```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
                           CONFLICT DIAMONDS

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON TRADE

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 10, 2001

                               __________

                           Serial No. 107-46

                               __________

         Printed for the use of the Committee on Ways and Means

                    U.S. GOVERNMENT PRINTING OFFICE
76-201                      WASHINGTON : 2001

For Sale by the Superintendent of Documents, U.S. Government Printing Office
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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota               GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa                     JOHN LEWIS, Georgia
SAM JOHNSON, Texas                   RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington            MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia                 WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio                    JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania           XAVIER BECERRA, California
WES WATKINS, Oklahoma                KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona               LLOYD DOGGETT, Texas
JERRY WELLER, Illinois               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

                     Allison Giles, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman

E. CLAY SHAW, Jr., Florida           SANDER M. LEVIN, Michigan
AMO HOUGHTON, New York               CHARLES B. RANGEL, New York
DAVE CAMP, Michigan                  RICHARD E. NEAL, Massachusetts
JIM RAMSTAD, Minnesota               WILLIAM J. JEFFERSON, Louisiana
JENNIFER DUNN, Washington            XAVIER BECERRA, California
WALLY HERGER, California             JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania
JIM NUSSLE, Iowa

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.

                            C O N T E N T S

                               __________
                                                                   Page
Advisories announcing the hearing................................     2

                               WITNESSES

U.S. Department of State, Alan Eastham, Special Negotiator for 
  Conflict Diamonds..............................................    23
Office of the United States Trade Representative, James E. 
  Mendenhall, Deputy General Counsel.............................    26
                               __________
Amnesty International USA, Adotei Akwei..........................    55
DeWine, Hon. Mike, a United States Senator from the State of Ohio     8
Hall, Hon. Tony P., a Representative in Congress from the State 
  of Ohio........................................................    12
Jeweler's Vigilance Committee, and World Diamond Council, Cecilia 
  Gardner........................................................    43
Wolf, Hon. Frank R., a Representative in Congress from the State 
  of Virginia....................................................    20
World Diamond Council, and Jewelers of America, Inc., Matthew 
  Runci..........................................................    40
World Vision United States, Rory E. Anderson.....................    45

                         ``CONFLICT DIAMONDS''

                              ----------                              

                      WEDNESDAY, OCTOBER 10, 2001

                  House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:07 a.m., in 
room 1100 Longworth House Office Building, Hon. Philip M. Crane 
(Chairman of the Subcommittee) presiding.
    [The advisory and revised advisory announcing the hearing 
follow:]

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
September 25, 2001
No. TR-6

                    Crane Announces Hearing on Trade

                         ``Conflict Diamonds''

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing on ``Trade in African Diamonds.'' The 
hearing will take place on Tuesday, October 9, 2001, in the main 
Committee hearing room, 1100 Longworth House Office Building, beginning 
at 4:00 p.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 Office of the United States Trade 
Representative. 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:

      
    Last year, the Subcommittee on Trade held a hearing on the diamond 
trade and its link to illegal arms trafficking and civil war in Africa. 
``Conflict 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 been trading ``conflict diamonds'' to finance its war 
against the government of Sierra Leone. The United Nations has adopted 
several resolutions calling for embargoes against diamonds from Sierra 
Leone and other African countries. The resolutions call on member 
states to ban the importation of rough diamonds unless those diamonds 
are exported under a certification system approved by a Security 
Council Sanction Committee. The Administration has responded with 
several executive orders implementing these resolutions. See the White 
House website at: http://www.whitehouse.gov/news/releases/2001/05/
20010523-11.html.
      
    The United States has been actively involved in efforts to curb the 
trade in ``conflict diamonds'' and in developing an international 
regime known as the ``Kimberley Process'' to help countries identify 
the source of diamonds in order to implement the United Nations 
resolutions. This month in London, further agreement was reached on 
control procedures. However, many important questions remain to be 
decided, and these questions need to be resolved in the next several 
meetings in order to successfully conclude the negotiations and report 
to the United Nations by November.
      
    Under current 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.

FOCUS OF THE HEARING:

      
    The focus of the hearing will be to evaluate legislative options 
available that: (1) are administrable and WTO consistent, (2) will not 
undermine ongoing Administration efforts to reach an international 
consensus banning such trade, and (3) will effectively curtail conflict 
diamond trade without impacting the legitimate diamond trade. In 
announcing the hearing, Chairman Crane stated: ``I would like to 
explore what progress the Administration has made since our hearing 
last year in building an international coalition to stop these 
`conflict diamonds' from Africa, with a view toward moving an 
appropriate legislative proposal this year.''
      

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

      
    Requests to be heard at the hearing must be made by telephone to 
Traci Altman or Bill Covey at (202) 225-1721 no later than the close of 
business, Monday, October 1, 2001. The telephone request should be 
followed by a formal written request to Allison Giles, 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, October 5, 2001. 
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, 
October 23, 2001, to Allison Giles, 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.

                * * * NOTICE--HEARING RESCHEDULED * * *

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-6649
FOR IMMEDIATE RELEASE
October 5, 2001
No. TR-6--Revised

                        Hearing Rescheduled for

               Subcommittee Hearing ``Conflict Diamonds''

                      Wednesday, October 10, 2001

    Congressman Philip M. Crane (R-IL), Chairman, 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, October 9, 2001, at 4:00 p.m., has been 
rescheduled for Wednesday, October 10, 2001, at 10:00 a.m., in the main 
Committee hearing room, 1100 Longworth House Office Building.

    All other details for the hearing remain the same. (See 
Subcommittee press release No. TR-6 dated September 25, 2001.)

                          

    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 they could 
testify.
    Last year, we had a hearing to take testimony from many of 
these same witnesses about the same state of affairs in Africa. 
I think no one disputes the tragic facts of the illicit diamond 
trade and how it continues to fund the rebel wars and poverty 
in Africa. This hearing takes all of that as a point of 
departure. Our focus is to look at where international 
negotiations are, what progress has been made in stopping the 
conflict diamond trade, and what legislation may be appropriate 
this year.
    I am mindful that international relations and negotiations 
are supposed to conclude this year and in this delicate time of 
international diplomacy, we must be especially careful not to 
disrupt the administration's efforts, however well intentioned 
we may be, 85 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 
derived and 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 diamond industry based in 
Antwerp recognizes this, and I applaud the industry for taking 
steps toward achieving this goal.
    We will hear first from our esteemed colleagues from 
Congress about their concerns on the progress of solving the 
problem of trade in conflict diamonds, and then we will hear 
from the administration for a response and comment on 
legislation. Finally, representatives from the diamond industry 
and non-government organizations will testify.
    I ask everyone to address the legislative criteria that 
this Committee is bound to follow. Will legislative proposals 
be administrable and consistent with our international trade 
obligations? Will legislation undermine the administration's 
efforts to reach an international consensus? And if so, how? 
