is to lead constructively in this process,

the provisions of US legislation should be fully consistent with an international

framework of rough diamond controls. On this point, we understand that ministers

45

from more than thirty countries are scheduled to convene in London next month,

consistent with the decision of the G–8 in July, to coordinate national legislative efforts. The agenda for this meeting includes:

• Planning legislative programs in each country, requiring certification of rough

diamond imports and exports and enacting laws to allow seizure and/or criminal

prosecution of those who are found to be dealing conflict diamonds;

• Establishing a regime to back such laws and regulations by monitoring the flow

of rough diamonds and the documentation that goes with them;

• Getting key countries to agree to co-sponsor a UN resolution on conflict diamonds at the upcoming General Assembly session.

We would therefore strongly urge those in Congress who currently advocate specific legislative proposals to address the conflict diamond situation to recognze that

it is simply not possible to legislate a national solution to the conflict diamond problem in the US market alone, without inflicting significant economic damage on the

diamond and jewelry industries of the US, Israel, India, Belgium, Botswana, South

Africa Namibia and Russia. A transnational problem requires an international solution.

For this reason we respectfully request that Congress defer action on pending legislation until the results of the upcoming London ministerial meeting have been assessed.

At the same time we recommend that future US legislation, if required, be structured in accordance with the following points:

1) All polished diamond imports entering the U.S. in commercial quantities would

be required to originate in countries with rough diamond controls in place;

2) Rough diamond controls to be defined in terms of strict adherence by each

country to an international regime comprised of:

• All countries that export rough diamonds should have official dedicated import/

export offices for rough and/or polished diamonds closely supervised by government

authorities that register data on export shipments in an international diamond

database (IDD). Furthermore, the diamonds are to be sealed in standardized

tamperproof containers, which will include an officially signed document capturing

all the information entered into the IDD and thereby certify the origin of the contents of the shipment;

• All countries that import rough diamonds should have official dedicated import/

export offices for rough and/or polished diamonds closely supervised by government

authorities that register import shipments in the IDD. No rough diamonds are to

be imported unless they are in a standardized sealed tamperproof container from

the country of export and the export shipment information in the international diamond database corresponds to the enclosed official documentation. The importing

country will enter date and country of importation in the IDD;

• All countries that import commercial quantities of polished diamonds should

adopt legislative programs requiring certification that imports of commercial quantities of polished diamonds may come only from countries that have implemented

rough controls, as above, and allowing criminal prosecution of those who are found

to be knowingly dealing in conflict diamonds.

• The Administration could certify annually compliance by countries with the provisions for rough diamond controls specified above, and upon the determination that

all countries were in compliance, disband the controls once the trade in conflict diamonds has ceased (sunset provision).

We applaud the efforts of those in Congress who have stepped forward in an effort

to stop the trade in conflict diamonds. Because we too deplore the link between diamonds and acts of violence, we strongly urge those in Congress who currently advocate specific legislative proposals in an effort to curtail trade in conflict diamonds

that, in taking the lead with legislation, it is imperative that the US coordinate its

efforts with industry, the UN, NGO’s and the ministries of other key governments

around the world. This is the only way to ensure that our shared goal will be

achieved. Premature or uncoordinated efforts will not achieve the desired outcome

and may instead adversely impact legitimate diamond economies all over the world

and tens of thousands of small businesses throughout the United States, while perhaps benefitting only one or two large diamond producers who possess the internal

capacity to self-guarantee the origin of their products.

Mr. Chairman, the planets are moving into alignment in a way that will enable

all of us to accomplish our common goal—to stop the terrible trade in conflict diamonds. The timing and coordination of our respective efforts are now critical to success in this mission.Let us work together. Thank you.

46

World Diamond Council Members

Name Title & Organization Country

Eli Izhakoff .......................... Chairman—World Diamond Council ............................................................. U.S.A.

Sean Cohen ......................... Vice Chairman—WDC President—International Diamond Manufacturers

Association.

South Africa

Abraham Fischler ................ Vice Chairman—WDC President—World Federation of Diamond Bourses .. Belgium

Sergei Oulin ......................... Vice Chairman—WDCVice President—Alrosa .............................................. Russia

Shmuel Schnitzer ................. Vice Chairman—WDC President—Israel Diamond Exchange ...................... Israel

Matthew Runci .................... Secretary General—WDCPresident & CEO—Jewelers of America ................ U.S.A.

Noa Balthazar ...................... President—Ascorp ......................................................................................... Angola

Ernest Blom ......................... President—Diamond Merchants Association of Southern Africa ................. South Africa

William Boyajian .................. President—Gemological Institute of America .............................................. U.S.A.

Robert Bridel ....................... Executive Director—A.G.S. ............................................................................ U.S.A.

Andrew Coxon ...................... Director—DTC De Beers ................................................................................ England

Frank Demeyere ................... Chief of Cabinet—Ministry of Economic Affairs, Belgium .......................... Belgium

Jeffrey Fischer ...................... President—DMIA ........................................................................................... U.S.A.

Stephan Fischler .................. Secretary General—IDMA .............................................................................. Belgium

Sylvia Fletcher ..................... Senior Advisor—USAID Office of Transition Initiatives ................................ U.S.A.

Cecelia Gardner ................... Executive Director—Jewelers Vigilance Committee ...................................... U.S.A.

Freddy Hager ....................... President—London Diamond Bourse ............................................................ England

Gordon Gilchrist ................... Managing Director—Argyle Diamonds .......................................................... Australia

Paul Goris ............................ Chairman—Antwerp Diamond Bank ............................................................. Belgium

Peter Gross .......................... General Manager—International Diamond Division, ABN Amro .................. Belgium

Terry Janes ........................... BHP Diamond Inc. ......................................................................................... Canada

Sanjai Kothari ...................... ........................................................................................................................ India

Michael Kowalsky ................ President & CEO—Tiffany & Co. .................................................................. U.S.A.

Lawrence Ma ....................... Chairman—Diamond Federation of Hong Kong ........................................... China

Barbara Masekela ............... De Beers—South Africa ................................................................................ South Africa

Peter Meeus ......................... General Manager—High Diamond Council ................................................... Belgium

Dianna Melrose .................... Foreign & Commonwealth Office .................................................................. U.K.

Nchaka Moloi ....................... Advisor to Minister of Minerals and Energy ................................................. South Africa

Louis Nchindo ...................... Botswana Diamond Company ....................................................................... Botswana

Benjamin Oshman ............... President & CEO—Union Bank, Israel ......................................................... Israel

Youri Rebrik ......................... ........................................................................................................................ Russia

Martin Rapaport.

Rapaport Corporation .......... U.S.A..

Shri Nilesh Shah ................. Gem and Jewelry Export Promotion ............................................................... India

Udi Sheintal ......................... Diamond Controller—Ministry of Trade and Commerce .............................. Israel

Abraham Traub .................... President—Kidum for the Advancement of the Diamond Industry ............. Israel

Inge Zaamwani .................... Managing Director—Namdeb Diamond Corporation .................................... Namibia

47

Joint Resolution World Federation of Diamond Bourses (W.F.D.B.) and

International Diamond Manufacturers Association (I.D.M.A.)

ANTWERP JULY 19, 2000

WFDB and IDMA, representing all the principal diamond manufacturing and

trading centers of the world, have consistently been aware of and been involved in

combating the conflict diamonds problem. Particularly, they point to the numerous

resolutions passed by themselves and their members.

We believe that more can and should be done to limit, if not eliminate, this problem entirely. We believe that the solution to the conflict diamonds problem is a

48

moral imperative above all others. However we do not believe that the solution necessarily entails damage or limitation to the 96+% of the world diamond trade which

is legitimate. On the contrary, we believe that an enlightened and effective approach

to the problem can lead to the improvement of the diamond market overall.

It is our understanding that all concerned parties are aware of the positive benefits of diamonds as well as their potential role in providing prosperity, a key ingredient of peace, in countries currently experiencing strife. Over the past year, various

solutions have been proposed. We have analyzed these proposals, some of which we

have found to be ineffective, others more practical and some impractical. All the proposals have had elements that we believe are logical and should be incorporated into

an effective solution.

As diamond manufacturers and traders primarily responsible for the conversion

of rough diamonds into polished and the marketing of those polished diamonds, we

are proposing a number of concrete steps to be taken by all parties concerned which

we believe will lead to a more effective and immediate resolution of the problem.

While our proposal may be subject in the future to any number of improvements,

we believe it is, in the first instance, practically implementable in the short term,

and it does not preclude further steps being taken as and when the means and requirement arise.

Specifically and most importantly, we are mindful that the next phase of solution

must start sooner rather then later and that if this is to be done in a non-destructive manner, the most practically implementable steps must be taken first, in order

that the process not be delayed with theoretical concepts and technologies.

1. We recognize that rough diamonds individually are not sufficiently determinable as to source and origin. However, with the correct system, rough diamond

parcels can be monitored within a net.

2. There is not implementable means of tagging, tracking and identifying finished

polished diamonds.

3. All legitimate diamonds in their rough form can travel within an identifiable

net.

Accordingly we propose:

1. Each accredited rough diamond importing country, whether a producer, manufacturing or dealing center, enacts ‘‘redline’’ legislation. As such, no parcel of rough

may be imported unless such parcel of rough has been sealed and registered in a

universally standardized manner by an accredited export authority from the exporting country.

2. Each exporting country, which can be either a producer country or accredited

dealing/manufacturing center, will establish accredited export offices or diamond

board which will seal parcels of rough diamonds to be exported and registered in

an international database. If the country is a producer country, it will be accredited

only if it has control mechanisms in place to determine the flow of rough and legitimate ownership of rough presented to the export authority.

3. Polished diamond consuming countries will enact legislation forbidding importation of polished diamonds from any manufacturing/dealing country that does not

have ‘‘redline’’ legislation as regards the importation of rough.

4. Each and every country, as part of the diamond net, be they rough exporters,

importers, or polished consuming countries, enacts legislation bringing criminal penalties on any individual and/or company proven to be knowingly involved in illegal

rough diamonds.

5. Each and every diamond organization adopts an ethical code of conduct as regards conflict diamonds, labor practices and good business practices in general, the

failure to adhere to which would lead to expulsion from WFDB, IDMA and all other

relevant organizations.

6. As a positive measure of compliance, all relevant and interested parties promote adherence to the code of conduct as a positive consumer choice in the marketplace.

7. We enlist the support of the banks, insurance, shipping companies and other

pertinent providers of goods and services to our industry to expose and cease-business relations with any entity that is found knowingly to violate these principles.

8. That there is a continual analysis of relevant technologies and investment by

the industry in developing them further for implementation leading to greater compliance.

9. That compliance with the above be monitored and controlled by an International Diamond Council comprised of producers, manufacturers, traders, governments and relevant international organizations. that this process be fully verified

and audited.

49

A joint committee of both organizations has been formed in order to ensure rapid

implementation of the above.

As we envisage it, each time rough diamonds leave a producer or rough trading

center, those rough diamonds would be sealed in a standardized manner by an authority accredited by the international diamond council. This is the only means by

which those diamonds could be imported into the next country.

We understand that it is the nature of the diamond business and directly related

to the profitability of mines and the efficient manufacturing processes currently employed, that rough diamonds of various origins and qualities are mixed together into

‘‘saleable’’ parcels. Therefore, our system allows for the mixture of such parcels by

requiring their further export and import from any mixing or dealing center to be

subject once again to sealing and documentation.

Key to the whole process is monitoring and keeping accounts of the data flows.

In particular, it is essential to be able to verify and see that one country’s exports

to another are matched by the country’s official imports from the exporting country.

All accounts should, ultimately, balance. The establishment of the International Diamond Council is crucial to this process in that the International Diamond Council

would be required to balance all imports and exports and accredit importing and

exporting authorities in each country.

Just as importantly, it is undoubtedly correct to assume that a certain degree of

deliberate noncompliance may occur. The International Diamond Council would be

required to remove export accreditation from producer countries where rough exports are known to exceed production capacity or verified official imports.

By the same taken, the International Diamond Council would be able to remove

the accreditation of countries to import diamonds if it was found that those countries were allowing the import of non-verifiable rough.

We believe that funding for our proposals can be achieved through charging a

minimal levy, both on the import and export of rough diamonds. Undoubtedly, effectiveness of the system can be improved over time. However, we believe that we will

immediately close off all the legal loopholes by which conflict diamonds may currently be entering the trade. This will make the task of relevant customs and criminal authorities far easier in terms of identifying and prosecuting perpetrators. In

particular, if all legitimate rough diamonds are knowingly ‘‘declared’’, the four percent of conflict rough diamonds will be impossible for those few companies trading

in them to hide.

As a final note, we do not claim that this is an immediately perfect system or that

improvements cannot be made. However, we believe that these are practically

implementable measures, that they will be highly effective in terms of the current

status quo and that they can be relatively rapidly implemented without precluding

any further additions.

Most significantly, we believe that our proposals will see immediate results and

that they are non-destructive to the legitimate industry and producer countries. In

fact they stand to enhance the legitimate trade. By adopting a code of conduct, consumer choice can be made into a positive enhancement of the diamond industry,

without the necessity of negative imagery.

50

51

Chairman CRANE. Thank you.

Mr. Yearsley?

52

STATEMENT OF ALEX YEARSLEY, CAMPAIGNER, GLOBAL

WITNESS, LONDON, ENGLAND

Mr. YEARSLEY. Good morning, Chairman Crane and members of

the committee that are still left here. My name is Alex Yearsley

and I am a campaigner for Global Witness. I am pleased to appear

at this meeting and I thank you for holding it. Global Witness are

a British-based non-governmental organization that focuses on the

links between environmental and human rights abuses, especially

the impacts of natural resource exploitation upon countries and

their people.

In late 1996, Global Witness began to look at the role of diamonds in funding the tragic conflicts in Angola. In December 1998,

we published our first report on conflict diamonds called, ‘‘A Rough

Trade: The Role of Governments and Companies in the Angolan

Conflict.’’ In June of this year, we published our second report, simply entitled, ‘‘Conflict Diamonds: Possibilities for the Identification,

Certification, and Control of Diamonds.’’

Since late 1996, my colleague and I, Ms. Charmian Gooch, have

traveled extensively to the diamond producing and marketing countries of Angola, Botswana, Belgium, Sierra Leone, South Africa,

Namibia, Israel, India, and the United States in order to see

whether a solution is possible to the curse of conflict diamonds. As

a result of this work and due to the extensive contact we have had

with many of the companies, trade associations, government officials, and individuals in the diamond industry, we believe that, indeed, a solution that is practical, implementable, WTO compatible,

and that will not damage the legitimate trade but will protect it

is entirely feasible.

Four months ago, my colleague, Ms. Charmian Gooch, gave evidence at a Congressional hearing on the issue of conflict diamonds.

Today, 127 days later, are we any closer to a solution? Whilst we

wish that a system could have been imposed many years ago, I believe that we are looking at the possible solutions to this deadly

trade. I think it is fair to say that we have come a long way in a

very short time. This, I believe, is testimony to the gravity of the

situation and some of the expert work carried out by government,

industry, and civil society individuals.

However, currently as I speak, the diamond trade as a unified

whole has failed to put recognizable or verifiable controls or certification in place that can reliably attach conflict-free status to diamonds. However, since late 1998, there has been a shift in world

opinion on the issue of conflict diamonds which in itself is a new

term. No longer is the soaking up of open market goods from areas

of conflict deemed to be an inevitable consequence of the need to

stabilize the world price of diamonds. Governments have ceased to

accept this as an argument for non-interference, as, and probably

more importantly, have consumers.

The majority of the proposals I am about to suggest are ideas

that are consistent with the suggestions of the Kimberley Working

Group, of which Global Witness is a member. The problem that

these proposals aim to address is that of illicitly traded rough diamonds being used to finance weapons purchases and fuel wars in

Africa. This problem can only be addressed by all the relevant

stakeholders in the diamond producing, processing, and consuming

53

nations and all segments of the diamond industry working together

to curb the trade in conflict diamonds whilst avoiding harm to the

legitimate trade.

However, it is important to remember, though, that no system

will be 100 percent watertight, and with a commodity as valuable

and as fungible as diamonds, determined individuals will always

manage to get through. However, what the system will do is prevent the horrors of the 1990s, when companies such as DeBeers

were able to buy up several hundred million dollars worth of rough

diamonds that originated from the diamond mines under the control of the UNITA rebels in Angola on the markets of Tel Aviv,

Antwerp, London, and New York.

Possible solutions: The only solution to have been so far identified that is currently both practical and implementable is the creation of an international certification system for all rough diamonds. There are, indeed, many potential technological solutions,

such as laser marking. However, these are currently not financially

viable or practical to implement. However, I would urge this committee to consider the funding of continued research in this field.

Much thought and deliberation has gone into how this system

could work, most notably by the Kimberley Working Group. The

general consensus reached by the group regarding the creation and

implementation of an international system has been explained. Information contained on the certificates would build upon existing

national systems currently in place and should certainly not water

down any existing national systems. However, as a basic international standard which needs to be agreed to under best principles, the certificate should contain a minimum of the following information relating to the diamond shipment: The total caratage of

diamonds, the aggregate value of the diamonds, and the country of

origin, country of origin meaning extraction.

Global Witness believes that it is necessary to go several stages

beyond the certification scheme and that more specific requirements are needed for countries where diamonds are mined, commercially traded, manufactured, and reexported.

Whilst no one within Global Witness professes to be an expert in

international trade law or the WTO, we have carried out some

basic research into this important question. If, as is expected and

hoped, the recommendations of the Pretoria ministerial meeting

goes through United Nations General Assembly vote to ratification

into a global treaty, then there should be no problems with WTO

compatibility and, hence, will be free from any significant challenges.

However, in conclusion, there are still some countries and individuals that believe a sledgehammer is being used to crack a nut.

Nothing could be further from the truth. Those with personal vested interests argue that an international system will be restrictive

of trade and will impact upon the small miner. Again, nothing

could be further from the truth. All that will happen is that the

great majority of illicit smugglers and those that benefit will be

caught.

Whilst not wanting to end on a pessimistic note, I think it would

be folly not to raise this issue here. There are many in the press

and the diamond trade who believe that a diamond boycott is fast

54

approaching. Whilst I certainly agree with them regarding the devastating negative impact this will have on legitimate producers and

my complete condemnation for such action, I can see it gaining

ground if concerted action is not taken soon. Conflict diamonds

have been in the public eye for nearly two years now, and in reality, the diamond trade, whilst publicly tackling the issue, practically have done as little as possible to prevent the entry of conflict

diamonds into the global marketplace. Many find words have been

offered, but what has actually changed? And if reports from the

marketing centers of Antwerp and Tel Aviv are to be believed, I am

afraid, very little.

Consumers and the press are and will ask more questions. In

America, jewelry retailers have begun to take action regarding education campaigns on the issue, and rightly so. The United States

accounts for nearly 65 percent of the world’s diamond jewelry sales

per annum and all of those diamonds have to be imported from

somewhere. Indeed, two of the major documentary series, ‘‘60 Minutes’’ and ‘‘20/20’’ both have programs planned for the fall on the

issue of conflict diamonds. When the public and consumers see that

the diamond trade as a collective whole have failed to live up to

their extremely laudable goals, they will judge accordingly, rightly

or wrongly. The result is not a position I would like us even to contemplate.

As a result, I would urge the committee to support any initiative

on the implementation of U.S. legislation, be it from the diamond

trade, civil society, or your own legislators, that sought to introduce

a system for rough controls that is similar to the Kimberley process, for if we put our trust and faith in the countries of the world

to act with speed with one voice, it could have devastating consequences for millions of people in Africa. Thank you.

[The prepared statement follows:]

Statement of Alex Yearsley, Campaigner, Global Witness, London, England

Good morning Chairman Crane and Members of the Committee. My name is Alex

Yearsley and I am a Campaigner for Global Witness. I am pleased to appear at this

hearing and I thank you for holding it. Global Witness are a British based non governmental organisation that focuses on the links between environmental and human

rights abuses, especially the impacts of natural resource exploitation upon countries

and their people. In late 1996 Global Witness began to look at the role of diamonds

in funding the tragic conflict in Angola. In December 1998 we published our first

report on conflict diamonds called, ‘A Rough Trade: The role of governments and

companies in the Angolan Conflict,’ in June of this year we published our second

report, which hopefully you will have in front of you and simply entitled, ’ Conflict

Diamonds, Possibilities for the Identification, Certification and Control of Diamonds.’ Since late 1996 my colleague and I, Ms. Charmian Gooch, have travelled

extensively to the diamond producing and marketing countries of Angola, Botswana,

Belgium, Sierra Leone, South Africa, Namibia, Israel, India and the United States

and also to transhipment countries such as Rwanda, Uganda and Zambia in order

to see whether a solution is possible to the curse of conflict diamonds. As a result

of this work and due to the extensive contact we have had with many of the companies, trade associations, government officials and individuals in the diamond industry we believe that indeed a solution that is practical, implementable, WTO compatible and that will not damage the legitimate trade, but will protect it is entirely feasible.

Four months ago my colleague Ms.Charmian Gooch gave evidence at a Congressional hearing on the issue of conflict diamonds. Today, 127 days later are we any

closer to a solution? Whilst we wish that a system could have been imposed many

years ago I believe that we are looking at the possible solutions to this deadly

trade—I think it is fair to say that we have come along way in a very short time.

55

This I believe is testimony to the gravity of the situation and to some of the expert

work carried out by government, industry and civil society individuals.

Currently as I speak the diamond trade as a unified whole, has failed to put

recognisable or verifiable controls or certification in place that can reliably attach

‘conflict free’ status to diamonds. However since late 1998 there has been a shift

in world opinion on the issue of conflict diamonds, which in itself is a new term.

No longer is the ‘soaking up’ of ’open market goods’ from areas of conflict deemed

to be an inevitable consequence of the need to stabilise the world price of diamonds.

Governments have ceased to accept this as an argument for non-interference, as

and probably more importantly, have consumers.It is vital that a long-term solution

to this very complex problem be found, and that can only work if some of the underlying structures are addressed rather than the commercial sector of the industry

dealing with each problem country on a case-by-case basis. This is no way to deal

with the atrocities and horrors inflicted upon peoples of affected countries nor to

protect the legitimate diamond economies. It is clear that there is a need to create

a ’chain of custody’ within the diamond trade—a verifiable trail from the mine to

the consumer that can work with existing structures and patterns of trade.

In response to the growing international concern over the problem of conflict diamonds, the Southern African Development Community (SADC) producer States

(Botswana, Namibia and South Africa) initiated an African regional initiative to

identify possible solutions. In May 2000, the South African Department of Minerals

and Energy organised a Technical Forum in Kimberley, South Africa to address the

problem of ‘conflict diamonds.’ It is fair to say that the Kimberley meeting has set

new standards in bringing together different stakeholders from government, industry and civil society.

Participants were drawn from leading producing nations and the majority of importing, marketing, cutting and polishing centres. A working group made up of the

relevant stakeholders was created and has met three times in Angola, Namibia and

the UK. This working group will produce a report, which will be presented at a Ministerial meeting in Pretoria, South Africa on September 21st.

The majority of the proposals that I am about to suggest are ideas that are consistent with the suggestions of this working group, of which Global Witness is a

member. The problems that these proposals aim to address, is that of illicitly traded

rough diamonds being used to finance weapons purchases and fuel wars in Africa.

This problem can only be addressed by all the relevant stakeholders in the diamond

producing, processing and consuming nations, and all segments of the diamond industry working together to curb the trade in conflict diamonds, whilst avoiding

harm to the legitimate trade.

At this point I would like to mention that some initiatives have already begun

at the national level. However this has only been due to the intense pressure of

international criticism from civil society, the UN and some governments. In Angola,

one of the most affected countries by conflict diamonds, the Government has introduced a new administrative system for controlling diamond exports under agreement with the High Diamond Council (HRD) in Antwerp, Belgium. It is stated that

an unforgeable Certificate of Origin for the export of all diamonds is in use. The

Government of Angola has also stated that it is implementing measures to control

artisanal mining and marketing, however, after many repeated requests the Government of Angola have failed to clarify what these measures are and how they are

to be introduced. It is these measures that are crucial to the avoidance of conflict

diamonds being sold into the legitimate trade and I urge the Government of Angola

to publicly clarify their position. In Sierra Leone the government is also developing

a new Certification Scheme in co-operation with the governments of Belgium, the

United State’s and the United Kingdom. This system has only been in operation for

a number of days so it is still too early to report on its success or failure.

It is important to remember though that no system will be 100 percent watertight

and with a commodity as valuable and as fungible as diamonds determined individuals will always manage to get through. However what this system will do is prevent the horrors of the 1990s, when companies such as De Beers, were able to buy

up several hundred million dollars worth of rough diamonds, that originated from

the diamond mines under the control of the Unita rebels in Angola, on the markets

of Tel Aviv, Antwerp, London and New York.

Although conflict diamonds have been sold for nearly the last 15 years the term

has only been in use for about a year and a half and a final definition still has to

be reached. In Africa it is possible to be clear as to what constitutes conflict diamonds as being diamonds that originate from areas controlled by forces fighting the

democratically elected and internationally recognised government of the relevant

country. At this point I would like to emphasise that conflict diamonds are not an

African problem, they are a problem that effects all those involved in the diamond

56

trade—be they a high street retailer in New York or a diamond buyer in Sierra

Leone.

POSSIBLE SOLUTIONS

As mentioned in my opening statement the only solution to have been so far identified that is currently both practical and implementable is the creation of an international certification system for all rough diamonds. There are indeed many potential technological solutions, such as laser marking, however these are currently not

financially viable or practical to implement. however I would urge this committee

to consider the funding of continued research into this field.

How will an international certification system work?

Much thought and deliberation has gone into how this system could work, most

notably as mentioned earlier by the Kimberley Working Group. The general consensus reached by the group regarding the creation and implementation of an international system is as follows.

‘No country would permit the importation of any diamonds unless they are accompanied by a Certificate of Origin which is issued by an internationally accepted

State or State accredited body in the exporting country for all diamonds lawfully

mined, purchased or imported in that country by a person accredited by that authority and that they are exported in a tamper proof sealed parcel from a mutually notified exit site to a mutually notified import site that would issue a matching Certificate of Import after inspection of the diamonds and accompanying documentation.’

Information contained on the certificates would build upon existing national systems currently in place and should certainly not water down any existing national

systems. However as a basic international standard, which needs to be agreed to

under best practice principles, the certificate should contain the minimum following

information relating to the diamond shipment:

• The total caratage of diamonds;

• The aggregate value of the diamonds;

• The country of origin (extraction);

Global Witness believes that it is necessary to go several stages beyond this certification scheme and that more specific requirements are needed for countries

where diamonds are mined, commercially traded, manufactured and re-exported.

All diamond producing and exporting countries should implement the following

measures to ensure that conflict diamonds can no longer enter in the global market.

• route all diamonds through a government run diamond office;

• establish a licensing system for the extraction of any diamonds, whether the extraction is being carried out by a large company or an alluvial digger;

• establish a system of countercheck paperwork for extraction licences and applications for export;

• establish a registry for official diamond buyers and exporters;

• criminalise the handling of rough diamonds without an official licence;

• exclude the holders of government office, the military, and the police as well as

the close family members of the aforementioned-from being registered to mine or

trade in diamonds;

• publish publicly on a monthly basis diamond production and export figures.

For countries involved in the trading and importing of diamonds in parallel with

establishing the international certification system they should:

• amend importation legislation to insist on the country of extraction appearing

on importation documents;

• insist on all diamond shipment documentation to be checked against forwarded

documentation;

• enforce penalties such as the confiscation and the seizure of the diamonds if the

appropriate paperwork is not or cannot be provided;

• physically inspect every parcel of rough diamonds entering their territory;

• ensure that customs officials have access to an international database of diamond shipments;

• publish on a monthly basis all figures for the import and export of diamonds.

• For all diamond traders, polishers, manufacturers and retailers they should:

• only trade in diamonds with a verifiably legitimate product trail;

• implement the measures agreed to at the World Diamond Council meeting in

Antwerp in July 2000.

Will an international certification system be WTO compatible?

Whilst no one within Global Witness professes to be an expert in international

trade law or the WTO we have carried out some basic preliminary research into this

57

very important question. If, as is expected and hoped, the recommendations of the

Pretoria Ministerial meeting goes to a United Nations General Assembly vote for

ratification into a global treaty then there should be no problems with WTO compatibility and hence will be free from any significant challenges.

How the certification scheme could work under WTO rules:

The following are grounds under which the international certification scheme

could be justified under WTO rules.

If as just mentioned the international certification system is bought into being

pursuant to a UN resolution then a WTO member could invoke an exception rule

contained in Article XX1(c) of the GATT to justify its certification requirement. This

provision allows a WTO member to take measures that would otherwise be in

breach of its WTO obligations provided that it is acting in pursuance of its obligations under the United Nations Charter of the maintenance of international peace

and security.

Under WTO rules it could be possible for a WTO member to rely on either of the

exceptions set down in Article XXI(b)(ii) or (iii) GATT. These relate respectively to

measures taken by a WTO member which it considers necessary for the protection

of its essential security interests in relating to the traffic in arms, ammunition and

implements of war and to such traffic in other goods and materials as is carried on

directly or indirectly for the purpose of supplying a military establishment. Hence

in respect of Article XXI.b(ii) it would be possible for a WTO member to justify the

certification requirement on the basis that non-certified diamonds from the countries concerned are being used to finance the purchase of weapons and are thus perpetuating wars in areas of the world which may effect its essential security interests.

Similarly, in respect of the Article XXI. b(III) exception it could be argued that

the situation in several key diamond producing countries gives rise to an emergency

in international relations which justified the WTO member concerned introducing

its certification requirement.

In conclusion there are still some countries and individuals that believe a sledgehammer is being used to crack a nut. Nothing could be further from the truth.

Those with personal vested interests argue that an international system will be restrictive of trade and will impact upon the small miner—again nothing could be further from the truth—all that will happen is that the great majority of ’illicit diamond’ smugglers and those that benefit will be caught.

Many people talk about the law of unintended consequences and indeed there will

be many unintended consequences if this system is successfully applied for as a result, not only will conflict diamonds be taken out of the market place—but so will

’illicit’ diamonds which are diamonds that are stolen or smuggled from a country.

This will have many implications as there are many respectable companies and individuals involved in the diamond trade that make a good deal of their profits from

this ’illicit’ trade and upsetting this particular apple-cart may be too much to handle

for some. However one thing is certain—if you have nothing to hide then you will

have nothing to fear from this system—it will be interesting to watch who protests

the most at the imposition of this system.

Whilst not wanting to end on a pessimistic note I think it would be folly not to

raise this issue here. There are many in the press and the diamond trade who believe that a diamond boycott is fast approaching. Whilst I certainly agree with them

regarding the devastating negative impact this will have on legitimate producers

and my complete condemnation for such action, I can see it gaining ground if concerted action is not taken soon. Conflict diamonds have been in the public eye for

nearly 2 years now and in reality, the diamond trade, whilst publicly tackling the

issue, practically have done as little as possible to prevent the entry of conflict diamonds into the global market place. Many fine words have been offered but what

has actually changed, and if recent reports from the marketing centres of Antwerp

and Tel Aviv are to be believed, I’m afraid very little. Consumers and the press are

and will ask more questions. In America jewellery retailers have begun to take action regarding education campaigns on the issue and rightly so. The United States

accounts for nearly 65 percent of the worlds diamond jewellery sales per annum and

all of those diamonds are have to be imported from somewhere. Indeed two of the

major documentary series, 60 minutes and 20/20 both have programmes planned for

the Fall on the issue of conflict diamonds and when the public and consumers see

that the diamond trade as a collective whole have failed to live up to their extremely

laudable goals they will judge accordingly—rightly or wrongly. The result is not a

position I would like us even to contemplate. As a result I would urge the Committee to support any initiative on the implementation of US legislation, be it from

the diamond trade, civil society or your own legislators, that sought to introduce a

58

system for rough controls that is similar to the one I have proposed in some detail

earlier. For if we put our trust and faith in the countries of the world to act with

speed with one voice it could have devastating consequences for millions of people

in Africa.

Chairman CRANE. Thank you.

Mr. Fischer?

STATEMENT OF JEFFREY FISCHER, PRESIDENT, DIAMOND

MANUFACTURERS AND IMPORTERS ASSOCIATION OF AMERICA, NEW YORK, NEW YORK

Mr. FISCHER. Mr. Chairman and members of the subcommittee,

my name is Jeffrey Fischer and I thank you for inviting me to address you today in my capacity as President of the Diamond Manufacturers Association of America. Our association includes virtually

all of the major cutting firms in the United States. Our membership is unanimous in its revulsion of any connection between diamonds and human suffering and is dedicated to helping solve the

problems which we address today.

As Vice President of the International Diamond Manufacturers

Association, I also serve on the steering committee of the World Diamond Council and have been actively involved in its creation.

You have asked me to give you a brief overview of how diamonds

flow from mine to consumer through the diamond pipeline. Please

refer to the chart of the pipeline we have provided. A single diamond can be sold and resold numerous times before it ultimately

adorns a retail consumer. Diamonds are frequently traded upstream and downstream between dealers in the normal course of

business. As the diagram illustrates, even the consumer can eventually become the seller. After all, the diamond itself endures forever.

What is most important to note from the diagram is the line

drawn between rough and polished diamonds. Most of the dealing

in polished diamonds, jewelry manufacturing and retailing is done

by people who have had no more experience with rough diamonds

than the typical member of Congress. All polished starts as rough,

and once polished remains polished forever. That transformation is

the only irreversible transaction in our pipeline.

A single rough stone is commonly cut into two polished diamonds. Often, a piece of rough yields only one stone. Sometimes it

yields multiple stones, or it may never be polished at all and may

be sold for industrial purposes. As we proceed down the pipeline,

the frequency of transactions and the number of small businesses

involved increases dramatically, while the average size of a typical

transaction diminishes in monetary terms. Throughout the pipeline, these diamonds are constantly assorted, mixed, and reassorted

to meet different commercial requirements.

To further complicate matters, already polished diamonds are

frequently recut for improvement or repair, altering their characteristics to varying degrees. Further, polished diamonds are frequently unset and reset in different jewelry, sometimes alone,

sometimes with other diamonds. Trying to track polished diamonds

effectively would be a nightmare and would accomplish nothing.

59

The place for effective, administrable import/export controls is at

the rough level. We believe that the system of proposed controls

adopted at the World Diamond Congress in July and now being

brought forward by the World Diamond Council is the most practical and most effective means to filter out from the pipeline the

less than four percent of worldwide rough production which is

being misused to fund conflict. By effectively placing this filter at

the rough level, all resulting polished will comply with conflict-free

status and it will do it at no cost to American taxpayers.

We are practical, realistic, ethical business people. We seek support from Congress to sever the link between diamonds and brutality without delay. We hope to actively participate in the creation

of the best possible legislation, legislation that will not do serious

damage to the legitimate Southern African economies so dependent

on diamonds, that will not wreak havoc with U.S. customs procedures, and will not harm the livelihoods of millions of people worldwide directly employed by or benefitting from the diamond industry.

It would be a shame if this precedent-setting constructive collaboration of government, the U.N., private industry, and the

NGOs results in anything less than the best possible solution. We

implore Congress to consider the World Diamond Council proposals

before taking action. We reiterate our desire to contribute whatever

assistance and expertise we can provide. Thank you.

[The prepared statement follows:]

Statement of Jeffrey Fischer, President, Diamond Manufacturers and

Importers Association of America, New York, New York

Mr. Chairman and members of the subcommittee, my name is Jeffrey Fischer and

I thank you for inviting me to address you today in my capacity as president of the

Diamond Manufacturers and Importers Association of America. Our association includes within its membership virtually all of the United States’ major diamond cutting firms. Our membership is unanimous in its revulsion of any connection between

diamonds and human suffering, and is dedicated to helping solve the problems,

which we address today. I also serve on the steering committee of the Would Diamond Council and have been actively involved in its creation.

I have been invited to give a brief overview of how diamonds flow from mine to

consumer through what we refer to as the Diamond Pipeline and how diamonds are

merchandised along the way.

Please refer to the chart we have provided titled ‘‘Simplified Schematic of Diamond Pipeline.’’

A single diamond can be sold and re-sold numerous times before it ultimately

adorns a retail consumer. Diamonds are frequently traded ‘‘upstream’’ and ‘‘downstream’’ between dealers at marginal price differences in the normal course of business. As the diagram illustrates, while it is not a significant part of the picture,

even the consumer can eventually become the seller—after all the diamond ‘‘is forever.’’

From the outside, the diamond market may appear confusing, fragmented, perhaps even inefficient, but it exemplifies the free market ideals that our American

economic system extols.

What is most important to note from the diagram is the line drawn between

rough and polished diamonds. Most of the polished dealing, jewelry manufacturing,

and retailing is done by people who have had no more exposure to rough diamonds

then the typical member of Congress. All polished starts as rough, and once polished, remains polished forever. That transformation is the only irreversible ‘‘transaction’’ in our pipeline.