Will the proposals be effective in curtailing trade in conflict 
diamonds? And finally, how will these proposals adversely 
affect the legitimate diamond trade in the countries in Africa 
that depend upon such trade?
    Any legislation must help, not hinder, the solution to this 
illegal trade. And I would now like torecognize our 
distinguished ranking member, Mr. Levin, for any statement he would 
like to make.
    [The opening statement of Chairman Crane follows:]
  Opening Statement of the Hon. Philip M. Crane, a Representative in 
  Congress from the State of Illinois, and Chairman, Subcommittee on 
                                 Trade
    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.
    Last year we had a hearing to take testimony from many of these 
same witnesses about the state of affairs in Africa. I think no one 
disputes the tragic facts of the illicit diamond trade and how it 
continues to fund rebel wars and poverty in Africa. This hearing takes 
all of that as a point of departure. Our focus is to look at where 
international negotiations are, what progress has been made in stopping 
the conflict diamond trade, and what legislation may be appropriate 
this year. I am mindful that international negotiations are supposed to 
conclude this year, and in this delicate time of international 
diplomacy, we must be especially careful not to disrupt the 
Administration's efforts, however, well-intentioned we may be.
    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 diamond industry based in Antwerp 
recognizes this, and I applaud the industry for taking steps towards 
achieving this goal.
    We will hear first from our esteemed colleagues from Congress about 
their concerns on the progress of solving the problem of trade in 
conflict diamonds, and then we will hear from the Administration for a 
response and comment on legislation. Finally, representatives from the 
diamond industry and non-government organizations will testify.
    I ask everyone to address the legislative criteria that this 
Committee is bound to follow. How will legislative proposals be 
administrable and consistent with our international trade obligations? 
Will legislation undermine the Administration's efforts to reach an 
international consensus, and if so, how? Will the proposals be 
effective in curtailing trade in conflict diamonds? Lastly, how will 
these proposals adversely affect the legitimate diamond trade and the 
countries in Africa that reply upon such trade? Any legislation must 
help, not hinder, the solution to this illegal trade.
    I now recognize our distinguished Ranking Member, Mr. Levin, for 
any statement he would like to make.

                                

    Mr. Levin. I thank you, Mr. Chairman, and on behalf of my 
Democratic colleagues that are not here, only because, as you 
may have heard the rumors, we have a caucus for the election of 
a whip, and so I want to enter into the record a few remarks on 
behalf of Mr. Rangel who is our ranking member on the full 
Committee and myself.
    Chairman Crane. Without objection, so ordered.
    Mr. Levin. Thank you for holding this hearing. The issues 
of trafficking in conflict diamonds is being considered in our 
Committee because it has trade ramifications. That being said, 
we think we all agree that the importance of the issue extends 
beyond its effect on U.S. trade laws and goes more directly to 
the issue of what our responsibility is to assist the nations 
of sub-Saharan Africa with bringing peace to that continent.
    Diamonds should enrich the lives of the African people. 
Instead of wealth, however, diamonds in Angola, Sierra Leone 
and elsewhere are bringing pain and suffering. The two Security 
Council resolutions calling for United Nations (U.N.) members 
to prohibit the trade in conflict diamonds from Sierra Leone 
and Angola are welcome first steps toward preventing rebel 
groups from financing their civil war activities and human 
rights abuses through illegal diamond trade.
    We are encouraged that the administration has been actively 
engaged along with a wide range of other governments, industry 
representatives, and non-governmental organizations (NGOs) in 
the Kimberley Process, which will develop a system for 
monitoring the rough diamond trade that will enable governments 
to restrict trade in illegal diamonds.
    Congress has a critical role to play. H.R. 2722 is broadly 
supported legislation; it demonstrates our commitment as a 
country to curbing the trade in conflict diamonds, and sends a 
powerful message to the international community that they need 
to work as quickly as possible to develop an international 
system for monitoring the diamond trade.
    Time is of the essence. Every day we delay action will 
prolong the trade in conflict diamonds and the atrocities 
associated with it. We look forward to listening to our 
representatives from the U.S. Trade Representative (USTR), the 
U.S. Department of State, the private sector, and 
representatives from human rights groups as well as our 
distinguished colleagues in the House and in the Senate.
    As you know, last year, the Congress passed and the 
President signed into law historic legislation that recognizes 
that the nations of sub-Saharan Africa can be our partners in 
economic progress and prosperity. In working to pass that 
legislation, my colleagues and we recognize that the bill would 
not be a panacea for the African continent. We understood that 
creating a new framework for closer economic cooperation with 
the region while a good first step was only the beginning.
    So today our Committee and our Subcommittee continues its 
commitment to the nations of sub-Saharan Africa with this 
hearing. I hope we will enforce that commitment with passage of 
H.R. 2722. Thank you, Mr. Chairman.
    [The opening statement of Mr. Rangel follows:]
 Opening Statement of the Hon. Charles B. Rangel, a Representative in 
                  Congress from the State of New York
    Diamonds should enrich the lives of the African people. Instead of 
wealth, however, diamonds in Angola, Sierra Leone, and elsewhere are 
bringing pain and suffering. For several years, rebel groups in sub-
Saharan Africa have been using diamonds extracted from illegally 
controlled mines to finance arms purchases and civil war activities. 
The sale of these so-called ``conflict diamonds''--estimated to account 
for about 4 percent of the global diamond trade--has played a key role 
in financing organizations that have killed several million people, 
driven millions more from their homes, and committed countless human 
rights abuses.
    The two Security Council resolutions calling for UN Members to 
prohibit the trade in conflict diamonds from Sierra Leone and Angola 
are welcome first steps toward preventing rebel groups from financing 
their civil war activities and human rights abuses through illegal 
diamond trade.
    We are further encouraged that the Administration has been actively 
engaged, along with a wide range of other governments, industry 
representatives, and non-governmental organizations, in the Kimberley 
Process, which will develop a system for monitoring the rough diamond 
trade that will enable governments to restrict trade in illegal 
diamonds.
    Congress has a critical role to play in this process. As you know, 
the Clean Diamonds Trade Act, H.R. 2722, has been referred to this 
Committee. This broadly supported legislation demonstrates the United 
States' commitment to curbing the trade in ``conflict diamonds'' and 
sends a powerful message to the international community that they need 
to work as quickly as possible to develop an international system for 
monitoring the diamond trade.
    Time is of the essence--every day we delay action will prolong the 
trade in conflict diamonds and the atrocities associated with it. We 
ask that we all work together to pass this legislation before the end 
of the year.
    As you know, last year the Congress passed and the President signed 
into law historic legislation that recognizes that the nations of sub-
Saharan Africa can be our partners in economic progress and prosperity. 
In working to pass that legislation, we recognized that the bill would 
not be a panacea for the continent. We understood that creating a new 
framework for closer economic cooperation with the region, while a good 
first step, was only the beginning.
    Now we continue our commitment to the nations of sub-Saharan 
Africa, calling for effective measures that will sever a key source of 
funding for organizations that have been causing pain and suffering in 
many nations. In doing so, we will preserve the dignity of an industry 
which can and should be a source of wealth for countries around the 
world.

                                

    Chairman Crane. I would now like to recognize our first 
panel of members from the House and from the Senate. Our first 
three witnesses will be Senator DeWine, Congressman Hall, and 
Congressman Wolf, and I welcome you all, and we shall defer to 
our distinguished colleague from the other chamber, who is on a 
tight time constraint, and then, Mike, you are excused if you 
have to run after you havemade your statement.

STATEMENT OF THE HON. MIKE DeWINE, A UNITED STATES SENATOR FROM 
                       THE STATE OF OHIO

    Mr. DeWine. Mr. Chairman, Congressman Levin, thank you very 
much. It is good to be back in the Longworth Building. I spent 
8 years here. It is good to be home and good to be with my 
friends. Thank you for holding this hearing on this very, very 
important topic. Your colleagues and my colleagues Congressman 
Hall and Congressman Wolf have really been the leaders in this, 
and they are the driving force behind this bill.
    I have tried to take the lead in the Senate along with 
several of my colleagues to try to complement their efforts. As 
you know, the diamond trade, and as you pointed out, Mr. 
Chairman, is one of the world's most lucrative industries. With 
its potential for extreme profitability, it is not surprising 
that a black market and illicit trade have emerged alongside 
the legitimate industry.
    Candidly, diamond trading has become an attractive and 
sustainable income source for violent rebel groups and 
terrorist networks around the world. In fact, the sale of 
illicit diamonds has yielded disturbing reports that an 
associate of bin Laden is involved in the trade, and that there 
clearly is an established link between Sierra Leone's diamond 
trade and well-known Lebanese terrorists.
    In Africa currently where the majority of the world's 
diamonds are found there is ongoing strife and struggle 
resulting from the fight for control of the precious gems. 
While violence has erupted in several countries including 
Sierra Leone, Angola, the Congo, and Liberia, Sierra Leone in 
particular has one of the world's worst records of violence.
    In that nation, a nation embroiled in civil war for nearly 
a decade, rebel groups, most notably the Revolutionary United 
Front (RUF) have seized control of many of the country's 
diamond fields. Since the start of the rebels' quest for 
control of Sierra Leone's diamond supply, the RUF has 
conscripted children, children often as young as 7 or 8 years 
old, to be soldiers in their makeshift army.
    They have ripped an estimated 12,000 children from their 
families. This rebel army, child soldiers included, has 
terrorized Sierra Leone's population, killing, abducting, 
raping, and hacking off the limbs of victims with their 
machetes.
    We can do something about this. We can begin to change 
things. We have the power to help make a difference, to help 
end the indiscriminate suffering and violence in Sierra Leone, 
Angola, and elsewhere in Africa.
    Mr. Chairman, we have this power and we simply must use it. 
As the world's biggest diamond customer purchasing the majority 
of the world's diamonds, the United States has obvious clout. 
With that clout, we have the power, the power to remove the 
lucrative financial incentives that drive the rebel groups to 
trade in diamonds in the first place.
    Simply put, Mr. Chairman, if there is no market for their 
diamonds, there is little reason for the rebels to engage in 
their brutal campaigns to secure and protect their diamonds. 
Specifically, our legislation would prohibit the import of 
diamonds and diamond jewelry into the United States, unless the 
exporting countries have a system in place that includes 
forgery-proof certification documents as well as a uniform 
database to track and monitor the global diamond trade.
    This means, Mr. Chairman, that every diamond brought into 
the United States would require a certificate of origin and 
authenticity indicating that it was not laundered onto the 
market by a rebel group.
    Finally, Mr. Chairman, our bill also stipulates that fines 
and proceeds from seized contraband will be contributed to the 
USAID's War Victims Fund. These funds would be returned to the 
very people, the very people who suffer from the profitable 
sale of the diamonds. This legislation, Mr. Chairman, 
represents a turning point, a point of unity among the industry 
and the international community, and it is our hope that the 
bill will bring immediate attention to the violence in Africa 
and add momentum to international promises of action.
    Mr. Chairman, I thank the chair, and again thank my two 
colleagues from the House for their tremendous leadership on 
this very important issue.
    Chairman Crane. Well, we want to thank you, Mike, and we 
appreciate your problems with scheduling and all, and so you 
are free to leave, but we are grateful that you came and 
testified to open up the hearing this morning.
    Mr. DeWine. Thank you, Mr. Chairman.
    [The prepared statement of Mr. DeWine follows:]
  Statement of the Hon. Mike DeWine, a United States Senator from the 
                             State of Ohio
    Chairman Thomas and Ranking Member Rangel--thank you for allowing 
me to testify at this very important and very timely hearing today. As 
you know, the diamond trade is one of the world's most lucrative 
industries. With its potential for extreme profitability, it is not 
surprising that a black-market and illicit trade have emerged alongside 
the legitimate industry.
    Candidly, diamond trading has become an attractive and sustainable 
income source for violent rebel groups and terrorist networks around 
the world. In fact, the sale of illicit diamonds has yielded disturbing 
reports that even Osama bin Laden is involved in this trade. The 
February 22, 2001 U.S. District Court trial, United States vs. Osama 
bin Laden attests to this. Additionally, there is an established link 
between Sierra Leone's diamond trade and well known Lebanese 
terrorists.
    In Africa currently, where the majority of the world's diamonds are 
found, there is on-going strife and struggle resulting from the fight 
for control of the precious gems. While violence has erupted in several 
countries, including Sierra Leone, Angola, the Congo, Guinea [gih-
knee], and Liberia, Sierra Leone--in particular--has one of the worst 
records of violence. In this nation--a nation embroiled in civil war 
for nearly a decade, rebel groups--most notably, the Revolutionary 
United Front (RUF)--have seized control of many of the country's 
diamond fields. Once in control of a diamond field, the rebels 
confiscate the diamonds; launder them onto the legitimate market 
through other nearby nations, like Liberia; and ultimately finance 
their terrorist regimes and their continued efforts to overthrow the 
legitimate government.
    Upon reaching the market, it is nearly impossible to distinguish 
the illegally gathered diamonds--also known as ``conflict'' or 
``blood'' diamonds--from legitimate or ``clean'' stones. And so, over 
the past decade, the rebels have been able to smuggle out at least $10 
billion dollars in diamonds.
    Since the start of the rebel's quest for control of Sierra Leone's 
diamond supply, the children of this small nation have borne the 
biggest brunt of the insurgency.
    For over eight years, the RUF has conscripted children--children 
often as young as seven or eight years old--to be soldiers in their 
make-shift army. They have ripped an estimated 12,000 children from 
their families. After the RUF invaded the capital of Freetown in 
January 1999, at least 3,000 children were reported missing.
    As a result of deliberate and systematic brutalization, child 
soldiers have become some of the most vicious--and effective--fighters 
within the rebel factions. The rebel army--child-soldiers included--has 
terrorized Sierra Leone's population, killing, abducting, raping, and 
hacking off the limbs of victims with their machetes. This chopping off 
of limbs is the RUF's trademark strategy. In Freetown, the surgeons are 
frantic. Scores of men, women, and children--their hands partly chopped 
off--have flooded the main hospital. Amputating as quickly as they can, 
doctors toss severed hands into a communal bucket.