A single rough stone is commonly polished into two polished diamonds. Often, a

piece of rough yields only one stone, sometimes it yields multiple stones, or it may

never be polished and sold for industrial purposes.

As we proceed down the pipeline, the frequency of transactions and the number

of small businesses involved increases dramatically, while the average size of a typVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00063 Fmt 6631 Sfmt 6602 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
60

ical transaction diminishes in monetary terms. Throughout the pipeline diamonds

are constantly assorted, mixed and re-assorted to fit differing commercial requirements.

To complicate matters further, already polished diamonds are frequently ‘‘re-cut’’

for improvement or repair, altering their characteristics to varying degrees. Moreover, polished diamonds are frequently unset and re-set in different jewelry sometimes alone, sometimes with other diamonds.

The place for effective administerable import/export controls is at the rough level.

We believe that the system of proposed controls adopted at the World Diamond Congress in July and now being brought forward by the World Diamond Council is the

most practical and most effective means to filter out from the pipeline the less than

four percent of world-wide rough production which is being misused to fund conflict.

By effectively placing this ‘‘filter’’ at the rough level, all resulting polished will comply with ‘‘conflict-free’’ status.

We are practical, realistic, business people and as such are tackling the conflict

diamond problem with idealism strengthened by realism.

We do anticipate seeking assistance from Congress in severing the link between

diamonds and brutality without delay—but not simply legislation—the best possible

legislation. Legislation that will be most effective and enforceable, that will not do

serious damage to the legitimate southern African economies so dependent on diamonds, that will not wreak havoc with US Customs procedures, and will not harm

the livelihoods of millions of people world wide directly employed by or benefiting

from the diamond industry. This legislation must be fully consistent with an international inter-governmental agreement backed by industry.

It would be a shame if this precedent setting constructive collaboration of government, the United Nations, private industry, and the non-governmental organizations result in anything less than the best possible solution.We implore Congress

to consider the World Diamond Council’s proposal before taking action. We reiterate

our desire to contribute whatever assistance and expertise we can provide.

Thank you.

61

Chairman CRANE. Thank you, Mr. Fischer.

Ms. Burkhalter?

STATEMENT OF HOLLY BURKHALTER, ADVOCACY DIRECTOR,

PHYSICIANS FOR HUMAN RIGHTS

Ms. BURKHALTER. Thank you, Chairman Crane. Physicians for

Human Rights welcomes your interest in this issue and we welcome the diamond industry’s remarkable action taken at Antwerp.

We welcome the international process that my friend and colleague

62

Alex has described to create an international system for legitimizing an industry. And we welcome Tony Hall’s legislation. But

I have a concern about all of these various developments. All of

them are too slow to impact what is going on in Sierra Leone right

now.

Sierra Leone is controlled by the RUF, about half of its territory,

including 90 percent of the diamond-producing areas. The presence

of 16,000 U.N. troops has not made a difference in the RUF’s ability to control and abuse the civilian population. Recently, I heard

a report from the foremost human rights activist in Sierra Leone,

a wonderful woman named Zainab Bangura, who had just received

the word about the RUF’s youngest rape victim, who was 12

months old. So long as the RUF is in place in Sierra Leone, it will

continue to commit abuses like this, and the key to the RUF maintaining its power and authority and military supremacy in Sierra

Leone is diamond revenues.

Last year, Liberia, precisely the year that the region was under

the closest international scrutiny and there were the most protestations about conflict diamonds including a host of international

meetings, Liberia had a boom year for sales, exporting $290 million

worth of stones. So any action that is taken has to happen very

quickly to deprive the RUF by depriving Liberia and others who

transship Sierra Leonean stones of resources and revenues with

which they are buying weapons to abuse the civilian population.

When you consider, for example, that the Swiss government re- leased figures that the Liberian sales doubled last year to $30 million just to Switzerland, that buys a lot of rifles. The RUF is not

buying aircraft carriers. They are not buying cruise missiles. They

are buying guns, and with those guns, particularly when their adversaries tend to be about five years old, they can do a great deal

of damage.

Thus, I am concerned that the legislation you are considering

right now has a two-year waiver. The RUF can be in place for two

years without seeing a dent in the resources it gains through the

illicit transfer of diamonds through Burkina Faso, Liberia, Togo,

and other countries.

Similarly, with the RUF controls regimen proposed in Antwerp,

which we strongly support, even under the most optimistic scenario, a global regimen under U.N. auspices that requires a treaty,

that requires every exporting and importing country in the world

to take legislative action, that requires consistent packaging in

every producing country, understandably, is going to take some

months, if not years, to put in place, and in the meantime, Liberia

and others continue to export diamonds in huge amounts.

My own view is that the United States Congress should take action immediately to put in place an import regimen that says the

U.S. will not import any cut and finished stones from any country

that does not have an embargo in place on the importation of rough

stones from Liberia.

Basically, this is the kind of legislation that is going to be required once the Antwerp system is in place. I am simply urging you

to put it in place early and put it in place now. It is not a substitute for the Antwerp system and it is not a substitute for the

international regimen, but it would allow the United States to push

63

very hard at the major importing nations of rough stones, that is

to say Israel, India, and Belgium, that they must themselves throw

up import restrictions on the importation of the principal countries

that are transshipping Sierra Leonean gems.

It does not do any good for Belgium to say solemnly, we are not

importing any stones exported from Sierra Leone when everybody

knows that Sierra Leone is not officially exporting any stones. Sierra Leonean stones are going almost exclusively through Liberia,

through Burkina, through Togo, through Guinea, and through

other countries. So saying you are not handling conflict stones

while you are allowing a boom number of stones to come in from

Liberia is simply disingenuous.

So my view is that the United States cannot control the diamond

industry. It cannot control the import and export policies of its allies and those that are the principal players in the diamond industry, but we can control what we are importing and we can put import controls in place tomorrow that would make it impossible for

Belgium, India, and Israel to continue handling rough stones and

expect to export the finished product here.

I would allow you a six-month waiting period if you asked, because these things cannot be done overnight. But I think the twoyear waiting period in the Hall bill and the ‘‘however long it takes’’

for the Antwerp system is simply too long given the urgency of the

problem in Sierra Leone today. Thank you very much.

[The prepared statement follows:]

Statement of Holly Burkhalter, Advocacy Director, Physicians for Human

Rights

Introduction:

Good morning, Chairman Crane and Members of the Committee. My name is

Holly Burkhalter, and I am the advocacy director of Physicians for Human Rights.

I am honored to appear at this hearing; thank you for conducting it. Physicians for

Human Rights is a human rights organization that utilizes the skills of the medical

and scientific professions to investigate and prevent human rights abuses around

the world.

My organization, which conducted an investigation of rape and sexual violence in

Sierra Leone last March, has organized in collaboration with InterAction and the

Africa Advocacy Network an informal coalition of some seventy U.S.-based human

rights, humanitarian, and religious groups to promote protection of human rights

in Sierra Leone. As a part of that effort, we have called upon the diamond industry

to take specific action to deprive the Revolutionary United Front (RUF) of revenues

from their control of Sierra Leone’s diamond resources, as a way of denying them

access to weapons and ending their control of and abuses against the civilian population. It goes without saying that if diamond revenues were not being used to purchase weapons that are used against the unarmed population, Physicians for

Human Rights would not be concerned about the RUF’s control of Sierra Leone’s

diamonds. For it is the link between diamonds, weapons, and abuses that is of concern, not diamonds in and of themselves. My remarks today focus on diamonds and

violence in Sierra Leone, but the observations about the need for reforming the diamond industry apply to Angola as well, and to future conflicts that may arise in

other diamond-producing countries.

Summary:

Physicians for Human Rights is deeply concerned about the continued sale of diamonds by insurgent forces in Sierra Leone and Angola, and the flow of weapons to

the combatants in return. We welcome the diamond industry’s recent commitment

to developing a global certification regimen that eventually will marginalize the

trade in conflict diamonds, and we urge all governments to diplomatically support

the initiative. In the meantime, however, it is vitally important that the world’s

principal importers of rough diamonds—Belgium, Israel, and India—immediately

enact unilateral prohibitions on the import of rough diamonds laundered through

64

1The RUF is the principal violator of human rights in the conflict of the past decade, but Sierra Leonean army forces and militia members (the so-called Karmajors) have also engaged in

gross violations of human rights, including capture and use of child soldiers. PHR is particularly

concerned about abuses attributable to forces under the authority of Johnny Paul Koromo, who

is now allied with the government of Sierra Leone. 2These numbers amount to half the population of Sierra Leone being displaced from their

homes.

Liberia, Burkina Faso, and Togo, and enact a quota on imports of diamonds from

the Ivory Coast and Guinea that is commensurate with their indigenous diamond

producing capacity. We respectfully urge this Committee to enact legislation this

year that prohibits American imports of diamonds from countries that have not

erected meaningful trade barriers against diamonds arriving from countries known

to launder Sierra Leonean and Angolan gems, or that permit the diamond industry

within its borders to handle stones from such sources.

Background:

The Committee is familiar with the role that diamonds have played in funding

and fueling appalling human rights abuses in Sierra Leone; indeed, that is why you

have called this hearing. The misappropriation of Sierra Leone’s diamond resources

by insurgents and renegade army officers and soldiers dates back to the early

1990’s, and official corruption and theft of Sierra Leone’s diamond resources is a

decades-long problem. But the linkage between diamonds and conflict only recently

riveted the world’s attention because of the RUF’s extraordinarily cruel violence

against unarmed men, women, and children. The insurgents’ signature violations include mass rape of women and children of all ages; widespread amputation of limbs;

and extensive forcible recruitment, deployment, and abuse of child soldiers.

Physicians for Human Rights’ preliminary medical investigation of human rights

abuses conducted last spring revealed that in areas under RUF control (approximately half of Sierra Leone) almost every Sierra Leonean institution, town, village,

and family has been weakened, scarred, maimed or destroyed by the insurgents’

reign of terror.1 PHR researchers have been informed by local human rights activists that in some communities almost every woman and girl has been raped. Thousands of women and children were abducted by RUF insurgents to serve as sexual

slaves or child combatants and hundreds are still in their custody.

The ubiquitous practice of rape is particularly appalling. This is a crime that carries great shame and stigma for the victims, and many rape victims who have escaped from the RUF (often pregnant or with new babies) have been rejected by their

families and communities. These innocent victims, many of whom survived other

gross crimes, such as amputation and mutilation and many of whom are HIV-positive as a result of rape, need extensive mental and physical health services as well

as job training and humanitarian assistance. But such services are all but nonexistent outside of Freetown because of the security threat that humanitarian organizations face in working in areas under the RUF’s control, and the paucity of such

services generally.

The RUF’s violence (as well as war crimes by other parties to the conflict) has

resulted in upwards of a million noncombatants fleeing the country altogether and

another million being displaced from their homes inside the country.2 But it was

not until the rebel force attacked U.N. peacekeepers attempting to disarm and demobilize RUF combatants in the diamond-mining areas, killing several and taking

five hundred hostage in May, that the international community at last was moved

to outrage and action. That action has included, appropriately, demands that the

RUF be deprived of the revenues from diamond smuggling that have been crucial

to its military campaign that nearly destroyed Sierra Leone and its people.

The Revolutionary United Front insurgency appears to have grown and developed

largely because of its access to diamond resources, with which the rebel force transformed itself into a formidable fighting force of some 15,000 fighters, well-armed

and well-equipped with everything that money can buy. As Ambassador Richard

Holbrooke stated in his July 31 testimony before the Security Council, ‘‘A year ago,

the RUF were drug-crazed, machete-wielding thugs. They are now acquiring machine guns, shoulder-fired surface-to-air missiles and the means to shoot down aircraft.’’ In a region where an AK–47 can be purchased for $5, millions of dollars in

diamond revenues have permitted the RUF to exert enormous control over the civilian population of the country.

The RUF does not appear to have an ideological basis for its war against its own

people, nor do ethnic or tribal divisions offer an explanation for its struggle. Rather,

the insurgents’ seizure of territory appears to be based exclusively on their quest

for diamonds, money, and power. Without its access to Sierra Leone’s vast diamond

65

3Statement of Ambassador Richard Holbrooke, Exploratory Hearing on Sierra Leone Diamonds, Security Council, July 31, 2000. 4 Notes for UN Security Council Committee on Sierra Leone Sanctions, Partnership Africa

Canada, July 31, 2000. 5 ‘‘The Heart of the Matter, Diamonds and Human Security,’’ Partnership Africa Canada,

2000. 6Guina, which is said to be a transshipment point for a significant quantity of insurgent-controlled stones is in a different category than Liberia and Burkina Faso. There is no evidence

of official Guinean government complicity in the smuggling, and the authorities have appealed

for international assistance in stopping it. 7 ‘‘African Nations Threatened with Sanctions,’’ The Washington Post, July 31, 2000.

wealth and the assistance of a powerful patron in neighboring Liberia, Charles Taylor, the RUF would never have become the military force that it is today.

Although Liberian officials have taken great umbrage at denunciations by the

Clinton Administration and British officials at its role in laundering the RUF’s illicit

diamond wealth, export statistics are a damning indictment. Official exports of diamonds from Sierra Leone in recent years have only averaged 8,500 carats annually,

but historically Sierra Leone’s annual production has totalled 530,000 carats. Where

are the missing diamonds? The RUF controls 90 percent of Sierra Leone’s diamondproducing areas and diamonds are most assuredly being mined and exported. They

are entering the world market through a number of other countries, most notably

Liberia.

Liberia’s average annual mining capacity is 100,000–150,000 carats, but the official Diamond High Council in Antwerp recorded Liberian imports into Belgium of

more than 31 million carats over the past five years; an average of 6 million carats

a year. U.S. Government officials estimate that the RUF has accrued $30—$50 million and perhaps as much as $125 million a year from the illicit sale of diamonds.3

The role of neighboring countries in transshipping diamonds mined elsewhere can

be seen in statistical records from the past decade in Belgium: Guinea exported 2.8

times more than it produced; Ivory Coast exported eight times more than it produced; and Liberia exported 40 times more than it produced.4 The Canadian nongovernmental organization, Partnership Africa Canada, which has investigated the

issue of conflict diamonds extensively, has identified the active involvement of Liberian officials in serving as a fencing operation for diamonds smuggled from other

nations, including Angola and Sierra Leone.

In a report this year, Partnership Africa Canada detailed the links between diamonds and weapons in Sierra Leone: ‘‘British newspaper accounts in January 1999

reported that late the previous year the RUF had contracted two British companies

operating ’aging’ Boeing aircraft to transport AK47 rifles and 60 mm. portable mortars to rebel-held territory in eastern Sierra Leone. The 40-ton consignment of arms,

from Brataslava in Slovakia, was undoubtedly acquired with diamond resources.

The arms were crucial in the RUF’s successful and highly destructive attack on

Freetown in January 1999.’’ 5

Other nations, notably Burkina Faso, Guinea,6 the Ivory Coast, and Togo are also

implicated in diamond smuggling from Sierra Leone, according to United Nations

experts. Burkina Faso’s president, Blaise Campoare, is intimately involved with the

RUF and a key advisor on its military stratgies. According to British Foreign Ministry official Stephen Pattison, Campoare and Charles Taylor regularly meet with

RUF military commanders to discuss strategy. The meetings are chaired either by

Taylor or Campoare. Pattison offered a detailed description of recent meetings between the RUF, Campoare, and Taylor, describing how three rebels, one carrying

diamonds to pay for ‘material’ from Burkina Faso, traveled with Charles Taylor to

a June 5 meeting in Ouagadougou; five days later, the rebel commander flew to

Monrovia to meet Taylor, carrying more diamonds to buy equipment.7

International attention to the role of diamonds in the ongoing destruction of Sierra Leone because of the U.N. hostage crisis and fear of possible consumer boycott

of diamonds persuaded the diamond industry in May of this year to undertake comprehensive reforms. At a meeting of diamond-producing nations and the industry in

Kimberly, South Africa, a plan for developing a global certification regimen for legitimate diamonds was developed and a follow-up meeting was held in Luanda in

May. The most significant development was in mid-July at Antwerp, where the

World Diamond Congress (the industry trade association) formally announced a

comprehensive, global certification plan for assuring that the industry does not

trade in conflict diamonds. A preliminary diplomatic meeting of key diamond producers and importers was held last week in Windhoek, Namibia, and ministerial

meetings are scheduled for Pretoria in two weeks to finalize the agreement.

Put overly simply, the industry’s proposed global certification scheme, known as

‘‘rough controls,’’ would work as follows. Rather than attempting to identify and exVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00069 Fmt 6631 Sfmt 6602 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
66

8 At this time the technology does not exist to source the mined origin of a cut and polished

diamond. Experts are often able to ascertain the source of a run of diamonds in the rough. But

once the alluvial material and other distinctive geological features are removed in cutting and

polishing, it is said to be impossible to identify the gem’s mined origin. 9The United States does not import rough diamonds. Almost all the diamonds that enter the

U.S. are cut and finished elsewhere. Thus the U.S. is not itself in a position to impose import

restrictions on rough stones. 10 A difficulty with this proposal is the inexact nature of assessing a country’s mining capacity.

Huge exports from a country with almost no capacity, like Liberia, are easy to spot. But in countries like Russia, with virtually unknown but presumably vast resources, determining mining

clude all conflict stones from the international diamond trade, the global certification scheme instead creates a certification and delivery system for legitimate exports and bars all others from certified cutting and finishing centers. No country

is permitted to import rough diamonds unless packets of these uncut diamonds have

forgery-proof certificates of origin granted by governments and are in tamper-proof

packaging. The rough exports are logged in an international computer database

when they leave a country and when they enter, so that discrepancies between exports and imports from any country would immediately be apparent. An international monitoring authority, the proposed International Diamond Council, would

conduct oversight of the entire system, and violators would be prosecuted and

banned from the trade.

It is important to note that once rough packets have been accepted into legitimate, certified cutting and finishing centers (largely based in Belgium, India, and

Israel) the packets of rough diamonds would be broken up and the country-of-origin

certification would be lost. The industry insists that it is absolutely impossible to

retain such documents for individual stones once they are cut, polished, traded, exported, and sold. (And, it is only fair to note that the diamond industry’s most

prominent critics, Global Witness and Partnership Africa Canada, agree with that

assessment.) If the global certification regimen is in place and operating properly,

the industry maintains that it is not necessary to know the country of origin of

stones coming out of its cutting centers because all stones in legitimate cutting centers will themselves be legitimate. Countries importing cut and polished diamonds

will not be required to source them to country of mined origin,8 but rather to impose

strict prohibitions on the entry of stones from any country where diamonds are finished that does not itself have rough controls in place.9

Weakness in the Proposed Plan of Rough Controls:

Mr. Chairman, the diamond industry can justly be praised for moving quickly in

recent months to create a global system to squeeze out the trade in conflict diamonds in a far-reaching, comprehensive way. Nonetheless, Physicians for Human

Rights is deeply concerned about what appears to be a significant weakness in the

industry’s proposal: transshipment and export by other countries of rough stones

mined in rebel-controlled Angola and Sierra Leone. The industry’s proposed global

certification scheme requires tamper-proof packaging and double-entry booking in a

computer registry. But what is to prevent a country from officially packaging and

sealing diamonds smuggled from Sierra Leone or Angola as their own, and exporting them openly and transparently through designated, monitored exit points? Only

in cases where exports grossly exceed the transshipping State’s own capacity (which

in the case of Liberia was so negligible that the country’s role in laundering others’

diamonds was immediately apparent) would the counterfeit be obvious.

The diamond industry has pledged not to deal in conflict stones, and we welcome

that pledge. On August 7, for example, Indian government officials announced that

they will require Indian traders who import uncut diamonds to declare that they

do not originate from Sierra Leone, Angola, or the Democratic Republic of Congo.

This is an important statement, given that India is reportedly responsible for finishing over 55 percent of the world’s cut diamonds. But to my knowledge, neither

the key countries that import rough diamonds for cutting and finishing nor the diamond industry itself has taken action to bar the importation of rough diamonds

from Liberia, Burkina Faso, or Togo. Since virtually all of Sierra Leone’s diamonds

are coming from those countries, not from Sierra Leone itself, commitments not to

import from Sierra Leone are not especially useful in actually stopping the trade

in blood diamonds and the flow of money and weapons to the RUF.

One measure to deal with this issue has been proposed by Ian Smillie, the leading

non-governmental expert on conflict diamonds who is now a member of the U.N. Security Council’s expert panel to review the effectiveness of the Sierra Leone diamond

embargo. Mr. Smillie has called for an immediate cap or exclusion from world markets of those exports of diamonds that significantly exceed a country’s known resource base.10 This provision is included in the working document to be considered

67

capacity precisely will be impossible, thus allowing the possibility that such a country could

serve as a transshipment base for diamonds from anywhere else in the world. 11 ‘‘Liberian Exports Flood Into Switzerland,’’ Associated Press, August 9, 2000.

at the upcoming ministerial conference. But the diamond industry as well as the

key importers of rough stones, Israel, Belgium, and India, should not wait for the

establishment of a global regimen to be completed, which may take years, before announcing and implementing such a policy today.

In July of this year, some seventy American non-governmental organizations released a letter calling upon the World Diamond Congress to immediately announce

that no packets of rough diamonds would be accepted into its cutting centers from

Liberia, Togo, Burkina Faso, the Ivory Coast, or the Democratic Republic of Congo.

This action would not be a substitute for the comprehensive, global system of rough

controls needed that, indeed, the diamond industry has agreed to. It is, rather, a

vital step urgently required now while the global certification regimen is settling

into place.

It is my understanding that the organized diamond industry firmly opposes taking

this action because there is no international sanctions regimen in place against

those countries transshipping conflict diamonds, only against rebel-controlled Angola and Sierra Leone. This is a disappointing response. The role of Sierra Leone’s

neighbors, particularly Liberia and Burkina Faso, in laundering Sierra Leonean diamonds in exchange for weapons is well known. It should not require a United Nations embargo to persuade the diamond industry to actually carry out what it has

pledged to do: cease handling rough stones from Angola and Sierra Leone. Making

good on that oft-stated promise obliges the three major importers and the industry

to immediately prohibit all contact with those countries that launder conflict diamonds. To date, I have not seen evidence that that step has been taken. Moreover,

the bountiful exports of diamonds within the last year from non-producing Liberia

make it inescapably clear that Sierra Leonean diamonds are entering the industry’s

cutting centers and are being traded and sold in the international market.

The United Nations Sanctions Committee’s expert commission on the Sierra

Leonean diamond embargo has been tasked to make its report on October 31. At

that time, the United Nations may enlarge the Sierra Leonean diamond embargo

to include Liberia and perhaps other countries. Let us hope that the three major

importing countries and the diamond industry will then do what it should have done

years ago: publicly announce that it is closing the doors of its cutting centers to all

diamonds emanating from Liberia and other countries known to transship Sierra

Leonean gems. Those centers concerned with their international reputation would

do well to immediately develop and publicize a protocol for identifying and excluding

such stones and invite the U.N.’s investigative body to regularly inspect its surveillance and vetting operations.

Physicians for Human Rights strongly supports the industry’s proposed global certification regimen of rough controls adopted in Antwerp. But even under the most

optimistic timeline for the plan’s adoption by the international community, it seems

unlikely that the program can be put in place in less than a year or two. Accordingly, it will be a very long time before these reforms choke off the RUF and

UNITA’s trade in diamonds and their ability to purchase weapons with the proceeds.

American officials have reported that Liberia exported $290 million in smuggled

diamonds last year alone. A Swiss customs official reported on August 9 of this year

that diamond imports from Liberia have soared in the past year, and estimate that

many are coming from rebel-held areas of Sierra Leone. Swiss diamond imports

from Liberia have totaled almost $30 million this year, compared with $15 million

last year, and the quality of the stones make it clear that they did not come from

Liberia.11

Legislation:

Physicians for Human Rights and our partners in the non-governmental community applaud Representative Tony Hall and his cosponsors for highlighting the link

between diamonds and human rights violations, and for proposing to take action to

limit their importation into the United States. We have endorsed the original

CARAT Act, and urged our physician members to encourage their own representatives in Congress to co-sponsor it.

t is my understanding that Congressman Hall’s revised CARAT Act requires that

diamonds entering the United States be accompanied by a certificate of mined origin, which can be waived if the rough controls regimen is in place and is effective

in stopping the trade in conflict diamonds. The Act’s import restrictions would not

go into effect until two years after enactment.

68

12For detailed information on arms flows to the RUF, see ‘‘Neglected Arms Embargo on Sierra

Leone Rebels,’’ a Human Rights Watch briefing paper dated May 15, 2000.

We would welcome action on the Hall-Wolf bill this session. It presses the diamond industry to implement what it has pledged to do, and it holds out the possibility of imposing a more rigorous import regimen—country-of-origin certification—

if it does not. Nonetheless, I still have concerns that neither the CARAT Act nor

the global certification scheme of rough controls will have any impact in the short

run on the trade in RUF and UNITA-controlled diamonds, and will do little to deprive those forces of their diamond revenue and thus their means of waging war.

Without meaning in any way to undermine either the CARAT Act or the global

certification regimen, I would like to suggest that the Committee consider revising

the legislation. The bill should include a prohibition on U.S. importation of any finished diamonds from countries, specifically including Belgium, India, and Israel,

which have not erected effective national embargoes on the importation of rough

diamonds from Liberia, Togo, Burkina Faso, and the DRC, and which have not prohibited the cutting centers that operate within their national boundaries from handling such stones if they are smuggled in. The U.S. could also prohibit the entry

of finished diamonds from countries that have not set a quota on the volume of diamonds that may be imported that is commensurate with the exporting country’s

own mining capacity. Thus the Ivory Coast and Guinea, which have their own diamond production, could export, but they could not export amounts disproportionate

to their own production, that is, launder diamonds for others.

The United States is not in a position to regulate the diamond industry, nor can

it force any other government to take the actions that are required for the global

certification program to become a reality. The only thing that the U.S. can do is control its own imports. By conditioning American imports of finished diamonds on the

actions of the world’s largest importers of rough stones—Belgium, Israel, and

India—the U.S. would encourage those governments to take meaningful action in

the short run that could help stem the flow of revenues to the RUF and UNITA

almost immediately. Such an action is not a substitute for the global system that

the diamond industry has agreed to, and which I believe is vitally needed. But it

does encourage in a meaningful way very rapid action on the part of both the diamond industry and the world’s leading importers of rough stones to cease importing

conflict stones exported by Liberia, Burkina Faso, and others.

Conclusion:

Mr. Chairman, I would not want to suggest by my testimony that diamonds alone

are the problem or the answer to the heartbreaking human rights crisis in Sierra

Leone. It is crucial, for example, that the United Nations and its strongest members

take immediate and forceful steps to implement the international weapons embargo

on the RUF, in place since 1997 and the arms embargo against Liberia, which was

imposed in 1992. The United Nations Security Council must put some teeth into

these measures by establishing responsible monitoring bodies and publicly report

and condemn violations. Moreover, competent troops should be posted at the Sierra

Leonean-Liberian border, at airfields, and other delivery points to seize shipments

of weapons to the RUF. U.N. forces should take immediate action to disrupt the

RUF’s weapons supply lines, including on roads and waterways, airports and airfields.12

What is needed most of all, in my opinion, is for the United Nations, generously

supported by the U.S. and its allies, to implement a forceful military strategy to dislodge the RUF from the areas that it controls (including the diamond-producing regions) and defeat, demilitarize and demobilize the insurgents. International peacekeeping forces should establish security and protection for all civilians throughout

Sierra Leone so that they may rebuild their shattered lives and country. Extensive

humanitarian and development assistance should be provided once security is established so that Sierra Leonean refugees in Guinea can return home. Those implicated

in human rights abuses, particularly those in command positions, should be apprehended and turned over to the Sierra Leonean authorities, and, eventually, to the

international tribunal that the United Nations is establishing to prosecute war

crimes in Sierra Leone for investigation and prosecution.

Most of the members of the non-governmental coalition that Physicians for

Human Rights has helped organize to work on conflict diamonds have been equally

outspoken about the need for protection of the civilian population and enforcement

of international human rights standards in Sierra Leone. We are very grateful for

the attention that Representatives Hall and Wolf have given to the issue of human

rights in Sierra Leone and the role that diamonds have played in the country’s deVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00072 Fmt 6631 Sfmt 6602 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
69

struction, and appreciate the Chairman and members of this Committee highlighting our concerns so prominently at this important hearing.

Thank you.

Chairman CRANE. Thank you.

Mr. Jolis?

STATEMENT OF J.F. ‘‘JACK’’ JOLIS, PRESIDENT, ROUGH

DIAMOND CONSULTANCY, ANTWERP, BELGIUM

Mr. JOLIS. Thank you, Mr. Chairman. I am an American diamond dealer/consultant and have worked for 30 years in every part

of the globe where diamonds are mined, bought, sold, and cut. Having for the past year or so read and heard so much about how the

relatively small diamond business is responsible for funding the

maniacal carnage we witness pretty much throughout Africa, I feel

compelled to reply.

Let us take a look at Africa and its suddenly infamous diamond

producing countries. Sierra Leone—even if not a single diamond existed there, not a man, woman, or child would escape being amputated or beheaded by a rusty machete. Let us not waste valuable

time talking about peacekeeping or mercenary forces in Sierra.

Peacekeepers? They consist mostly of Nigerian gangsters assisted

by some Guinea gangsters who are not only better armed but even

more intent on killing anyone who gets in their way of putting

their hands on the diamonds.

And in Sierra, there is a lovely bunch of drugged-up thugs called

the KAMAJORS, who, while professing to support the current government, find themselves fighting their allies, enemies, even themselves, not for diamonds but because they are drugged and all they

know what to do is fight. You think they would know how to sell

an uncut diamond?

Do diamonds pay for this mayhem? I doubt it, not when you are

offered, as I was recently in Kinshasa, a fully-loaded AK–47 for

U.S. $10. To top it all, the Leonean government hires a bunch of

quaintly named South African mercenaries called Executive Outcomes who are not only paid by the government with diamonds but

are even given diamond fields to exploit, and this by a government

supported by the U.N. that is bleating about their rebellion being

financed by diamonds.

Angola—sure, for the time being, most of the diamond fields lie

in UNITA hands, but these areas change hands according to the

fortunes of war. In any case, the MPLA also have diamond fields

of their own and I happen to know at first hand of many of the

MPLA’s generals who sell their diamonds to UNITA. The MPLA

have infinitely more money, in any case, from oil to buy weapons

than UNITA has diamonds, not to mention the fact that UNITA

diamonds, which are mostly on the western bank of the Cuango

River, are in no way distinguishable from the same diamonds

found on the Congo side of the river.

There is a lot of uniformed talk of some sort of invisible infrared

internal marking scheme for polished stones, which, even were it

possible, which it is not, would immediately wipe out the entire

category of D-flawless polished stones.

70

And then there is a theory about branding rough diamonds. Eh?

First of all, branding a rough diamond makes about as much sense

as branding a cow and then trying to determine where the resulting steak came from. And as for the notion of branding a cut diamond along its border with, say, something like ‘‘DeBeers 2001X,’’

any half-clever diamond cutter could do the same using the same

number he might have come across a similar-sized DeBeers stone.

So there is a lot of uninformed chatter about identifying the

providence of diamonds, whether cut or uncut. No can do, certainly

not in any court of law. Any expert will be countered by an opposing expert.

Which brings me back to what is currently known as D.R. Congo,

a country with at least three different areas producing distinctly

different diamonds, some rebel, some government. Mix them together in a single parcel and the job of determining which are the

clean stones becomes even more impossible.

Angola stones? Take some from UNITA-held zones, mix them

with stones from the MPLA, add some stones from Ivory Coast,

some others from Guinea, the Central African Republic, and what

have you got? A big load of nothing that is remotely identifiable by

anyone reputable.

If diamonds were the proximate cause of African tribal butchery,

how can one explain the Congolese civil war of 1960? Pro-Western

Moise Tschombe tried to establish independence for his copper-rich

and diamond-rich province today known as Kolwezi. He was foiled

by the U.N.-sponsored Kasavubu, who in turn was overthrown by

the equally U.N.-sponsored Mobutu, whose people killed the communist Lumumba. But the point of all this ancient history is that

at the time, nobody even uttered the word ‘‘diamond.’’ It was all

‘‘copper.’’

And do you remember the civil war in Nigeria between the

breakaway Biafra and the then-Federal Government? What did

diamonds have to do with that butchery? Right, exactly nothing.

Of the five civil wars in the Tchad, over diamonds? Sorry, nary

a one. Or even the 40-plus-year civil war in the Sudan, over diamonds? The only diamond you might find in the Sudan would be

lodged between the Mahdi’s cadaver’s two front teeth.

And the unspeakable mangle-shambles that used to be Somalia,

any diamonds involved in that particular charnel house? I do not

think so. And finally, in the worst killing fields since Cambodia is

the incredibly barbaric Hutu-Tutsi mutual genocide. Is it in any

way financed by diamonds of the blood kind or any other kind? No.

That Africa is in a dreadful and perhaps even terminal mess is

undeniable, but to fob off this horrible internecine catastrophe on

the fact that diamonds, along with a heck of a lot of other stuff,

abound there is to utterly lose any claim to a perspective on the

problem. As I said earlier, you could take away every diamond that

exists under the soil in Africa and not a single human being who

is currently being killed, tortured, or maimed would be spared.

An interesting case in point is the Central African Republic,

where the two major tribes, the Bayas and the Bandas, have been

both at each other’s throats since time immemorial, and yet diamonds are found in profusion in both these tribes’ areas. They are

manifestly not killing each other over diamonds.

71

There are really only two possible solutions to the problem. First,

and this is not really much of a solution at all, is to let them chop

each other up until the last man is standing.

Second would be to send in the only men who are competent and

incorruptible enough to do the job properly, the British SAS and

their Parachute Regiment, the French Foreign Legion and their

Régiments Etranger Parachutés, and the U.S. Special Forces and our Delta Force. Neo-colonialism? You betcha, and

99 percent of the people of the embattled Africa would kiss your

feet for it.

But ban blood or any other diamonds? First of all, such a plan

would not succeed. Diamonds are like fine art. They are non-fungible and by definition are not controllable. And even in the unlikely event that such an anti-diamond scheme did have a measure

of success, the only people it would hurt would be the already dirtpoor, hard working, artisan/digger poor devils digging away in the

third world, certainly not diamond dealers who have stocks like

Uncle Scrooge had a swimming pool overflowing with golden

spondulics.

Thank you, Mr. Chairman.

[The prepared statement follows:]

Statement of J.F. ‘‘Jack’’ Jolis, President, Rough Diamond Consultancy,

Antwerp, Belgium

DIAMONDS: AND AFRICAN CONFLICTS

I am an American diamond dealer/consultant and have worked for thirty years

in every part of the globe where diamonds are mined, bought, sold and cut. Having

for the past year or so read and heard so much about how the relatively small diamond business is responsible for ‘‘funding’’ the maniacal carnage we witness pretty

much throughout Africa, I feel compelled to reply.

Let’s take a look at Africa and its suddenly infamous diamond producing countries:

Sierra Leone: Even if not a single diamond existed there, not a man, woman or

child would escape being amputated or beheaded by a rusty machete.

Let us not waste valuable time talking about ‘‘peace-keeping’’ or ‘‘mercenary’’

forces in Sierra. ‘‘Peacekeepers’’? They consist mostly of Nigerian gangsters, assisted

by some Guinean gangsters, who are not only better armed, but even more intent

on killing anyone who gets in their way of putting their hands on ‘‘the diamonds.’’

And in Sierra, there is a lovely bunch of drugged-up thugs called the KAMAJORS,

who, while professing to support the current government find themselves fighting

their allies, enemies, even themselves—not for diamonds, but because they’re

drugged and all they know what to do is fight. You think they would know how to

sell an uncut diamond?

Do diamonds pay for this mayhem? I doubt it, not when you are offered, as I was

recently in Kinshasa, a fully-loaded AK–47 for $10. To top it all , the Leonian government hires a bunch of quaintly named South African mercenaries called ‘‘Executive Outcomes’’ who are not only paid by the ’government with diamonds, but are

even given diamond ‘‘fields’’ to exploit. And this by a government, supported by the

UN, that is bleating about their ‘‘rebellion’’ being financed by diamonds.

Angola. Sure, for the time being most of the ‘‘diamond fields’’ lie in UNITA hands,

but these areas change hands according to the fortunes of war. In ANY case, the

MPLA ALSO have diamond fields of their own and, I happen to know at first hand

of many of the MPLA’s ‘‘generals’’ who sell THEIR diamonds to UNITA. The MPLA

have infinitely more money from oil to buy weapons than UNITA has diamonds. Not

to mention the fact that the UNITA diamonds which are mostly on the western

bank of the Cuango River are, IN NO WAY distinguishable from the same diamonds

found on the Congo side of the river. So?