    I cannot understate nor can I fully describe the horrific abuses 
these children are suffering. The most vivid accounts come from the 
child-soldiers, themselves. I'd like to read a few of their stories, 
taken from Amnesty International's 1998 report called, ``Sierra Leone--
A Year of Atrocities against Civilians.'' According to one child's 
recollection:

            ``Civilians were rounded up, in groups or in lines, and 
        then taken individually to a pounding block in the village 
        where their hands, arms, or legs were cut with a machete. . . . 
        Men were then ordered to rape members of their own family. If 
        they refused, their arms were cut off and the women were raped 
        by rebel forces, often in front of their husbands . . . victims 
        of these atrocities also reported women and children being 
        rounded up and locked into houses which were then set [on 
        fire].''

    A young man from Lunsar, describing a rebel attack last spring, 
said this:

            ``Ten people were captured by the rebels and they asked us 
        to form a [line]. My brother was removed from the [line], and 
        they killed him with a rifle, and they cut his head with a 
        knife. After this, they killed his pregnant wife. There was an 
        argument among the rebels about the sex of the baby she was 
        carrying, so they decided to open her stomach to see the 
        baby.''

    Rape, sexual slavery and other forms of sexual abuse of girls and 
women have been systematic, organized, and widespread. Many of those 
abducted have been forced to become the ``wives'' of combatants. 
According to Isatu, an abducted girl now 18:

            ``I did not want to go; I was forced to go. They killed a 
        lot of women who refused to go with them.''

    She was forced to become the sexual partner of the combatant who 
captured her and is now the mother of their three-month-old baby.
    Mr. Chairman, we are losing these children--an entire generation of 
children. If the situation does notimprove, these kids have no future. 
But, as long as the rebels' diamond trade remains unchallenged, nothing 
will change.
    We can do something about this. We can make a difference. We have 
the power to help put an end to the indescribable suffering and 
violence in Sierra Leone, Angola, and elsewhere in Africa. We have that 
power, Mr. Chairman, and we must use it.
    As the world's biggest diamond customer--purchasing the majority of 
the world's diamonds--the United States has tremendous clout. With that 
clout, we have the power to remove the lucrative financial incentives 
that drive the rebel groups to trade in diamonds in the first place. 
Simply put, if there is no market for their diamonds, there is little 
reason for the rebels to engage in their brutal campaigns to secure and 
protect their cache.
    That is why, along with my distinguished Senate colleagues, Senator 
Durbin and Senator Feingold, I have introduced legislation called the 
``Clean Diamonds Act of 2001'' to remove the rebels' market incentive. 
My colleague from Ohio, Congressman Tony Hall, and Congressman Frank 
Wolf from Virginia have introduced a similar measure in the House.
    Our bill is very simple. The whole idea behind it is to facilitate 
the implementation of a system of controls on the export and import of 
diamonds, so that buyers can be certain that their purchases are not 
fueling the rebel campaign.
    Specifically, our legislation would prohibit the import of diamonds 
and diamond jewelry into the United States unless the exporting 
countries have a system in place that includes forgery-proof 
certification documents, as well as a uniform database to track and 
monitor the global diamond trade. This means that every diamond brought 
into the United States would require a certificate of origin and 
authenticity, indicating that it was not laundered onto the market by a 
rebel group.
    Additionally, the bill requires the President to report annually to 
Congress on the control system's effectiveness and also requires the 
General Accounting Office to do the same within three years of 
enactment.
    Finally, our bill stipulates that fines and proceeds from seized 
contraband will be contributed to the USAID's War Victims Fund. These 
funds would be returned to the very people who suffer from the 
profitable sale of the diamonds and would be used to help finance 
humanitarian relief and microenterprise efforts.
    Our bill represents a turning point--a point of unity among the 
industry and the international community. And, it is our hope that this 
legislation will bring immediate attention to this problem and add 
momentum to international promises of action.
    We have an obligation--a moral responsibility--to help stop the 
violence, the brutality, the needless killing and maiming. No other 
child should kill or be killed in Sierra Leone and other African 
nations. It is the humane thing to do. It is the right thing to do.

                                

    Chairman Crane. You bet. And now we will yield to our House 
witness Tony Hall.

    STATEMENT OF THE HON. TONY P. HALL, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Hall. Thank you, Mr. Chairman, and Mr. Houghton and Mr. 
Herger. I have a statement for you. I will not read it. I would 
just like to refer to it from time to time. I am very glad to 
be here with my good friend Frank Wolf.
    Chairman Crane. Well, if you will yield a moment, it will 
be a part of the permanent record, too.
    Mr. Hall. And I appreciate Senator DeWine coming over here 
and being an important part of this legislation, along with Mr. 
Houghton, Mr. Rangel, Mr. Feingold, and Mr. Durbin. It is a 
very, very bipartisan bill. I think Mike has outlined it. I 
think you know the issues. We have a hundred of the best human 
rights groups in the world that are solidly behind this. We 
have a diamond industry that is part of this consensus 
legislation.
    We have tremendous bipartisan support. Frank Wolf and I 
have seen the effects of what it is to trade in conflict 
diamonds and what it does to countries. The first thing it does 
it takes money away from the countries, especially the poorest 
countries in the world, that ought to be going to their 
treasuries to help their poor people. But because it is 
smuggled or because it becomes conflict diamonds, it is traded 
to fund most of the civil wars that are going on today.
    And to see the results of that, as Frank and I have seen in 
various refugee camps, to see all the people who are missing 
limbs because they just happened to be in the way, and if we 
can solve this problem of conflict diamonds, we can take the 
money and the guts out of a lot of the civil wars that are 
going on in Africa today.
    I will never forget visiting Angola a few years ago. I came 
out of a restaurant at night in the capital and saw about 30 
orphan kids, real little kids just living on the street in an 
alleyway on top of each other like puppies. Their misery was 
caused by diamonds, caused by war. You cannot walk in Angola or 
in the Congo or Sierra Leone without seeing people who have 
been harmed in so many different ways. Their ears are cut off, 
their noses are cut off, their limbs are cut off. They have 
suffered wholesale killings and butchery that is beyond 
anybody's imagination.
    And to learn in recent weeks that there is a very, very 
good possibility that bin Laden is part of this because he is 
able to use these organizations as one of his moneymaking 
schemes. I do not know what else I can say to you. I have 
testified before this Committee. We think we have good 
legislation. We have worked with the Customs people, with the 
State Department. We feel that the bill meets our obligation to 
the World Trade Organization (WTO).
    We are open to your ideas as to how you think the bill 
could be improved. We need to move on this. We really do, and 
judging by the promise and the commitment that was made by 
Chairman Thomas, hopefully we can in the next week or two. I 
think that if we can put legislation on the books, it will help 
the Kimberley Process. It will move the United Nations' efforts 
ahead even further. We have lots of allies that want us to pass 
this legislation.