There is a lot of uninformed talk of some sort of ‘‘invisible infra-red internal

marking’’ scheme for polished stones, which, even were it possible, which it isn’t,

would immediately wipe out the entire category of ‘‘D-Flawless’’ polished stones.

And then there is a theory about ‘‘branding’’ rough diamonds. Eh? First of all,

72

‘‘branding’’ a rough diamond makes about as much sense as branding a cow and

then determining where the resulting steak came from. And, as for the notion of

‘‘branding’’ a cut diamond along its border (with, say, something like ‘‘DeBeers 2001

X) ‘‘, any half-clever diamond cutter could do the same, using the same number he

might have come across a similar-sized DeBeers stone.

So there is a lot of uninformed chatter about ‘‘identifying the provenance of diamonds,’’ whether cut or un-cut. No can do. Certainly not in any court of law—any

‘‘expert’’ will be countered by an opposing ‘‘expert.’’

Which brings me back to what is currently known as the D.R. Congo, a country

with at least 3 different areas producing distinctly different diamonds. Some ‘‘rebel.’’

Some ‘‘government.’’ Mix them together into a single parcel, and the job of determining which are the ‘‘clean’’ stones becomes even more impossible Angola stones?

Take some from UNITA-held zones, mix them with stones from the MPLA, add

some stones from Ivory Coast, and some others from Guinea and the Central African Republic, and you’ve got what? A big load of nothing that is remotely identifiable by anyone reputable.

If diamonds were the proximate cause of African tribal butchery, how can one explain the Congolese civil war of 1960? Pro-Western Moise Tschombe tried to establish independence for his copper-rich (and diamond-rich) province today known as

Kolwezi. He was foiled by the UN-sponsored Kasavubu, who in turn was overthrown

by the equally UN-sponsored Mobutu, whose people killed the communist

Lumumba—but the point of all this ancient history is that at the time nobody even

uttered the word ‘‘diamond’’—it was all COPPER!

And do you remember the civil war in Nigeria, between the breakaway Biafra and

the then-′′Federal’’ Government? What did diamonds have to do with that butchery?

Right. Exactly nothing.

Or the 5 civil wars in the Tchad? Over diamonds. Sorry. Nary a one.

Or, even the 40+-year civil war in the Sudan. Over diamonds? The only diamond

you might find in the Sudan would be lodged between the Mahdi’s cadaver’s 2 front

teeth.

And the unspeakable mangle-shambles that used to be Somalia. Any diamonds involved in that particular charnel house? I don’t think so.

And finally, in the worst killing fields since Cambodia is the incredibly barbaric

HutuTutsi mutual genocide in any way financed by diamonds? Of the ‘‘blood’’ kind

or any other? No.

That Africa is in a dreadful and perhaps even terminal mess is undeniable. But

to fob off this horrible internecine catastrophe on the fact that diamonds—along

with a heck of a lot of other stuff—abound there is to utterly lose any claim to a

perspective on the problem. As I said earlier, you could take away every diamond

that exists under the soil there and not a single human being who is currently being

killed tortured or maimed would be spared.

(An interesting case in point is the Central African Republic, where the two major

tribes, the Bayas and the Bandas, have been at each others’ throats since time immemorial. And yet diamonds are found in profusion in BOTH these tribes’ areas.

They are manifestly not killing each other for diamonds.)

There are really only two possible solutions to the problem:

First, and this is not really much of a solution at all, is to let them chop each

other up until The Last Man Is Standing.

Second would be to send in the only men who are competent and incorruptible

enough to do the Job properly: The British SAS and their Parachute Regiment; The

French Foreign Legion and their Regiments Etranger Parachutes; and the US Special Forces and our Delta Force. Neo-colonialism? You betcha. And 99 percent of the

people of embattled Africa would kiss your feet for it.

But ban ‘‘blood’’—or any other—diamonds? First of all, such a plan would not succeed . Diamonds, like fine art, are non-fungible, and by definition, are not ‘‘controllable.’’ And, even in the unlikely event that such an anti-diamond scheme DID have

a measure of success, the only people it would hurt would be the already dirt-poor

hard-working artisan/digger poor devils, digging away in the Third World—certainly

not diamond dealers who have stocks like Unca Scrooge had a swimming pool overflowing with golden spondulics.

Chairman CRANE. Thank you, Mr. Jolis.

Mr. Boyajian?

73

STATEMENT OF WILLIAM E. BOYAJIAN, PRESIDENT,

GEMOLOGICAL INSTITUTE OF AMERICA, CARLSBAD, CALIFORNIA, ON BEHALF OF WORLD DIAMOND COUNCIL

Mr. BOYAJIAN. Mr. Chairman, I am Bill Boyajian, President of

the Gemological Institute of America, GIA. GIA is a nonprofit

501(c)(3) public benefit corporation. As a nonprofit education and

research institution, we ensure the public trust in diamonds and

gemstones by educating and serving the gem and jewelry industry

worldwide. GIA is headquartered on a sprawling 18-acre campus in

Carlsbad, California, and has a significant office and laboratory in

New York City. We employ some 700 professionals and have campus facilities in eight countries on three continents.

Everyone concerned believes that it is in the long-term best interest of the trade and the public that the exploitation of diamond

resources to fuel war and conflict in African countries be halted immediately. Over the past year, the Gemological Institute of America

has been asked to research, review, and comment on the feasibility

of identification of country of origin of rough and polished gem diamonds. I will speak very briefly today on GIA’s view of those possibilities and limitations as they currently exist.

From the outset, let me state that based upon all of our current

knowledge and that which we have been able to glean from the literature and other noted experts, there is no known scientific and

practical means for determining the country of origin of rough and

polished gem diamonds. And while some have suggested that visual means alone will distinguish rough diamond origin, we would

view this as highly problematic and overly subjective, at best.

We believe that if steps must be taken now to curtail the flow

of so-called conflict diamonds into the trade, and we believe this to

be so, such steps must entail the tracking of diamonds in the

rough, from mine through manufacturer, in order to assure the retail community and ultimately the consumer that diamonds entering the marketplace are conflict-free. To succeed, such a tracking

system will require the increased cooperation of all organizations

in the diamond industry and all governments of countries involved

in the mining, exportation, importation, manufacturing, and/or distribution of rough gem diamonds.

Of the 100-plus millions of carats of diamonds mined annually,

only a few percent actually originate in countries of known civil

conflict. In this regard, it should be understood that country of origin means the country where diamonds are mined or extracted and

not necessarily the places where they were deposited in the earth’s

crust. Diamonds originally emplaced in several primary deposits in

one or more countries could be weathered out of their original host

rock, transported by rivers, and become concentrated in a secondary deposit in another country. I might add that many of the

diamond deposits in the countries of conflict in Africa are those of

secondary deposits. That is, they have been carried there through

the transport of rivers and weathered from their original host.

If identifying characteristics existed for the diamonds from a particular primary deposit, these features may or may not be retained

during the weathering and transport of the diamonds. Moreover,

from a single secondary deposit in a conflict country, one could potentially find diamonds with characteristics distinctive of several

74

primary deposits in one or more countries. Therefore, these characteristics would provide no information on where the diamonds were

mined but only where they were first brought to the surface, possibly in a neighboring non-conflict country that depends on diamond exports to maintain economic and social stability.

Even if a high proportion of rough diamonds from a particular

geographic area does not have some distinctive physical characteristics, many such characteristics are lost during the manufacturing

process. This means that even fewer characteristics exist for determining the geographic source of polished diamonds.

Analogous to studying the country of origin of diamonds is that

of the country of origin of various colored stones—ruby, sapphire,

emerald in particular. Because GIA has long felt that the best research data and expertise has not resulted in a standard of consistency and scientific backing acceptable to our institution, we have

never entered the arena of providing origin reports on colored

gemstones and continue to hold this fundamental view.

Likewise, except and until the advent of so-called conflict diamonds, GIA as a world authority on polished diamonds has never

seriously been asked or even contemplated the prospects of attempting to determine the country of origin of rough diamonds.

In summary, based upon current knowledge, there is no known

scientific way to determine the country of origin of rough or polished gem diamonds, nor do we foresee practical ways being developed in the near future. Likewise, we would be highly suspect of

those who might characterize visual observation alone as a means

of rough diamond identification. Such claims, in our view, are

fraught with danger.

Therefore, a chain of warranties or a system of certification to

track diamonds from their country of origin through the manufacturing process and ultimately to the retailer and the consumer

would provide a better alternative at this time to the goal of preventing the sale of conflict diamonds. As a nonprofit public benefit

institution, GIA is committed to assisting the trade, governments,

and non-governmental organizations in whatever way possible to

curtail the mining and flow of conflict diamonds.

Chairman Crane, as President of the Gemological Institute of

America, I have also been asked to serve on the World Diamond

Council and have been asked to chair the technical committee of

that council and our goal would be to implement the Antwerp resolution as it was currently passed. Thank you.

[The prepared statement follows:]

Statement of William E. Boyajian, President, Gemological Institute of

America, Carlsbad, California, on behalf of World Diamond Council

INTRODUCTION

Mr. Chairman and members of the subcommittee, I am William E. Boyajian,

President of the Gemological Institute of America (GIA). Founded in 1931, GIA is

the largest educational and research institution in the world, with some 700 employees on campuses in eight countries on three continents. Incorporated as a 501(c) 3

public benefit corporation, GIA’s mission is to educate and serve the gem and jewelry industry, creating standards of professionalism to benefit the trade and, therefore, uphold the public trust in diamonds and other gemstones. We educate some

15,000 people each year in gemological training programs and conduct state-of-theart gemological research to ensure the integrity of gems. Our Gem Trade Laboratory

grades most of the major polished diamonds that are bought and sold around the

75

world each year, estimated at a value of some $3 billion at the wholesale level. We

also design and manufacture fine gemological testing equipment to assist jewelers

in identifying and grading diamonds and other gemstones.

Over the past 18 months, interest has been expressed by certain governmental

and non-governmental organizations in establishing a mechanism to determine the

‘‘country of origin’’ of gem diamonds. These organizations suggest that if such a determination could be made, the diamonds being mined in particular conflict countries could be identified and banned from international commerce. This action would

deprive the combatants involved of an important source of revenue for their activities.

Of the hundred-plus millions of carats of diamonds produced annually, only a few

percent originate in conflict countries. Despite this fact, public pressure is being

placed on the jewelry trade to quickly develop a mechanism to segregate those diamonds that are illicit. GIA has therefore been asked to research, review and comment on the feasibility of identification of country of origin of rough and polished

gem diamonds. This report sets forth the position of GIA as to whether the country

of origin for gem diamonds can be determined.

There are two different parts to the problem of determining the country of origin—identifying the geographic source of rough or polished diamonds, and tracking

diamonds from their source through the diamond ‘‘pipeline.’’ Can an analytical

means be developed to determine the geographic source of rough and polished diamonds whose origins are uncertain? Can a procedure be organized for tracking particular diamonds from the mine through manufacturing and retailing to the consumer, to prevent diamonds originating in certain countries from being sold? This

report will address these questions.

Based upon current knowledge, no practical means exist today for determining the

country of origin of rough or polished diamonds, although means may be developed

to make such a determination for some percentage of rough diamonds. We believe

that steps can be taken to track diamonds from the mine through to the manufacturer and retailer. To succeed, such a tracking system would require increased cooperation among all organizations of the diamond industry.

This report will focus on discussing the technical considerations involved in determining the country of origin for rough and polished diamonds, and will conclude

with a few remarks about a diamond tracking system. Before discussing these

issues, it is first necessary to make a few preliminary comments as background information.

General Comments Relevant to Determining Country of Origin

Diamond Formation. Diamonds crystallize deep in the earth’s mantle, and are

brought to the surface through magmatic activity. At the surface, the diamonds

occur in certain kinds of volcanic rocks (kimberlites and lamproites). From the primary deposits in these rocks, some diamonds are released during rock weathering

and can become concentrated in secondary alluvial deposits formed along rivers, or

in the marine deposits under the ocean along the western coast of southern Africa.

Like other minerals and rocks, diamond crystals contain within themselves a

record of their geologic history in terms of their morphology, detailed chemical composition, growth and etching features, and inclusions. Interpreting this record is a

current focus of geological research to better understand the physical conditions and

processes that take place where diamonds crystallize in the mantle. For scientists,

diamonds are particularly valued for this purpose because they, and their mineral

inclusions, undergo so little alteration after the diamonds are emplaced in the crust.

Thus, this record provides much information on the conditions of growth of diamonds, and some information on their post-growth conditions, in the mantle. However, the record provides little or no information on the geographic source of diamonds in the earth’s crust where they are found and mined. Thus, the features of

diamonds may provide no indication of their country of origin.

Meaning of ‘‘country of origin.’’ In discussions on the subject of determining geographic source, it should be understood that country of origin means the country

where the diamonds are mined or extracted, and not necessarily the places where

they were deposited in the earth’s crust. Diamonds originally emplaced in several

primary deposits (in one or more countries) could be weathered out of their original

host rock, be transported by rivers, and become concentrated in a secondary deposit

in another country. If identifying characteristics existed for the diamonds from a

particular primary deposit, these features may or may not be retained during the

weathering and transport of the diamonds to secondary deposits. Moreover, from a

single secondary deposit in a conflict country, one could potentially find diamonds

with characteristics distinctive of several primary deposits in one or more other

countries. Therefore, these characteristics would provide no information on where

76

the diamonds were mined (i.e., in a conflict country), but only where they were deposited, possibly in a neighboring non-conflict country that depends on diamond exports to maintain economic and social stability.

Distance from the source. As diamonds travel further from their geographic source

through the diamond ‘‘pipeline,’’ the likelihood of recognizing their source decreases.

In most cases today, a manufacturer purchases an assortment of rough diamonds,

possibly from a number of different geographic sources that are not all fully known

to them, to polish as gemstones. The contents of this assortment are often determined based upon the particular needs and capabilities of the manufacturer. Mixing

diamonds from several sources also provides for a more equitable distribution of diamonds among manufacturers. These factors all contribute to an uncertainty about

geographic source as the diamonds are bought and sold in the trade.

Loss of features during manufacturing. Even if a high proportion of rough diamonds from a geographic area does have some distinctive physical characteristics,

many such characteristics are lost during the manufacturing process to produce polished gemstones. This means that even fewer characteristics exist for determining

the geographic source of polished diamonds.

Acceptable proof of a country of origin. Among the organizations advocating that

the jewelry trade takes steps to identify diamonds from conflict countries, there has

yet to be much discussion on what would be considered acceptable proof that the

features of particular diamonds establish that they do or do not come from a conflict

country.

Unique Characteristics of a Diamond

Determination of the country of origin depends upon the existence of characteristics that are unique to diamonds from a particular geographic source. Possible distinctive characteristics include visual features of the rough or polished diamonds,

gemological properties, spectrum bands, and chemical composition data. To the extent that the diamond crystals in a deposit have a common geologic history, they

may have such similar characteristics that are unique to that deposit. Documenting

these characteristics may then allow the determination of a country of origin. Such

unique characteristics would need to be established on the basis of statistical studies of numerous diamonds from an area, with the resulting information being compiled into a database. Many diamonds from all similar sources would have to be investigated to check claims of uniqueness.

Characteristics of diamonds that are potentially diagnostic of geographic source

fall into several categories:

1) Visual features of rough diamonds—size, crystal morphology, surface features

(resulting from growth, etching, abrasion, and radiation exposure), color, and inclusions.

2) Visual features of polished diamonds—size, color, clarity, transparency, fluorescence, inclusions, and quality of polish.

3) Physical properties—visible, infrared, luminescence, and Raman spectra, anomalous birefringence patterns, and measurements of other physical property.

4) Detailed chemical composition analysis—trace elements, trace element ratios,

and isotopic data.

Determining unique characteristics. Geologic studies have shown that in some primary deposits, all the diamond crystals have a common geologic history. In other

deposits, the diamonds have differing histories (that is, they originated from different areas in the mantle). Secondary alluvial deposits contain diamond crystals

from all primary deposits sampled by the waters that transported the crystals to

the alluvial deposit; in some cases, this transport can extend over great distances.

At present, there exist scattered scientific studies of diamonds from several deposits,

limited mining records, and anecdotal evidence which suggest that, on average, diamond crystals from some deposits do have some identifying characteristics (such as

shape, surface features, and color). However, the existing data are too limited and

too sketchy to identify the place of origin of any given random diamond crystal with

a high degree of certainty.

In order to determine if certain characteristics are typical of diamonds from a geographic source, one would need to gather many kinds of analytical data. These data

would be required from a sufficient number of diamonds known to be from a particular area, to find both the average characteristics and the unusual ones, in order

to have a statistical degree of confidence in this information.

To further determine whether these average characteristics are diagnostic of diamonds from a particular deposit, one would need the same large quantity of data,

from a similarly large number of diamonds, from each of the other commercial diamond-producing areas around the world. Collection of these data could be more easily accomplished for primary deposits that occur in well-defined areas, and under

77

the control of major mining companies. Collection of data on diamonds from secondary alluvial deposits would be much more difficult to achieve both because there

is less control over mining activities (undertaken by numerous groups or individuals

on a legal or illegal basis), and because the productive areas may be geographically

very large. For both primary and secondary deposits, a determination would need

to be made about what would constitute a truly representative sample of diamonds

from an area. Statistical studies would then need to be carried out to analyze the

characteristics of the diamonds from each deposit, to determine if such characteristics are unique to the diamonds from that deposit.

Results of these statistical studies would need to be compiled into a database,

against which the features of diamonds of unknown source could be compared. At

this time, such a database does not exist. Gathering sets of diamonds from known

deposits would be a first step toward building this database. An appropriate procedure to document the characteristics of these sets of diamonds would need to be

agreed upon and implemented. Creation of this kind of information database is a

large research undertaking, and would likely take a several years (and millions of

dollars) to complete. Even then, one cannot rule out the possibility that diamonds

from some deposits will not have features diagnostic of their geographic source, and

that some atypical diamonds will exhibit characteristics suggestive of deposits other

than the one from which they were mined.

Source determination for rough versus polished diamonds. Various features have

been suggested as being potentially characteristic of rough diamonds from a particular country. These include crystal morphology, surface features, inclusions and

internal structure, shape or surface profiling, and trace element chemistry. While

diamonds from some deposits seem to have similar characteristics, no studies have

been published which indicate that mixed parcels from multiple sources could be

separated on the basis of such characteristics. Many of the surface and shape features present on rough diamonds are lost during the manufacturing process, leaving

even fewer characteristics of polished diamonds that are related to their geographic

source. Over the past 50 years, millions of polished diamonds have been examined, and

their gemological properties carefully documented, in gemological laboratories during the production of quality grading reports. During this extensive opportunity to

examine numerous polished diamonds, no observations have been reported which indicate that polished diamonds from a particular geographic source could be recognized during the grading procedure. Distinctive light reflection patterns arising from

the arrangement of facets, and the use of logos or other identifying marks, have

each been proposed for distinguishing polished diamonds. Except for a few isolated

studies, no extensive research work has been undertaken to establish if any of these

features will allow the recognition of particular polished diamonds originating from

conflict countries. On the contrary, past observations suggest that the features of

polished diamonds are not distinctive of geographic origin.

Documentation of spectra or other physical properties. Features of the spectra of

diamonds, or measurements of other physical properties, vary greatly within the

diamonds from the deposits that have been studied. Such features result from the

conditions of growth or post-growth to which the diamonds were subjected to in the

mantle. While some generalizations can be made (for example, many diamonds from

the Premier mine in South Africa display strong blue ultraviolet fluorescence), no

data have been published which propose that spectral features or other physical

properties are unique to diamonds from a deposit, or to claim that all diamonds

from a deposit exhibit given features.

Documentation of chemical composition. Compared to most other minerals, diamond is chemically quite pure. Nitrogen may occur at concentrations up to 0.5 percent. Other trace elements can occur at very low concentrations (levels of parts per

million or parts per billion).

Detection of trace elements at these very low levels in diamonds requires sophisticated and sensitive analytical techniques, such as neutron activation analysis or

laser ablation mass spectrometry. Such techniques are expensive and time-consuming, taking hours per sample to complete an analysis. The former technique requires the diamond to be irradiated in a nuclear reactor, and then the radioactive

decay of each of the various trace elements present in the diamond to be counted

using gamma spectroscopy methods. The latter technique, also referred to as LAICPMS, is a destructive method of chemical analysis, although on a small scale. A

few cubic micrometers of the diamond are vaporized by a laser beam (and a tiny

hole is produced), and the resulting components in the vapor are then analyzed with

a plasma mass spectrometer. The small area chosen for analysis would need to be

representative of the chemistry of the entire diamond. Achieving a representative

area may be quite difficult, because past studies have shown that diamonds can be

78

chemically quite inhomogeneous in terms of their trace elements. This could require

multiple analyzes be made of an individual diamond. A third method might be to

chemically analyze the isotopes of carbon or the trace elements in a diamond, which

would also be destructive to the sample. Although quite sensitive, all three techniques are impractical in terms of cost and time for analyzing a large number of

diamonds. For each of these methods, the analyzed areas would need to be cleaned

of surface contaminants, whose presence could prevent or render inaccurate the detection of trace elements at very low concentration levels. Data obtained from these

analytical techniques would need to be compiled in a computer database, and analyzed by statistical methods.

Even if trace element data existed for diamonds from all major deposits, little or

no results have been published to suggest that polished diamonds from a particular

geographic source could be recognized on the basis of such information. Like mineral

inclusions, the trace element composition of diamonds reflects their environment of

crystallization in the mantle, and so it may vary among the crystals within a given

deposit, especially an alluvial one.

Country of Origin of Colored Stones

Analogous to studying the country of origin of diamonds is that of the country of

origin of various colored stones: ruby, sapphire and emerald, in particular. Several

respectable laboratories have sought to compile databases on the country of origin

of these stones to meet market interests by producing gemological reports on the

origin of country of such gemstones.

Even with decades of independent research and the collection and analysis of comprehensive data, country of origin of colored stones is not an exact science and can

more reasonably be characterized as professional opinions based on the best evidence available to date and to that lab. Such interpretations or conclusions can and

do vary from laboratory to laboratory. Because of this and for other reasons, laboratories offering origin reports often state that it is their ‘‘opinion’’ of origin or that

a stone has characteristics similar to that of certain countries.

As you can probably surmise, country of origin determinations are a hotly debated

subject in the colored stone world. Because GIA has long felt that the best research

data and expertise has not resulted in a standard of consistency and scientific backing acceptable to our institution, we have never entered the arena of providing origin reports on colored gemstones, and continue to hold this fundamental view. Likewise, except and until the advent of so-called conflict diamonds, GIA has never seriously been asked or even contemplated the prospects of attempting to determine

country of origin in diamonds.

Conclusion

Based upon current knowledge, we do not know of any scientific way to determine

the country of origin of rough or polished gem diamonds, nor do we foresee practical

ways being developed in the near future. Determination of geographic source might

be made for some percentage of rough diamonds, because of the additional identifying characteristics they may exhibit. However, considerable research work would

be needed before one could estimate how large that percentage might be. Even in

the best-case scenario, it is to be expected that a significant number of rough diamonds would not show sufficient distinctive characteristics for their country of origin to be determined.

Therefore, a chain of warranties or a system of certification to track diamonds

from their country of origin through the manufacturing process to the retailer and

the consumer would provide a better alternative at this time to the goal of preventing the sale of illicit diamonds. Useful discussions have already begun within

the trade on how such a tracking system could operate. Some of the organizational

structure for cooperation among trade groups to implement a tracking system for

legitimate diamonds already exists. Such a system could be initiated rather quickly

if it should become a legal requirement. This will oblige dealers to declare the true

origin of their diamonds, and will in turn act as a guarantee that parcels of diamonds sold under such a system would not contain so-called conflict diamonds. Initiation of a tracking system would be an important step toward preventing illicit diamonds from passing along the diamond ‘‘pipeline’’ to the consumer, and the funds

from the sale of these illicit diamonds being used by conflict combatants.

As a nonprofit public benefit institution, GIA remains committed to assisting the

trade, governments and nongovernmental organizations in whatever way possible,

to curtail the mining and flow of so-called conflict diamonds.

79

Chairman CRANE. Thank you, Mr. Boyajian.

I apologize to all of you for the absence of our colleagues, but as

I indicated earlier, we have the debate going on over on the floor

to try and override the President’s veto of the marriage penalty

tax, and that marriage penalty tax in my district alone affects approximately over 140,000 of my constituents that are taking the hit

because of that absurdity in our tax code. If we did not punish people for getting married with our tax code, that would translate into

almost $100 million a year more to those individuals affected in my

district. I suspect they would be buying more diamonds for their

wives if we did not have that obscene code in place.

At any rate, we are going to be wrapping up after your panel,

but I would like to ask just a few questions of you, if I may, before

you depart.

Ms. Burkhalter, can you comment on whether the NGOs have

any efforts underway to boycott diamonds?

Ms. BURKHALTER. The 70 humanitarian, human rights, and religious organizations that joined with Physicians for Human Rights

in calling on the diamond industry to take action against specifically transshipment countries, as well as to implement the global

scheme that they did, indeed, agree to, have never announced a

boycott on diamonds, in large part because of our concern about the

legitimate diamond producers that have been mentioned more than

once in today’s hearing.

I will say, however, that there is enough concern within this community, that without speaking for every group, if by, oh, I do not

know, Valentine’s Day there is no sign that either the Antwerp regimen is in place and moving or the producing countries, particularly those that are dragging their feet, such as Russia, are committed to moving very smartly forward, and if we are not seeing

a diminution in the exports from known transshipping countries

that have no productive capacity of their own, namely Liberia, I

think there would be an interest in an education campaign. That

campaign might urge the many hundreds of thousands of members

of our many groups, particularly in the faith community, to educate

our membership about the role of conflict diamonds in the situation

in particularly Sierra Leone. We would probably be eager to urge

consumers and certainly our own membership to start asking questions at the retail level about whether this diamond can be—

whether the diamond people are looking to purchase can be assuredly a conflict-free stone, or more specifically, whether the retailer can promise that this diamond did not transship through Liberia.

Now, of course, the retailer will not be able to do so, and whether

that then translates into a boycott or a consumer’s decision not to

buy, I cannot say. I do not want to leave you with the impression

that we are announcing a boycott, but I will leave you with the impression that the groups that have joined with my organization in

pressing on the diamond industry are plenty agitated about this

and only very fast action is going to, I think, relieve their anxieties

about it.

80

Chairman CRANE. Mr. Fischer and Mr. Runci, if you would both

comment, I understand that the largest selling company of rough

stones has begun to market its diamonds as clean diamonds and

that some U.S. retail stores have begun to advertise their diamonds

as clean diamonds and are charging premium prices. Some people

see this as a confirmation that legislation to control the flow of diamonds will result in tightened price controls, for the largest diamond dealers shut out smaller dealers and the consumers will end

up paying higher prices for diamonds.

Would you please comment on this and whether you foresee

higher diamond prices if legislation is enacted to control the flow

of diamonds, and Mr. Fischer, you might go first and then Mr.

Runci.

Mr. FISCHER. Thank you. DeBeers has, in fact, started labeling

the boxes of rough diamonds that it sells as conflict-free. They have

stopped buying diamonds on the markets, on the open markets in

Africa, to assure that they are not buying conflict diamonds. They

have made a kind of a unilateral decision to be careful that there

is not an issue about transshipping and things like that during

these times.

Ultimately, the issue about whether a market would be divided

up into clean diamonds and non-clean diamonds certainly has several concerns. One is that we share a concern that controls be put

into place that are effective so that when diamonds are labeled

clean, and hopefully all diamonds under our system will be labeled

clean, these labels will not be superficial but they will be real, that

they will have reality behind them.

Regarding two different pricing systems, it is somewhat speculative how a market might develop, but if there were a system of

clean and unclean diamonds, you can go ahead and do intellectual

gyrations that the public would put more value on those that were

labeled as conflict-free. The issue is that without a comprehensive

program, that there will be clear labeling of the conflict-free diamonds versus other diamonds that are not labeled so, but there

will not be in reality a clear distinction. That is why we want to

put this safety net up as high as we can in the system where it

can be filtered, where as difficult a challenge as it is, we believe

that it is achievable. Anywhere lower down in the system where it

is done closer to the consumer and the retail jeweler, it is just not

workable. It is not going to accomplish what we all want.

Chairman CRANE. Mr. Runci?

Dr. RUNCI. Speaking from the position of retailers, Mr. Chairman, there is no way in the current regime for a retail jeweler to

directly and absolutely certify that any diamond that he or she

sells to a consumer is conflict-free. The most that retailers can do

today and, in fact, the majority of retailers are doing today, is to

assure consumers that they have made every effort in working with

their diamond suppliers, be they jewelry manufacturers or dealers

or traders in polished diamonds, which are the only kinds of diamonds that retailers buy, to require that they, in turn, have made

every effort to ensure that the purchases they make from their suppliers are assured as being conflict-free. In other words, a chain of

assurance as opposed to a chain of warrants. In order to institute

a true chain of warrants to ensure that no conflict diamonds are

81

being sold, as I said in my testimony, we would require controls in

place first in the countries of extraction.

As to the presence of claims by some jewelers that their stones

are conflict-free, I believe those claims are now being made by

some jewelers based on the assurances they have received from

their suppliers. The irony here is that everyone, to my knowledge,

in the industry in the United States is acting in good faith out of

their, not only a desire to preserve their businesses, but out of true

abhorrence to the connection that has, in fact, been established between four percent of the world’s production of rough diamonds and

these atrocities. Everyone wants that to end.

But the reality is that the retail jeweler, and the majority of retailer jewelers in this country, are small family-owned businesses.

The retail jeweler is powerless to provide 100 percent assurance

today. But they are making their best-faith effort. They are requiring similar assurances from their suppliers, and I am happy to say

that the supply side of the industry in the United States has moved

swiftly to offer those assurances and, in turn, to pass those requirements on up to their suppliers overseas. I believe the process is in

motion.

Chairman CRANE. Mr. Runci, the retailers are at the far end of

the diamond pipeline and they have little control, if any, over the

diamonds they import and they have to rely on what rough diamond dealers tell them is the source of their diamond imports.

What steps can retailers take to accurately ascertain the mining

source of imported diamonds?

Dr. RUNCI. Retailers typically purchase their diamonds, Mr.

Chairman, from traders or diamond wholesalers here in the United

States. Large retailers may purchase their diamonds from diamond

traders or wholesalers outside the United States. Retailers have

been enlightened on this issue for the past year as a result of a

continuing series of information bulletins that we have issued because this was an issue, quite frankly, that, with all due respect

to the civil society community, they were on top of much earlier

than the jewelry industry here in the United States. Jewelers have

no conception, nor have they ever had to be concerned with the ultimate origin in terms of extraction of the diamonds that they buy

and that they sell to consumers.

The very last thing that a jeweler wants is for a consumer to say,

‘‘how can you assure to me that this stone is not tainted?’’ No such

absolute assurance could be given. The chain of assurances that

has been put in place for the past nine months through our repeated communications to our members and their use of those communications with their vendors, the so-called Vendor Guidance

Agreement that the Jewelers of America developed, seems to be

working in terms of elevating the level of awareness up within the

trade and increasing the level of assurance that any retailer can,

in fact, offer their consumer.

We look forward to the day when simple international controls

have been put in place, starting in the countries of extraction. That

ultimately ensures that the flow of diamonds forward is, in fact,

untainted and that if, sadly, there are still conflict diamonds, they

are, in fact, being diverted to those markets that have not instituted those controls.

82

I think the United States and Congress can play an important

leadership role in this effort, but hopefully it will be in concert with

the international community, through leading the international

community, but not with a gun to the retail jeweler’s head that he

simply cannot accept without his business being on the line. Thank

you.

Chairman CRANE. Mr. Boyajian, do you foresee the possibility of

practical technology in the near future to determine the country of

mining of a cut and polished diamond?

Mr. BOYAJIAN. I do not. As I mentioned in my testimony, we

have never been asked, nor have we even contemplated the idea of

origin of country of polished diamonds. We ourselves are not experts in rough. We are experts in polished. We grade most of the

major diamonds that are bought and sold around the world, especially the larger, more important diamonds. We put quality analyses on them with color grade and clarity grade and cut.

But I just do not see the technology developing to be able to implement a system of being able to identify country of origin, and

again, as I mentioned in my testimony, in my written testimony

and also my oral testimony, it is extraordinarily difficult to know

where the diamond has actually come from. Where it was mined

from may not be where it originated.

The sources that have been identified in previous reports that

have been submitted perhaps to this group, perhaps to your committee, have identified sources of scientific data back to the beginning part of the 20th century. It is important to remember that

when goods were only coming from South Africa, for example, it

was much easier to study one mine’s production and be able to determine certain chemical or physical characteristics of diamonds

that might lead you to be able to determine origin. Such cases have

been cited many times in these reports.

My concern is that diamonds are found all over the world today.

Russia is a major producer of diamonds, as is Australia and now

Canada, all of Southern Africa. It is extraordinarily difficult to distinguish between primary and secondary sources. I just do not see

the technical feasibility. I would not know, sir, where to start.

Chairman CRANE. I want to express appreciation to all of you for

your testimony this morning. Again, I apologize for the absence of

my colleagues, but your written testimony and your response to

questions will be made a part of the record and so they will have

access to what you said.

I would appreciate it if you would stay in touch with us, though,

on an ongoing basis. This is an issue obviously of concern and concern to some of our colleagues who have already attempted to approach it legislatively. I am not sure exactly yet what the answer

is, but we appreciate all the help we can get from you.

With that, the committee stands adjourned.

[Whereupon, at 11:54 a.m., the hearing was adjourned.]

[Submissions for the record follow:]

Statement of Elly Rosen, Founder and President, Appraisal Information

Services, on behalf of Gems and Jewelry Reference, and Appraiser’s Information Network

Mr. Chairman and members of the subcommittee, my name is Elly Rosen and I

am founder of Appraisal Information Services (AIS), an online reference resource

83

and networking forum for members of the gems and jewelry and other personal

property trades, as well as for practitioners in the personal property appraisal profession.

I would first like to commend this subcommittee and the various members of congress who have been working towards finding a solution to the problems inherent

in the sale of African diamonds whose proceeds are used to fuel the fires of war.

I also commend you for providing this opportunity for trade leaders to present the

perspective of an industry whose members are generally honest hard working merchants who should not become further innocent victims of these terrible conflicts.

America and its citizenry have a moral obligation to enter into the international dialogue being conducted on this issue and we all owe a debt of gratitude to those

members of Congress who are trying to assure such entry at an early stage.

For context of your considering my brief comment, I should add that sections

within our site include the Appraisers’ Information NetWork (AIN), the Gems &

Jewelry Reference (GJR), the Guide for Personalty Expert Witnesses & Trial Consultants, and the Appraisal Information ClientCenter (AIC). Our membership includes appraisers from the most recognized professional personal property appraisal

organizations and practitioners from all segments of the gems and jewelry trade, including wholesale suppliers, retail jewelers, artisans, gemologists,labs, and appraisers. Our forums and reference areas are currently accessed in 5 countries on 4 continents and in 31 U.S. States.

I appreciate the opportunity to submit this statement for the record of your most

important subcommittee hearings on ‘‘Trade in African Diamonds’’ and I am submitting it to urge you to support current efforts by the international diamond and jewelry communities to develop meaningful procedures and safeguards as might be

needed to resolve the problem of that small portion of mined diamonds being usedto

finance African conflicts. Other respected leaders of the gemstone and jewelry industry have appeared before you who can best speak to such efforts currently under

way by the World Diamond Council as well as to the subject of gemological realities

related to identifying the country of origin of rough and polished diamonds. I will

be addressing just a few points related to the realities of manufacturers, retailers,

gemologists and appraisers, and how congressional activity might impact daily efforts to conduct their businesses.

The World Diamond Council, established by the Antwerp Resolution,appears to be

making a concerted effort to lay out and put into affect plans to deal with this problem at the source; the only place where it can be dealt with most efficiently and

in a manner which would avoid needless and unjustified harm to this important industry. We all owe a debt of gratitude to the sponsors of the C.A.R.A.T Act of 2000

as it made clear that the United States will be a leader in resolving this world problem. However, the CARAT Act can not be administered from a practical standpoint

and would present an unjustified burden on all segments of the trade. Unfortunately the well intentioned proposals in the Act would also make it a meaningless

burden as it would be close to impossible for many trade segments to comply.

Once rough diamonds leave their country of origin they are then bought and sold,

and resold, in varying configurations and parcels, in diamond centers all over the

world. Once polished it gets even more complex and efforts to track and label every

polished diamond (above some relatively low dollar base) would cause total chaos—

if it could be done at all. It should not be difficult to envision how polished diamonds

move from importer to finished jewelry. They are sorted by shapes, sizes and quality

grades as well as in melange (mixed) parcels.