    This is important legislation for all legitimate diamond 
dealers, whether they be in our country or in Belgium, 
Botswana, Namibia, or South Africa. This legislation will help 
them. So with that, I just say thank you for this hearing.
    I have here 200 letters from students from the Julius West 
Middle School in Rockville, Maryland. I understand they were 
going to be with us yesterday, and I appreciate their teacher 
being here with us today. Every time Frank and I have ever been 
able to talk to young people or anybody in the country about 
conflict diamonds, we hear tremendous support for ending this 
blood trade.
    Why should we pass this bill? Because we buy about 50 
percent of all the diamonds in the world every year. We can 
make a difference. And with that, I thank you, sir, and 
appreciate testifying.
    [The prepared statement of Mr. Hall follows:]
 Statement of the 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 holding this hearing today, and the opportunity to 
testify before the Committee again on conflict diamonds.
    You have a very strong line-up today, people who are working hard 
to end this scourge. You also have two strong advocates for human 
rights to hear from--Frank Wolf and Mike DeWine. I think you know where 
I stand; I'll be brief so you can hear from the other witnesses.
Why Congress Should Act
    All of us work on issues that--let's face it--won't be affected 
much one way or the other, no matter what we do. This isn't one of 
them. This is something where action by American consumers, and the 
American Congress, can make all the difference.
    Consumers can make a difference, because we buy the majority of the 
world's diamonds--a product whose value depends entirely on its image 
as a symbol of love and commitment. That image doesn't always match the 
reality that, sometimes, diamonds are used to fund terrible atrocities.
    Congress can help because, at the same time that American consumers 
are unwittingly helping fund wars in Africa, our country is the biggest 
donor of humanitarian aid to its victims. That is a losing proposition: 
in the past decade--as we have spent more than $2 billion in 
humanitarian aid to the four countries involved in wars over diamonds--
more than $10 billion in conflict diamonds has been smuggled out of 
these same countries.
    There is one more reason for Congress to act. Our country cannot 
afford to let this resource, which has channeled billions of dollars 
into black-market economies, turn into easy money for terrorists--
whether they belong to organizations, like Sierra Leone's Revolutionary 
United Front, that terrorize Africans; or to Al Qaeda, whose cells are 
involved in a range of money-making activities that includes diamond 
trading. I do not know the extent of Al Qaeda's activities, and do not 
want to be an alarmist. But I do know that diamonds--the most 
concentrated source of wealth ever known to mankind--should be put off 
limits to anyone bent on destruction. Especially Osama bin Laden.
Conflict Diamonds are Stolen Goods
    Finding a solution to this illegal trade is not an easy task. I 
know your focus, Mr. Chairman, is usually on finding ways to lift 
restrictions on trade. I agree with you sometimes, and with Mr. Rangel 
and Mr. Levin sometimes. But I share the commitment that you all have 
to letting trade be the engine of our economy, and of economies around 
the globe.
    However, this is not a question of free trade, or fair trade. 
Conflict diamonds are stolen from companies and countries. They are 
smuggled to avoid paying taxes that are one of African countries' key 
sources of income. And then, most horrifying of all, they are turned 
into weapons against innocent civilians who might interfere with these 
thugs' control of the diamond mines. In Sierra Leone, for example, 
rebels told many of their victims that they were forcibly amputating 
their hands as punishment for using them to cast ballots in the 
nation's first democratic election.
    I respect the Subcommittee's concerns about fulfilling our 
country's obligation to the World Trade Organization. I think the Clean 
Diamonds Trade Act does that in several ways, which are described in 
material attached to my testimony.
    But I know that if conflict diamonds had been treated like other 
stolen goods by the countries that import them, or by diamond traders, 
this problem would have been prevented--or solved much sooner. As the 
journalist and author Sebastian Junger put it, ``If international 
diamond brokers made a concerted effort to avoid buying illicitly mined 
diamonds, groups such as UNITA and the RUF would have a much, much 
harder time bankrolling their wars.'' I would add countries that import 
diamonds to the list that includes diamond brokers.
    I know the Subcommittee is aware of the efforts both countries and 
companies have made to agree on the international framework--an 
approach that both industry and non-governmental organizations say is 
the only real answer. Our State Department has been a steady 
participant in this work, as have the U.S. Customs Service and other 
agencies. This legislation is designed to strengthen their hand in 
these negotiations, and help prevent them from dragging into a third 
year.
Consensus Between Industry and Activists
    Notwithstanding our diplomats' efforts, much of the work of the 
Kimberley Process to construct this framework has been driven by NGOs 
and the diamond industry, whose representatives have teamed up to 
support the legislation the Subcommittee is considering today. Coming 
together behind a constructive solution was not easy--either for the 
Campaign to Eliminate Conflict Diamonds, which is a coalition of more 
than 100 human rights, humanitarian, and faith organizations; or for 
the World Diamond Council, whose members include all of that industry's 
many factions.
    The NGOs have been sharp critics of the diamond and jewelry 
industries, but were thoughtful and fair in taking the opportunity to 
work on a difficult problem together. At a time when many of their 
colleagues in the same organizations are on the front lines of the 
battle for responsible trade, with a product made vulnerable by its own 
marketing success, and with made-for-TV images of terrible suffering, 
these advocates' efforts are nothing short of extraordinary.
    The industry faced an equally difficult challenge in compromising 
with critics--and I count myself among them--who sometimes have 
forgotten to acknowledge that its ranks are filled with honorable men 
and women, and honest business people. Critics who have asked this 
industry to be much more nimble than those that sell oil, gas, timber, 
col-tan, or other products that have funded wars.
    Compared to the distance this coalition has traveled in a few short 
months, the differences here in Congress--even in this room, even this 
week--seem easy to bridge. But there's a catch: the NGOs have agreed to 
work with industry only until we adjourn this year. The Campaign's 
representatives feel strongly that consumers need to be informed about 
how some of the money they spend on diamonds is used, and they believe 
that severing the funding for these wars is an urgent need that cannot 
be allowed to run the course of ordinary legislation. I fully 
understand and support their unwillingness to put their work on behalf 
of suffering people on hold while Congress is in recess.
    Likewise, the World Diamond Council and Jewelers of America also 
are anxious for Congress to act. I think industry representatives are 
right to worry that protests and consumer-awareness events outside 
jewelry stores this holiday shopping season might make it very 
difficult to maintain the unusual alliance of miners, traders, and 
retailers that the World Diamond Council represents.
    I hope the Members of the Committee will listen closely to what 
Adotei Akwei, Rory Anderson, Cecilia Gardner, and Matt Runci will say 
today. They are among the very small number of people who have worked 
tirelessly to end the trade in conflict diamonds. They each speak for 
tens of thousands of others who support the work their organizations 
do. And they are right: Congress should join their efforts by passing 
the Clean Diamonds Trade Act.
``We Understand What Suffering Is''
    In the same spirit of cooperation that our coalition partners have 
demonstrated, Congressman Frank Wolf and I have worked with Republicans 
and Democrats here in the House and in the Senate. We have strong 
partners in Amo Houghton and Charlie Rangel--and in Mike DeWine, Dick 
Durbin, and Russ Feingold.
    We have met with senior officials in the Bush Administration, and 
we stand ready to work with them and with you to craft a responsible 
and effective bill. We are grateful for Chairman Thomas's commitment to 
move legislation this year, and appreciate your Subcommittee's 
contribution to that.
    In closing, I want to draw your attention to part of a Wall Street 
Journal article published in the aftermath of the attacks on our 
country last month that described the reaction of other countries:

            ``Until last week, Sierra Leone had little in common with 
        New York. Now, the two share huge death tolls, obliterated 
        landmark buildings and entire city blocks in rubble. Tens of 
        thousands of Sierra Leoneans were maimed, brutalized and killed 
        in a 10-year war between rebels and various governments. The 
        blighted land is ranked last among 162 countries'' by the 
        United Nations.

    The article goes on to describe how Sierra Leoneans are ``reaching 
out beyond their own misery'' to express ``the sorrow in their heart'' 
about the attacks. An unemployed driver in a nation where Islam is the 
faith of most people, put it this way: ``We feel America's suffering . 
. . because we understand what suffering is,'' Hussain Konteh said.
    Mr. Chairman, Members of the Committee: Frank Wolf and I saw what 
Mr. Konteh was talking about two years ago, and it has weighed heavily 
on us ever since then. We already understood what suffering is, as does 
our colleague Mike DeWine--who has made children's well-being a 
priority and logged countless hours and miles in helping and protecting 
them. We understood not in the same way Mr. Konteh does, but we've all 
seen countless people suffering from hunger, or disease, or every 
atrocity and violation of human rights we'd thought imaginable.
    Still, very few things could have prepared us for meeting the 2\1/
2\-year-old whose arm was forcibly amputated. Or the 14-year-old girl 
who lost both arms and was pregnant with her rapist's child. Or the 
young student who lost an ear, because rebels thought that would end 
his studies. Or other losses that Sierra Leoneans we met in refugee 
camps described.
    Even now, as our country joins the war that was declared on us; 
even now, as we worry for our soldiers' lives and our economy's health; 
even now, Mr. Chairman, I believe we must also address the trade in 
conflict diamonds. This is a problem we can do something about, 
something we are in a unique position to address. And, I would 
respectfully submit, if we can't do something about this suffering--
with everything we know about its cause, with the specter of these 
wars' continuing until this problem is addressed, and with the support 
of everyone who is represented here today--if we can't do something 
about this, then we all ought to pack it in.
    Thank you for your work here and in the days ahead. I appreciate 
the opportunity to testify today, and would be happy to answer any 
questions.

          Frequently Asked Questions--Clean Diamonds Trade Act

    Q. Why is U.S. legislation needed? Aren't there UN Security Council 
resolutions barring diamonds from Liberia, the Revolutionary United 
Front (Sierra Leone), and UNITA (Angola)? Isn't a targeted approach a 
better course?
    A. Sanctions against conflict diamonds, imposed against two rebel 
groups and the country of Liberia, are in place, but they are an 
imperfect solution because they do nothing to help block the smuggling 
of these diamonds through other channels. For example, UNITA today 
earns $100 million a year selling its diamonds--despite the fact that a 
UN embargo has been in place for three years.
    Nor are temporary UN sanctions an appropriate basis for a 
comprehensive system, which is what's needed to stop the current blood 
trade and to deter future wars over diamonds. This is a global problem 
that cannot be solved with a piecemeal approach--whether that is UN 
embargoes, or individual producing countries' laws. That is the firm 
conviction of the diamond industry, of civil society, and of others 
familiar with the problem of conflict diamonds.
    Most observers believe the United Nations will endorse the global 
system being devised by the Kimberley Process, and it commissioned this 
work precisely because it knows the patchwork of embargoes is not 
working.
    Q. Why should Congress act now on this problem? Isn't a global 
solution imminent, one that has the support of a broad range of 
diamond-producing and trading nations, plus the diamond industry--and 
that is likely to be endorsed by the United Nations?
    A. Last December, the United Nations General Assembly voted 
unanimously to charge nations, aided by representatives of the diamond 
industry and civil society, with submitting a recommendation for a 
global system of controlling rough diamonds. Participants in the 
Kimberley Process set forth a timetable for making their recommendation 
in December 2001--but whether they will meet their deadline remains to 
be seen. The most difficult decisions have not yet been made, and while 
progress has been good, there are valid reasons to be concerned.
    The legislation provides ample room for this initiative, (1) by 
taking effect six months after enactment, and (2) by letting the 
President issue a waiver for any country that is cooperating through 
the KimberleyProcess. It does not pre-empt the Kimberley Process; in 
fact, it defers to it. But few observers believe its progress will 
continue without the consumer pressure that the legislation 
articulates. That was one reason the industry agreed to compromise with 
NGOs on this bill: to keep the Kimberley Process moving apace.
    More importantly, the United States--as the world's largest 
consumer of diamonds, and the biggest contributor to humanitarian 
relief for victims of these diamond wars--has a rightful interest in 
ending this blood trade. It is reasonable for our country to cooperate 
with international efforts, and this bill encourages that. And it would 
be inappropriate for us to cede our responsibility to act, particularly 
as some 27,000 American jewelers likely will be the first to feel the 
impact of inaction, which will continue to tarnish diamonds' image in 
consumers' eyes.
    Finally, a coalition of all American stakeholders has called on 
Congress to act to fulfill the United States' moral obligation to lead 
efforts to stop the atrocities that conflict diamonds fund. The 
coalition includes more than 100 human rights, humanitarian, and faith 
groups--the Campaign to Eliminate Conflict Diamonds--whose member 
organizations have the support of millions of Americans; and 
representatives of the diamond and jewelry industries--the World 
Diamond Council and Jewelers of America. They reached a consensus on 
the Clean Diamonds Trade Act (H.R. 2722) and the Clean Diamonds Act (S. 
1084) months ago and have agreed to work together through 2001 to win 
passage of the consensus these bills represent.
    Q. Would the system the bill requires be effective?
    A. The bill does not require any specific system of controls on 
rough diamonds. Instead, it gives the Customs Service and the State 
Department leeway to define what a workable system is. It does set out 
some minimum standards, which were recommended by the diamond industry 
and which have been used as the starting point by the countries 
participating in the Kimberley Process. The bill does not spell out 
every aspect of the system for three reasons:

    1. LOur obligations to the World Trade Organization require the 
United States to target problems that affect trade narrowly, so that 
importers have more than one way to meet our concerns. Different 
importers should have different abilities to satisfy Customs officials 
that their diamonds are clean, because the situation in Canada may be 
different than in Sierra Leone, for example. (This is not necessarily 
true, but the presumption under trade law is difficult to refute). The 
bill allows this ``safe harbor'' provision to comply with WTO rules.