Manufacturers and diamond suppliers then do their own sorting based on the

needs of their customer base and their in house quality control procedures. Customs

laws would have to changed to have country of origin labeling reflect the place of

mining, rather than the current designation requirement that it be the country of

processing, or polishing. But that is where the problems would only begin. If each

diamond had to be labeled based on country of origin, diamond suppliers would have

to separate all their current categories of diamonds by as many subcategories as

there are diamond producing countries. For jewelry manufacturers and small manufacturing retail jewelers it would be even more complex.

Such smaller manufacturers go through numerous parcels to mix and match

qualities and sizes for a particular item. In addition, many retailers buy ‘‘semimounts’’ which are jewelry items containing the smaller stones and then separately

buy center stones or maintain an inventory selection of such stones. If such a manufacturer, or manufacturing retailer could somehow manage to keep track of each individual stone, compliance with the CARAT Act could result in one small ring having five designations on it for the countries of origin of each diamond. Even that

might have to then be changed if a small diamond broke in setting and had to be

84

replaced. This is just one example of the chaos that could ensue when good and honest folks make a sincere effort at CARAT Act compliance.

Small gemologist and appraisal practitioners will not be able to avoid being

dragged into the fray either. Once this snowball starts to roll there will invariably

be consumers asking us to confirm that their diamonds are from the country represented at point of sale. We will not have the ability to do so and confusion will

reign supreme as fodder for media expose sensationalists always on the hunt for a

good story or some free publicity.

It seems to make much more sense, and seems more practical and efficient to nip

the whole thing in the bud at the source. If current industry proposals can succeed

in sealing and certifying rough diamonds before leaving their country of origin then

we could all know from that point on that those diamonds, the overwhelming majority of diamonds mined, are OK wherever they then go. We urge Congress to avoid

precipitous action and allow the international trade leadership reasonable time to

develop, foster and implement such procedures.

For the Gems & Jewelry Reference and the Appraisers’ Information

NetWork, thanks for taking the time to consider our comments.

EMBASSY OF THE REPUBLIC OF LIBERIA

WASHINGTON, DC

September 12, 2000

The Honorable Philip Crane

Chairman, Subcommittee on Trade

House Ways and Means Committee

1104 Longworth House Office Building

Washington, D.C. 20515

Dear Mr. Chairman:

I have the honor to first thank the Subcommittee for the opportunity to submit

a statement on behalf of the Government of Liberia on the issue of conflict diamonds. The issue is critical to our neighbor, Sierra Leone, but it is also of vital importance to my country, also a diamond producer.

I am attaching to my statement a copy of a letter written on August 28, 2000 to

United Nations Secretary General, Mr. Kofi Annan, by the President of Liberia, Dr.

Charles Ghankay Taylor. A similar letter was also sent to President William Jefferson Clinton. In both letters, President Taylor re-affirms Liberia’s unreserved support for Security Council resolution 1300 (2000) which calls, inter alia, for an end

to the smuggling of diamonds from Sierra Leone. In addition to our support for the

UN resolution, Liberia recently undertook several new initiatives to assist in the

international battle against conflict diamonds and the dangerous purposes for which

they are traded-namely, arms to fuel civil conflicts in Africa.

We have enacted a statute criminalizing the export of undocumented or

uncertified diamonds. We have undertaken the enforcement of legislation requiring

the Central Bank of Liberia to issue certificates or origin for Liberian diamonds. We

have asked the International Monetary Fund and the World Bank to provide experts who would assist in the development of a transparent certification process.

Further, we have called for assistance from the international community to urgently

convene a meeting of international experts to focus on the trade and certification

process in the Mano River Union Countries (Liberia, Sierra Leone and Guinea).

Liberia has taken these steps not only out of concern for the peace and stability

of the region, but also to ensure our territorial integrity as well as the security of

our citizens. Liberians are no less impacted by the illegal diamond trade than our

neighbors and have the same interests in seeing it halted as the rest of the international community.

Mr. Chairman, I appreciate the opportunity to provide this information that I

trust will assist your committee in its deliberations. If I can answer any questions

regarding Liberia’s views, please do not hesitate to contact me.

Please accept, Mr. Chairman, the renewed assurances of my highest consideration.

Sincerely,

WILLIAM V.S. BULL

Ambassador to the United States of the

Republic of Liberia

85

Attachment:

Letter from the President of Liberia to the United Nations Secretary

General contained in UN Security Council

I extend compliments on behalf of the people of Liberia and in my own name to

you on the occasion of the convocation of the Millennium Summit, where leaders of

the world would be expected to define problems besetting our global family and determine solutions the alleviation of those problems, engendering hope in the future

of our one world and carving new aspirations for the United Nations. Against this

background, I am pleased to acquaint you with the current status of Liberia’s engagement in Sierra Leone, a troubled portion of our global village.

You may recall the commitment of the Government of Liberia to remain constructively engaged in the resolution of the crisis in the sisterly country of Sierra Leone.

Recently, our involvement, among other things, culminated in the release of over

500 United Nations peacekeepers who were unfortunately held against their will by

the Revolutionary United Front (RUF). Our Government will continue to be steadfastly bound to an immediate, peaceful and diplomatic solution to the crisis in the

subregion, and will continue to offer public and practical expressions to these

endeavours.

However, the apparent silence of the international community to the repeated violations of our territorial integrity by armed insurgents from the area of the GuineaSierra Leone borders, including a third and most recent attack emanating from the

Republic of Guinea, which is ongoing, continues to overburden the Liberian Government with unnecessary loss of lives and property and the displacement of a large

number of our people. It is the request of the Government of Liberia that you utilize

all forms of influence at your disposal to ensure the sanctity of our borders and the

maintenance of peace, security and stability within the framework of the Mano

River Union.

As the inviolability of the borders between Liberia Guinea and Sierra Leone remains a crucial issue, I recommend the following and request the support of the

United Nations in ensuring their speedy implementation:

(a) The Government of Liberia again calls for a monitoring presence of the

United Nations at these borders to monitor all crossing points capable of

conveying vehicular traffic. We recognize the enormous cost to individual

nations of policing the entire length of these borders and suggest the utilization of an airborne multi-spectral service in detection of any unusual

movements along the entire border.

Intelligence gathered therefrom could be shared by all appropriate authorities. The cost, which is relatively minor, could be borne by the international

community;

(b) On the status of RUF, as has been previously done, the Liberian Government has again called for the immediate disarmament and simultaneous

deployment of troops from the Economic Community of West African States

(ECOWAS) under the United Nations Mission in Sierra Leone (UNAMSIL)

in areas recently considered as RUF-dominated.

Along these lines, RUF has announced a new leadership acceptable to ECOWAS

and has informed EDOWAS through its Chairman that it welcomes our call for disarmament and demobilization and that it has begun the process leading to the

transformation to a political entity and subsequent reintegration into society. Additionally, RUF has informed ECOWAS of its wish to return weapons retrieved from

United Nations peacekeepers and its desire to establish communication with the

High Command of UNAMSIL, to facilitate and accelerate the return of the weapons

and the process of confidence-building.

In keeping therewith, it is our recommendation that these initiatives be immediately exploited by the United Nations, leading to a ceasefire; the withdrawal of

all belligerent forces to positions as at 7 July 1999; the simultaneous deployment

of ECOWAS troops, under UNAMSIL; and the total disarmament and demobilization of the armed factions.

You are doubtlessly aware of our unreserved support for Security Council resolution 1306 (2000), calling for an end to the smuggle of diamonds from Sierra Leone.

As evidence of this, we are undertaking several initiatives, including the enactment

of a statute criminalizing the export of undocumented or uncertificated diamonds;

the enforcement of legislation requiring the Central Bank of Liberia to issue certificates of origin; and our request to the International Monetary Fund and the World

Bank to second experts who would assist in the development of a transparent process. Furthermore, the Government calls for assistance from the international comVerDate 20-JUL-2000 09:45 Dec 27, 2000 Jkt 060010 PO 00000 Frm 00089 Fmt 6631 Sfmt 6602 K:\HEARINGS\68040.TXT WAYS1 PsN: WAYS1
86

munity to convene a meeting of international experts to focus on the trade and certification process in the Mano River Union countries.

The Government of Liberia assures you of its continued commitment to the pursuit of peace and stability both at home and in the subregion and welcomes the convening of this Summit with hope and anticipation for the evolution of solutions that

will make our world a safer place for our children.

Finally, I wish to request that you kindly circulate the present letter to all members of the Security Council as a document of the Council.

DAHKPANNAH DR. CHARLES GHANKAY TAYLOR

DIAMOND DEALERS CLUB, INC.

NEW YORK, NEW YORK

September 19, 2000

Congressman Philip M. Crane, Chairman

Subcommittee on Trade

House Committee on Ways and Means

Longworth House Office Building

Washington, D.C.

Dear Congressman Crane,

I am pleased to have the opportunity to offer our comments regarding the hearing

on trade in African diamonds convened by the Subcommittee on Trade of the Committee on Ways and Means that was held on September 13, 2000.

The Diamond Dealers Club is a trade association of diamond dealers, brokers and

manufacturers established in 1931. Since the founding of our organization, we have

been located in New York City. Our nearly 2,000 members come from more than

30 different countries and are importers of the overwhelming percentage of diamonds that enter the United States. Our By-Laws embody our founders recognition

of our organization’s key goal ‘‘to cooperate with governmental agencies.’’ The following comments are presented with this goal in mind.

As mutilations of civilians and severe civil rights violations occurring in certain

civil wars in Africa became more frequent, we became increasingly appalled. Particularly alarming to the diamond industry was the news that diamonds, which

enter the world diamond market from these countries, are responsible for these violations and are used to finance civil wars. Therefore, beginning in 1999, we devoted

considerable attention to resolving the problem of conflict diamonds. We have met

and worked with members of the U.S. Congress, representatives of foreign governments and industry leaders to come up with an effective solution to this problem.

Our commitment to eliminating the sale of conflict diamonds is evident. Our

membership-elected Board of Directors adopted the following resolution to battle the

sale of conflict diamonds: ‘‘Dealing in conflict diamonds shall constitute conduct unbecoming of a member for which suspension shall be instituted.’’

The Diamond Dealers Club supports the resolution adopted by the World Diamond Congress on July 19, 2000. We believe that the effective implementation of

this proposal would go a long way towards eliminating the problem of conflict diamonds and their use to purchase arms and finance civil wars.

Clearly, the WFDB proposals would benefit both the diamond-producing nations

as well as the American industry. Their strict implementation would mean that instead of diamonds being used to finance the death and destruction of innocent civilians, they would provide—as they have in such countries as South Africa and Botswana—employment for tens of thousands of Africans as well as encourage economic

development in diamond-producing nations.

Concomitantly, we feel that proposals that could lead to a boycott of diamonds

would be harmful to the entire diamond industry. This includes the miners and governments in the producing nations that have benefited from these resources as well

as the small business dominated diamond industry in several countries including

the United States.

We hope that the Subcommittee finds these comments useful in its deliberations

on the subject of trade in African diamonds. We look forward to working with you

to resolve the problem of conflict diamonds. If you have any requests for additional

information from the Diamond Dealers Club, please do not hesitate to contact us.

Sincerely,

JACOB BANDA

President

87

Statement of Mary Diaz, Executive Director, Women’s Commission for

Refugee Women and Children, New York, New York

The Women’s Commission for Refugee Women and Children is an expert resource

and advocacy organization working to improve conditions for refugee women and

children around the world. The Women’s Commission has sponsored several fact

finding missions in West Africa, including Sierra Leone, Liberia and Angola over the

past five years and released a report assessing the protection and assistance needs

of Sierra Leonean children and adolescents. As part of a campaign to monitor the

situation in Sierra Leone, the Women’s Commission has supported local women’s organizations, who are working to rebuild their country.

THE FOLLOWING QUESTION AND ANSWER PIECE WAS INITIALLY PREPARED TO RAISE

AWARENESS AMONG CONSUMERS ABOUT THE PROBLEM OF CONFLICT DIAMONDS AND

TO PROMOTE POSSIBLE SOLUTIONS.

Diamonds: Symbols of Love or War?

Questions and Answers

1. Why should I be concerned about diamonds?

Diamonds from Sierra Leone, Angola, and the Democratic Republic of the Congo

have been used by rebel groups to purchase weapons and commit unspeakable atrocities against civilian populations. In Sierra Leone, with the aim of conquering diamond-rich areas and securing the mines for themselves, rebels have used machetes

to brutally chop off the limbs of women, children, and even babies. They have forcibly recruited and drugged child soldiers. They have also abducted thousands of

women and young girls as sex slaves who are often beaten and gang-raped. This

violence has displaced almost a million people within Sierra Leone, created 460,000

refugees in neighboring countries and abroad, and left thousands of children disabled by dismemberment and mutilation. American consumers buy about 65 percent

of diamonds worldwide, and while diamonds are usually regarded as symbols of love

and commitment, diamonds mined from conflict areas are actually a source of horror.

2. How can the United States play a leadership role in stopping diamond fueled conflict?

The US can play a leadership role by enacting the Consumer Access to a Responsible Accounting of Trade (CARAT) Act. Currently, there is no way of guaranteeing

where diamonds sold in the US, or anywhere else in the world, originate. The

CARAT Act would require the diamond industry to provide US consumers with information about whether a diamond for sale originated from a conflict area. The

Consumer Access to a Responsible Accounting of Trade Act, otherwise known as the

CARAT Act (HR 3188) was introduced by Congressman Tony Hall (D–OH) and Congressman Frank Wolf (R–VA) in November of 1999. A revised version will be introduced this September. This bipartisan legislation acknowledges that some diamonds

fuel Africa’s wars and seeks to give Americans crucial information about the diamonds they buy.

3. What are conflict diamonds?

Conflict diamonds are diamonds mined or stolen by rebel forces who are fighting

the legitimate and internationally recognized government of that country. Currently,

these conflict diamonds are mined in Sierra Leone, Angola, and the Democratic Republic of the Congo. They are often smuggled out of these countries and into neighboring countries such as Liberia and the Ivory Coast. The latter have negligible diamond resources themselves but sell millions of US dollars worth of diamonds to

trade centers around the world. Liberia’s illicit diamond trade is widely recognized

by diamond industry experts; to illustrate, Liberian diamond mining capacity is only

about 100,000 to 150,000 carats per year but the country has exported over six million carats annually.

4. Can the American consumer help break the cycle of violence in the illegal diamond

trade?

Yes. The Women’s Commission has joined a broad based coalition of non-governmental and humanitarian assistance organizations that are committed to educating

consumers about the illegal diamond trade and providing information that will allow

88

consumers to make informed diamond purchases. Independent diamond experts

have estimated that about 10–15 percent of the world’s supply of diamonds are from

conflict areas in Africa. Although this is a relatively small percentage of the overall

diamond market, it is significant because the diamonds from these conflict countries

are largely gem quality diamonds. Gem quality diamonds are the most valuable portion of the diamond market and constitute 75 percent of the diamond profit. Because

rebels are able to sell diamonds throughout the world at a large profit, they are able

to sustain the wars in these countries. Therefore, it is imperative that consumers

know where their diamonds are from in order to make informed purchasing decisions and eliminate these conflict diamonds from the market.

5. Are all diamonds from conflict areas?

No. In fact, diamonds from Africa can have a very positive effect on those countries with legitimate diamond industries and cutting centers. In Botswana, Namibia,

and South Africa, the diamond industry has bolstered the economies, making them

among the most prosperous and stable countries in Africa. Diamond cutting centers

in India and Israel employ large numbers of people. If you buy a diamond from

these areas, you will actually be supporting a vital industry. We are not advocating

for a total boycott of diamonds because this would prove detrimental to these vital

legitimate industries. Rather, informed consumers can do the responsible thing by

buying legitimate diamonds and avoiding conflict diamonds.

6. What can be done to end the trade in conflict diamonds?

• Support the CARAT Act (HR 3188) that would provide consumers with information about where their diamonds originate;

• Educate consumers about diamonds that fuel Africa’s wars, such as those from

Sierra Leone, and those from legitimate diamond industries, such as Botswana;

• Demand that every diamond be accompanied by full forgery-proof documentation of the country of origin, not just the place of purchase or export;

• Support government regulation to bring transparency to diamond transactions

such as through Customs offices that employ statistical procedures to identify the

number of carats exported from a particular country and ensure that the export

number is consistent with that country’s mining capacity;

• Support technology for diamond ‘‘fingerprinting’’ to reliably determine the origin

of diamonds.

This research was compiled based in part on information from the following sources:

Ashton, Hilton. ‘‘Technical Forum on the Issue of ‘‘Conflict Diamonds,’’ summary

by BoE Securities of ‘‘Conflict Diamonds—Maintaining Consumer Confidence,’’

forum held May 11–12, 2000 in Kimberley, South Africa. May 25, 2000.

De Beers Mining Company. ‘‘De Beers: U.S. Congressional Hearings,’’ Written testimony before the US Congress, House Subcommittee on Africa, hearing on ‘‘Conflict

Diamonds.’’ May 9, 2000.

Global Witness. ‘‘Conflict Diamonds: Possibilities for the Identification, Certification, and Control of Diamonds.’’ May 10, 2000.

Harden, Blaine. ‘‘Africa’s Gems: Warfare’s Best Friend.’’ The New York Times on

the Web, April 6, 2000.

Rapaport, Martin. ‘‘Guilt Trip.’’ April 7, 2000. Available at www.diamonds.net

Smillie, Ian, Lansana Gberie and Ralph Hazleton. ‘‘The Heart of the Matter: Sierra Leone, Diamonds, and Human Security.’’ Partnership Africa Canada, January

2000.

Other useful sources:

Collier, Paul. ‘‘Economic Causes of Civil Conflict and their Implications for Policy.’’ World Bank. June 15, 2000.

Fowler, Robert R. ‘‘Report of the Panel of Experts on Violations of Security Council Sanctions Against UNITA.’’ Report to the United Nations Security Council.

March 10, 2000.

Global Witness. ‘‘A Crude Awakening: The Role of the Oil and Banking Industries

in Angola’s Civil War and the Plunder of State Assets.’’ January 2000.

Global Witness. ‘‘A Rough Trade: The Role of Companies and Governments in the

Angolan Conflict.’’ December 1998.

Kempster, Norman. ‘‘Dripping in Diamonds—and Blood.’’ Los Angeles Times. May

12, 2000.

National Intelligence Council. ‘‘Africa: The Economics of Insurgency in Angola, the

Democratic Republic of the Congo, and Sierra Leone.’’ Report from State Department conference on October 5, 1999. October 1999.

89

13 Conflict Diamonds: Possibilities for the Identification, Certification and Control of Diamonds, briefing document by Global Witness, June 2000, p. 1. 14Smillie, I., Gberie, L., Hazelton, R. The Heart of the Matter: Sierra Leone Diamonds and

Human Security, Partnership Africa Canada, Ottawa, Canada: January 2000, p. 1. 15Smillie et al, p.1.