    2. LSome 40 countries, along with representatives industry and 
civil society, have been working for the past 18 months on an 
international system of controls. Experts, including in the diamond 
industry, say that a comprehensive approach is the only serious way to 
address the smuggling that is at the root of this blood trade. The bill 
is designed to encourage the Kimberley Process to complete its work, 
according to the timetable set by its own participants. It is not 
designed to make their decisions for them, though, and therefore lets 
the system they devise satisfy U.S. requirements contained in this 
bill.
    3. LAt bottom, this is a law enforcement problem. Conflict diamonds 
are stolen, and smuggled across many borders. There are, of course, 
laws in producing countries that are the primary victim of this crime 
(both because their people suffer terrible atrocities inflicted by 
rebels funded by conflict diamonds; and because they are losing $60-
$200 million1 per year in uncollected tax revenues). These 
laws have not worked for two reasons: (a) other countries participating 
in the diamond trade have done nothing to help enforce these laws, and 
that is the reason a global system is needed; and (b) any system or new 
law must be flexible enough to respond to criminals' abilities to find 
ways around them. That is why the bill gives Customs officials 
flexibility to target this problem, and avoids spelling out exactly 
what steps they must take.

    \1\ USAID estimated in 2000 that Liberia, Sierra Leone, Angola, and 
the Democratic Republic of the Congo lose $60 million per year in 
uncollected taxes--which average 3% on the value of rough diamonds 
exported from there. A senior official of Botswana estimated (verbally) 
in 2001 that the total was $200 million.
---------------------------------------------------------------------------
    Q. How would a system of controls on rough diamonds work?
    A. The primary focus of the system being devised by participants in 
the Kimberley Process is the first time a rough diamond is traded. 
Models are being tested in Sierra Leone and Angola now, and have won 
praise from some of the sharpest critics of the diamond industry and 
countries that have ignored this problem.2
---------------------------------------------------------------------------
    \2\ Global Witness, a British NGO, examined Angola's system of 
controls closely; its report is available on its website: http://
www.oneworld.org/globalwitness/.
---------------------------------------------------------------------------
    Here's how the system works, in brief:

     LRough diamonds are exported in secure containers, whose 
contents are disclosed on an export certificate that accompanies the 
diamonds. The certificate's details are logged into an official 
database by the exporting country's authorities--and checked against 
that database by the importing country's authorities.
     LFrom there, a chain of warranties helps ensure the 
``clean stream'' of diamonds stays clean. This chain is a series of 
assurances, by sellers to buyers, that accompanies the diamonds until 
they are cut and polished.
     LIn addition, countries are considering the need for 
issuing re-export certificates every time a rough diamond is traded. 
Those may rely in part on the industry's chain of warranties, but there 
is not yet consensus on the workability of controls past the first 
import. The U.S. delegation in particular, prompted by enforcement 
concerns raised by Customs, has opposed re-export certificates.

    Here's how the system works, in detail:
    From the mine/mining area to export--This stage of the process of 
exporting diamonds poses the most difficult challenge to implementing 
an effective system of controls. That is because it is very difficult 
to monitor ``the first 10 yards'' a diamond travels from thousands of 
individual miners, to a diamond buyer. This problem is the focus of 
continuing work, but currently the expectation is that the system would 
require a producing country to license miners and regulate their 
activities closely. This once was a common practice, but has been 
neglected in some countries, a casualty of corruption and the chaotic 
nature of war.
    To help correct the inherent difficulty of monitoring the trade, 
especially at its start, the global system will give diamond-trading 
countries that participate through the Kimberley Process a forum for 
alerting producing countries to problems. That will help dilute the 
incentive to cheat--because while a producing country will want to get 
all of its diamonds through, an importing country will want to protect 
its supply of clean gems from the taint of conflict diamonds. It 
therefore will have an incentive to help the producing country 
safeguard its exports. That help could come in the form of carrots 
(like financial assistance), or sticks (like rejection of diamonds 
whose origin is easiest to determine at this stage).
    From first export to first import--Rough diamonds to be exported 
are taken to a producing country's authorities, who collect taxes on 
them (which average 3% and are the primary benefit African countries 
get from this resource; to keep this sum in perspective, rough diamonds 
now fetch about $60 per carat in Antwerp). Authorities then issue a 
numbered export certificate on each parcel of diamonds, and log details 
about the parcel--including its total carat weight--on the certificate 
and into a database.
    When the parcel arrives in the importing country (which is Belgium, 
in the case of 85% of rough diamonds traded), authorities check its 
contents against the certificate affixed to the parcel, and against the 
database. Because experts usually can tell a diamond's origin before it 
is cut, they have this tool to help them judge the veracity of the 
certificate. Even in the rare instance when they cannot tell where the 
diamond is from, they almost certainly can conclude it is not from the 
country issuing the certificate, if that is the case. Several shipments 
have been interdicted in this manner already.
    This ability to rely on a technical safeguard, and the expertise of 
Belgian authorities, makes this stage the logical place to focus 
enforcement efforts. If diamonds entering legitimate commerce are 
clean--and downstream countries protect the stream against imports from 
outside the clean stream--most smuggled diamonds (including those used 
to fund conflict) can be blocked from trading as legitimate goods.
    From first import to first sale--The customers of importers whose 
export certificates have been validated have a legal basis for issuing 
a warranty to anyone to whom they sell these diamonds. From there, each 
sale of the same diamonds--even if the parcel is broken up--can be 
accompanied by a warranty that traces its authority back to that first 
sale.
    The World Diamond Council, an industry association formed to 
address the problem of conflict diamonds, has pledged to monitor 
industry participants employing this chain of warranties and to take 
disciplinary action against any who use it improperly. Individual 
buyers also have recourse, through civil lawsuits, against improper 
warranties. Government or independent auditing of this chain of 
warranties would add credibility to it, in the view of civil society 
representatives and others. Such a proposal is now under consideration 
by the industry. However, U.S. Government experts doubt that a chain of 
warranties--whether it is audited or not--could provide a sufficient 
safeguard to constitute the basis for a government certificate.
    The outstanding question is whether the chain of warranties is a 
useful contribution to efforts to block conflict diamonds from 
legitimate trade. The answer may be determined by how many private 
businesses are willing to participate in the chain. As offered, this 
initiative represents a good-faith effort by an industry whose active 
participation in safeguarding the clean stream is essential. It could 
have a significant practical effect if it is widely used and, given the 
realities of the trade, that potential should not be underestimated.
    From first import to subsequent export--To combat the problem of 
conflict diamonds' entering the clean stream of legitimate diamonds, 
some observers believe that rough diamonds should be accompanied by re-
export certificates as they cross every border. These would adhere to 
the same rules set forth above--the parcel's carat weight disclosed, a 
unique number recorded on the certificate and in a database maintained 
by the exporting country, and information checked by the importing 
country. However, U.S. officials and others disagree on whether this 
mechanism could be enforced.
    One alternative solution to this transshipment problem may be the 
creation of a police force that has access to detailed statistical 
information and tough law enforcement powers. The Securities & Exchange 
Commission offers one model for this: it routinely handles sensitive 
information which, like diamond trade flows, are considered proprietary 
by industry participants. And the SEC routinely exercises police power 
that serves as a significant deterrent to wrong-doing.