Rapaport, Martin. ‘‘Blood Money.’’ Rapaport Corporation. November 5, 1999.

Available at www.diamonds.net

‘‘Report of the Panel of Experts on Violations of Security Council Sanctions

Against UNITA’’ Report to the United Nations Security Council. March 10, 2000.

Statement of Rory E. Anderson, Government Relations Manager, and Africa

Policy Specialist, World Vision

Thank you, Mr. Chairman, for the opportunity to present testimony to the Trade

Subcommittee on solutions to the ‘‘conflict diamond’’ trade in Africa. I am Rory E.

Anderson, Government Relations Manager and Africa policy specialist for World Vision, the largest privately-funded international relief and development organization

in the U.S. Later this month World Vision will celebrate its 50th anniversary. Currently, World Vision implements more than 6,000 relief, rehabilitation and longterm development projects in 95 countries.

Natural resources, from diamonds to oil, have a significant role in igniting and

fueling human conflict. In Africa, the shape of Post-Cold War conflict has increasingly been financed and perpetuated by natural resources, which conveniently do

not demand any ideological loyalty. The May 4th capture of UN peacekeepers in Sierra Leone has brought widespread scrutiny to the causes of this 9-year conflict, and

has forced policymakers at all levels to ask why war seems intractable in many

parts of Africa. In the recent conflicts of Sierra Leone, Angola and the Democratic

Republic of the Congo, diamonds are at the heart of the matter, and access to this

and other resources have become a primary incentive for war.

CONFLICT DIAMONDS DEFINED

There are various nuanced definitions of the term ‘‘conflict diamonds.’’ In this testimony, I attempt to describe both potential as well as current situations where the

sale of diamonds are used to sustain violent conflict. As defined here, conflict diamonds are those which originate from areas under the control of forces that are in

opposition to democratically elected and internationally recognized governments,13

or diamonds used by State institutions or non-State forces to fund campaigns of

human rights abuses against civilians. Many critics of the term ‘‘conflict diamonds’’

argue that diamonds don’t kill people, rather, people and guns kill. But in each of

the above cases, diamonds fund the purchase of small arms which perpetuate conflict. Diamonds are lucrative stones. In 1998 the diamond industry produced an estimated 115 million carats of rough diamonds with a market value of US$6.7 billion.

At the end of the diamond pipeline, this was converted into 67.1 million pieces of

jewelry worth close to US$50 billion.14 At both ends of the diamond pipeline—from

mine to finger—there are huge financial incentives. Further, diamonds are easily

smuggled. To the untrained eye, rough diamonds look like mere pebbles, which can

innocently be wedged in a shoe, sock, or any kind of body orifice, and can go undetected through most metal detectors or x-ray machines.

The most visible examples of diamonds and their role in conflict have been in Sierra Leone, Angola and the Democratic Republic of the Congo (DRC). In all three

of these cases, guaranteed access to the diamond mines has been a dominant incentive for war, and, ironically, war has enabled the diamond industry to prosper. Because diamonds can move so easily and quickly, a dealer can buy low, sell high and

reap windfall profits, particularly during the height of a war. For the seemingly intractable wars of Sierra Leone, Angola and the DRC, the point of each of these wars

may not be to actually win them, but to engage in profitable crime under the cover

of warfare. Over the years, the informal diamond mining sector, long dominated by

what might be called ‘‘disorganized crime,’’ has now become increasingly influenced

by organized crime and by the transcontinental smuggling of diamonds, guns, drugs,

and vast sums of money in search of a laundry. Each of these smuggled items has

become critical components to warfare, and thus, violence becomes central to the advancement of those with vested interests.15

90

16 ‘‘Africa’s Diamond Wars,’’ Harden, B. The New York Times on the Web, www.nytimes.com/

library/world/africa/040600africa-diamonds.html. 17 UN Secretary General’s report to UN Security Council, 23 November 1998. 18 UN Consolidated Appeal for Angola for Jan-Dec 2000, November 1999 19 IRIN–SA, ‘‘A grim humanitarian outlook by UNICEF,’’ 13 Jan 2000 20 UN Consolidated Appeal for Angola for Jan-Dec 2000, November 1999 21Mortality in Eastern DRC: Results from Five Mortality Surveys, International Rescue Committee Report, May 2000. 22 Ibid.

CONFLICT DIAMONDS IN AFRICA

In the current deliberations on conflict diamonds there have been fewer references

to the DRC, yet diamonds from this area are equally problematic. Several warring

factions, including the rebel government and multiple international armed forces

who all desire access to the DRC’s mineral resources, have wrecked a humanitarian

crisis that is quickly outpacing the enormity of the Sudan. This factor, coupled with

gross human rights abuses committed among all factions, warrants the label of conflict diamond for any stone originating from the DRC. In Sierra Leone, two inseparable factors have enabled the violence to perpetuate. A legacy of decades of official

corruption—much of which was rooted in the diamond trade—has left remnants of

a weakened State unable to defend its territory from internal and external threats,

which has resulted in the breakdown of law and order. This absence of national security has expanded the economic opportunity of conflict diamonds.

In Angola, political power implies a license for kleptocracy over the country’s resources. Rather than accept the 1992 elections which foreign observers judged free

and fair, UNITA (Union for the Total Independence of Angola) rebel leader Jonas

Savimbi simply resumed his war by seizing control of the Cuango River Valley, Angola’s richest diamond territory. UNITA began a major mining operation that made

them the richest rebels in Africa. Diamond money paid for UNITA offensives that

in the 1990s elevated Angola’s civil war to a new plateau of savagery, killing more

than half a million, displacing 4 million, and maiming 90,000 as a result of land

mines.16

THE HUMANITARIAN IMPACT

For every conflict diamond sold, there is a corresponding humanitarian crisis. It

has been said that Angola is the worst place to be a child. Thirty percent of Angolan

children die before they reach their fifth birthday.17 As of April 2000, a total of 3.7

million people were classified as ‘‘war affected’’ by the UN, defined as ‘‘those who

depend on emergency humanitarian assistance due to war and the resultant loss of

assets and earning opportunities.’’ 18 Of these, over 1.7 million are displaced, threequarters of whom are women and children.19 One-hundred and fifty thousand

(150,000) people are estimated to have either been killed or permanently maimed

due to landmine accidents.20 Two-thirds of the Angolan population live in absolute

poverty.

In the DRC, it has been found that since August 1998 there has been at least

1.7 million deaths in war-affected areas over and above the 600,000 that would normally be expected. The overwhelming majority of these additional deaths are attributable to preventable diseases and malnutrition—a tragic consequence of a health

care system destroyed by war. On average, some 2,600 people are dying every day,

and further research is finding that the first months of the year 2000 were even

worse than 1999.21 Thirty four percent of these deaths have been children under

the age of five (over 590,000), and 47 percent of all violent, war-related deaths are

women and children. The highest death rates are among populations displaced by

the fighting, and civilians continue to be targeted by all sides in the conflict. As one

NGO leader has explained this: ‘‘The loss of life in the Congo has been staggering,

It’s as if the entire population of Houston was wiped off the face of the earth in

a matter of months.’’ 22

Ranked last on the UN Human Development Index, the war in Sierra Leone has

exacted a heavy humanitarian toll on the population. An estimated 70,000 people

have been killed since the war started in 1991. Approximately 5,000 were killed in

and around Freetown in the January 1999 rebel offensive against the capital. Civilian and child amputations have been a trademark atrocity, with estimates of 1,800

amputees. Currently, almost 1 million Sierra Leonians are internally displaced, in

addition to the 470,000 refugees who have fled to neighboring Guinea and Liberia.

Thirty percent (30 percent) of Sierra Leone’s population of 4.6 million have been uprooted because of this conflict. Humanitarian response continues to be hampered by

the issue of access to war-affected populations trapped in the northern and eastern

91

parts of the country. Fifty-five percent (55 percent) of the population live in conflict

affected areas and are inaccessible by humanitarian aid.

REMEDIES: COORDINATED AND STRUCTURAL SOLUTIONS

This humanitarian legacy of conflict diamonds is indelible and undeniable; so are

the solutions. Although not necessarily complicated, an effective solution strategy

first requires the recognition that it is actually a marriage of two components: coordinated and structural solutions. This recognition enables stakeholders to manage

and ultimately contain the problem of conflict diamonds. Coordinated solutions

mean actions implemented and communicated by the specific primary and secondary stakeholders. Assuming that all concerned stakeholders have the same goal

of ending the trade in conflict diamonds, solutions will naturally compliment and

not compete with one another, but the effectiveness is in the communication and

coordination of action so that loopholes are closed. Structural solutions involve remedies aimed at providing alternatives to conflict diamonds.

COORDINATED SOLUTIONS

I have identified three stakeholders as the first line of defense against conflict diamonds:

• Industry Local civil society groups in diamond producing countries, • Rough diamond exporting governments, and • The diamond, especially rough stone traders.

Secondary stakeholders in the second line of defense include:

• Rough diamond importing governments, • Cut diamond consuming governments, • International regulatory and trade bodies, and • Cut diamond consumers.

Each stakeholder has a unique role to play:

• Local Civil Society. In Africa, particularly in rural areas, because communal obligations are usually placed above the individual, informal networks are strong. Because of this, it is well known who are the specific individuals mining and purchasing conflict stones. Grassroot organizations in diamond producing areas need to

formalize this knowledge by documenting evidence so that this part of the solution

does not turn into a witch hunt, but, rather, an effective monitoring tool. • Diamond Exporting Governments. Because the profit incentives are so high, it

is important that diamond exporting governments maintain tight regulations over

this resource, otherwise anarchy results—as in the case of Sierra Leone and the

DRC—and different factions violently compete over access to these lucrative resources. Closely associated with this strategy of regulation is reinvestment. National

and local governments must reinvest diamond wealth in public goods like

healthcare, education, roads and electricity, so there are fewer incentives for factions or individuals to trade in diamonds for the purpose of providing these basic

needs. • The Diamond Industry. The industry proposal laid out in Antwerp in July 2000

was a critical step for delineating specific actions needed by various stakeholders,

while committing the industry to play a part in the solution. The industry has two

unique mandates: the first is taking leadership in establishing its proposed rough

controls, where stones are ‘‘sealed and registered in a universally standardized manner’’ (Joint Industry Statement, July 19, 2000); and, second, enforcing the code of

conduct. Because the industry is organized and takes pride in its structure of informal networks, such as the production level, members within the industry know individuals who are dealing with conflict stones. Therefore, the industry’s second mandate is to maintain its commitment to the code of conduct stated in the Antwerp

document, whereby ‘‘failure to adhere to [an ethical code of conduct] regarding conflict stones [will] lead to the expulsion from the World Federation of Diamond

Bourses, the International Diamond Manufacturers Association, and all other relevant organizations.’’ Though the specific language is slightly vague in that no ethical codes of conduct were explained in the statement, the intent of the Antwerp document is very clear: any member of the industry caught dealing in conflict stones

will be expelled from the industry. Given this intent, it is the industry’s sole responsibility to enforce this code. • Rough Diamond Importing Governments. The role of importing is to reject parcels which are not sealed and registered by accredited diamond export authorities.

Legislation must be passed and customs officials must be trained to implement new

rough diamond control laws.

92

• Cut Diamond Importing Governments. Cut diamond importing States must

enact responsive laws to prohibit the possibility of conflict diamonds from entering

the market. In the U.S., the proposed Carat Act effectively does this. With tracking

regimes, customs officials will subsequently be able to reject or accept parcels according to any international embargoes. An additional tool which both types of importing governments can use is one of diplomacy. As in the case of Liberia a known

trans-shipment agent of conflict diamonds, diplomatic tools are helpful to politically

isolate rogue countries involved in this type of trade. • International regulatory and trade bodies. The proposed international diamond

council, which will be comprised of industry, civil society and government, should

be an important player in 1) the accreditation process of rough stone exporting centers; 2) monitoring the rough control system; and 3) auditing both industry and exporting governments’ handling of rough stones. Beyond this, it is also necessary to

involve international governing and trade regimes like the WTO and the UN who

have the authority of international law to arbitrate trade disputes and to enact

sanctions against transgressor countries. • Consumers. Although consumers are at the very end of a somewhat convoluted

pipeline, they are the final but the most effective line of defense against conflict diamonds. The power of the purse can never be underestimated, particularly with the

benefits of a free market economy where consumers can easily choose alternative

gems or synthetic diamonds. If lawmakers and the industry fail to implement the

described necessary changes, consumers could merely boycott diamonds all together,

severely damaging both the conflict and the legitimate diamond business. Given the

positive trends of reform, a boycott may not be necessary, but consumers still have

an obligation and a right to know the origins of such a costly purchase. To maintain

pressure on the industry and lawmakers to limit this trade in misery, consumers

should demand to know the origins when purchasing a diamond, even if that information is not yet readily available.

I have described the key stakeholders who have critical roles to play in the solution to end trade in conflict diamonds. The necessity and the miracle of involving

so many coordinated players in the solution is like constitutional checks and balances; individual stakeholder actions can offset any weak link in the chain.

STRUCTURAL SOLUTIONS

Reinforcing Weak Links

Solutions are also needed to address the structural causes for conflict diamonds.

These structural solutions can essentially be categorized in the areas of reinforcement and economic incentives. I recommend these solutions:

1. Reinforce support of rough diamond exporting governments to establish viable

certificate of origin schemes and systems of regulation over diamond mining areas.

This could include capacity building in export licensing systems and establishing appropriate punitive actions for individuals who are found trading in illicit and conflict

diamonds.

2. Assist rough diamond exporting countries in the areas of good governance, linking all types of financial assistance to poverty reduction and social reinvestment.

3. Build capacity among grassroot civil society groups to effectively monitor and

report on the diamond trade at the local level, while being careful to ensure the

safety of local evaluators.

Income Generation

Along with solutions of structural reinforcement, there is a foundational need to

address the economic reasons why individuals trade in conflict diamonds in the first

place. Some of these reasons can be addressed at the government level, but many

of the solutions have to reach the individual by providing economic alternatives to

conflict diamonds and rebel violence. Micro-enterprise loan funds have been successful throughout the world in providing a way out of poverty by providing income

choices. Expanded support for proven successful initiatives is important.

Operational non-governmental organizations (NGOs) in Angola, DRC and Sierra

Leone have to deal with the impact of conflict diamonds every day. In trying to provide structural solutions, World Vision, like many other NGOs, has found that a

combined approach of temporary emergency relief coupled with income generation

and civil society mobilization, are all important elements toward building long term

peace and stability. In Sierra Leone, World Vision is finding success in the following

ways:

• Food Aid. World Vision’s food aid program in Sierra Leone is based on three

premises: 1) give the farming population the tools and the best seeds they need to

produce again, assist them with the best possible technical assistance and provide

93

food to them so they do not eat their seeds and so they have strength to cultivate

and harvest; 2) provide food to those populations who cannot provide for themselves,

such as the vulnerable (elderly, institutionalized), the severely malnourished; and

3) give skilled tradesmen food so they can begin to reconstruct homes, clinics and

schools. More than 10,000 metric tons of US food will be used. The goal of this

project is to significantly improve household food security and sustained productive

capacity of the Sierra Leonian waraffected communities in 16 chiefdoms in Bo,

Bonthe, and Pujehun and in 11 chiefdoms in the Kono diamond district. This program addresses the acute food needs of 149,000 vulnerable persons through increased availability of, and access to food. It also increases household food security

of 10,000 waraffected, returning farm families through increased availability of, and

access to food and agricultural inputs (labor, seed rice, etc.). This program will improve organizational, physical, and productive infrastructure in rural areas through

food-for-work activities, engaging 70,000 individuals, and it will enhance community

interest and participation in the formal and nonformal education of youth via support to 4,500 at risk youth. This program is funded by USAID, Food for Peace.

• Transition Initiatives through Civil Society. The World Vision Sierra Leone

Transition Initiatives Program was first established in January 1997 to address

grassroots reconciliation and peace building issues. Funding was suspended after

the May 25, 1997 military coup and was reinstated in 1998 after the return of democracy. This program aims at facilitating the process of raising awareness on civic

rights; local capacity building for peace, constructive engagements with combatant

and other differing factions; effective consensus building; reconciliation and peaceful

coexistence; youth recovery from marginalization and exploitation, and generally

supporting the process of youth empowerment, so as to deter them from the lures

of rebel warfare. World Vision works with over 50 different community and civic

groups in Sierra Leone to accomplish the objectives of this program, which is funded

by the Office of Transition Initiatives.

• Support for agriculture. The agriculture productive infrastructure of Sierra

Leone started to deteriorate even before the war began in 1991. According to FAO

reports, production of the country’s staple crop, rice, fell 18 percent between 1990

and 1997. As a result of the war, estimates have only half of the nation’s requirement for rice being produced locally in 1999. People are beginning to return to their

land and World Vision, with the support of the Office of Foreign Disaster Assistance, is helping to improve food production in Sierra Leone through support to the

agriculture sector. There are three main objectives: 1) provide seeds and tools to

16,000 returnee and vulnerable farm families in the Kono district (10,000) and

Kailahun district (6,000) during this year’s crop season; 2) capacity building to improve agricultural practices among 48,396 farm families in our target communities

through increased access to a network of strengthened communitybased extension

services; and 3) improve agricultural productivity for 21,841 farm families in the

Southern region by addressing other issues of agricultural recovery beyond the

emergency supply of seeds and tools.

Conclusion

Effective, holistic solutions are not implemented in a vacuum. Wise policymakers

recognize that the solution to conflict diamonds is a constellation of actions involving key stakeholders, coupled with solutions addressing the fundamental causes for

the proliferation of conflict diamonds. The diamond industry has an incentive to

eliminate conflict diamonds by better monitoring the flow of rough stones. However,

much of the success of these initiatives will have to come from importing and exporting governments and international regulatory and trade regimes. Given the

present media attention and consumer scrutiny, there has been a lot of movement

at government levels to address the issue of conflict diamonds. It is essential that

civil society in diamond importing and exporting countries watch both industry and

governments, and hold them accountable. No system is perfect, but no system

means war. As long as greed exists, conflict diamonds won’t entirely go away, but

cooperative and consistent action can help to minimize the economic incentives for

war.

Thank you, Mr. Chairman, for the opportunity to present this testimony to the

committee. I look forward to answering questions of the committee. Also, World Vision is prepared to work with the Congress and the Administration to implement

any solutions that will lessen the suffering of people caused by conflict diamonds

and restore stability, peace and responsible governance in Africa.

Æ