    Q. Why doesn't the system simply require diamonds to move 
individually, in sealed packets with individual numbers that can 
continue to be tracked? Alternatively, why aren't physical marks on the 
diamonds being considered--since those would be removed in the cutting 
process anyway and would not diminish the diamonds' value?
    A. Some 850 million stones trade every year, most of them in 
parcels of dozens or hundreds of diamonds until they are cut. It would 
be a logistical nightmare to separate these parcels into individual 
diamonds. Likewise, coating rough diamonds with wax that contains a 
special colorant (like U.S. currency uses)--or etching a mark into 
individual diamonds, also would impose a burden, because either 
approach would hinder the sorting and cutting process by emplacing a 
physical barrier to the process of quickly judging a diamond's value. 
As much of the value added by diamond traders is their sorting and 
marketing parcels of diamonds, this barrier's effect should not be 
minimized.
    Between 80 and 95% of diamonds are not from conflict zones. 
Hopefully, the wars that have been fueled by diamond revenues will 
end--with the help of these efforts--and a system of controls will 
remain in effect to deter future conflicts. The bill endeavors to 
address the problem without imposing an undue burden either on industry 
or on countries involved in what is, for the most part, a legitimate 
trade.
    Q. Why doesn't the bill impose a system of controls on polished 
diamonds, or diamond jewelry?
    A. Efforts have focused on rough diamonds because their trade (1) 
is where the problem of rebels' funding from conflict diamonds arises, 
and (2) lends itself to verification by technical means. The goal is to 
prevent rough diamonds from being cut and polished--which is the point 
at which they gain much of their value, and the point past which no 
means of determining a diamond's origin currently exist.
    The bill does close loopholes that could exist for polished 
diamonds and diamond jewelry, by requiring countries that supply the 
U.S. market to get the diamonds they use from the clean stream.
    Q. This bill seems to be an effort to end diamond smuggling--a 
worthwhile goal, perhaps, but one that seems impossible to attain. Will 
this increase red tape for legitimate industry, without stopping 
criminal smugglers?
    A. Smuggling is endemic in the diamond trade: estimates of its 
prevalence range from 22 to 40% of all diamonds traded. The 
extraordinarily low tax paid on these transactions--0.04%--underscores 
the loss African nations that depend on diamond revenues suffer at the 
hands of smugglers.
    But the bill's goal is more narrow: to end the smuggling that is 
used to fund conflict--whose costs are calculated in lives, not 
dollars. Together with UN and regional peacekeeping, and other efforts, 
choking off the money that rebels and invading armies can earn by 
looting diamond mines promises to bring these wars to an end. Ensuring 
systems are in place so that diamonds cannot be used to fund future 
wars, along with other efforts, will help deter more suffering.
    No law can stop crime, but enacting this will enlist legitimate 
members of the industry--who make up the overwhelming majority of the 
diamond trade--in efforts to stop the most destructive smuggling: that 
used to fund wars.
    Q. Does this bill violate our obligations under the World Trade 
Organization?
    A. Considerable care was taken to ensure that the United States 
does not violate its WTO obligations if this bill is enacted into law.
    1. LAs a general matter, the United States could defend against any 
WTO challenge to this bill under either the general exceptions (Article 
XX) or essential security exceptions (Article XXI) of the WTO (GATT 
1994). Court decisions on these exceptions suggest these exceptions 
could be used successfully to defend this legislation against any WTO 
challenge. The Congress in its findings takes note of these exceptions.
    2. LThe bill provides the President with administrative flexibility 
so that he could implement the bill in a way that would withstand any 
WTO challenge. For example, instead of requiring all diamond exporters 
to implement a single system:
       LIt permits the President to allow imports from 
countries with systems that are functionally equivalent to the one 
spelled out in the bill3; or that meet the requirements of 
the system designed by the Kimberley Process4; or
---------------------------------------------------------------------------
    \3\ Section 4(a)(1)(B).
    \4\ Section 4(a)(1)(C) or (D).
---------------------------------------------------------------------------
       LIt lets an importer demonstrate to Customs officials 
that its diamonds are conflict-free so they can import them even if its 
country has not implemented any system of controls5; and
---------------------------------------------------------------------------
    \5\ Section 5(A)(iii).
---------------------------------------------------------------------------
       LIt lets the President tailor penalties--such as barring 
imports from a country--to fit the violation.6 For example, 
if the problem is that rough diamonds are being smuggled into the 
United States from a country, he can bar rough diamond imports from 
that country (instead of barring all diamond and diamond jewelry 
imports).
---------------------------------------------------------------------------
    \6\ Section 6(a), by permitting the President to issue a partial 
waiver.
---------------------------------------------------------------------------
    3. LThe bill provides the President with waiver authority that, if 
a WTO challenge were imminent, could be exercised to remove a country's 
standing to lodge that challenge. This would give our diplomats the 
ability to try to work out any disputes before they rose to the level 
of a challenge to the WTO.7
---------------------------------------------------------------------------
    \7\ Section 6(a).
---------------------------------------------------------------------------
    4. LFinally, the bill contains a self-correcting mechanism, so that 
if there were ever a WTO ruling against the United States, the Treasury 
Secretary and Customs would not be required to take any action under 
the bill that would be in violation of our WTO obligations.8
---------------------------------------------------------------------------
    \8\ Section 10.
---------------------------------------------------------------------------
    The bill also was crafted to facilitate several defenses to any WTO 
challenge:
    1. LGATT 1994's Article XXI permits a nation to assert it is acting 
in its security interests, (a) to address the traffic in arms or 
materials that supply a military establishment, or (b) in pursuance of 
its UN obligations--such as to enforce the current sanctions on the 
RUF, UNITA and Liberia, or an expected future UN resolution 
implementing the Kimberley Process.
    The bill includes findings 9 that would support the 
United States if it asserts a security defense against a WTO challenge.
---------------------------------------------------------------------------
    \9\ Section 2 (4).
---------------------------------------------------------------------------
    2. LGATT 1994's Article XX(b) permits a nation to assert it is 
acting out of necessity to protect human life and health--so long at 
its action does not arbitrarily or unjustifiably discriminate against a 
country, or is not taken simply to disguise a restriction on trade.
      L  The bill includes findings that detail the toll conflict 
diamonds is exacting on human life and health10 and that 
explain international efforts to devise a global approach to this 
problem.11 The United States could use either to defend 
against any WTO challenge.
---------------------------------------------------------------------------
    \10\ Section 2 (1).
    \11\ Section 2 (6) and (8).
---------------------------------------------------------------------------
    Q. Would this bill increase costs to American taxpayers? Would it 
increase the price of diamonds that American consumers pay?
    A. The Administration has not indicated it expects Customs' 
enforcement or other costs borne by taxpayers to increase because of 
this bill.
    As to the price of diamonds, a regulatory system like the one the 
bill encourages should not impose additional costs on diamond traders 
that were significant enough to pass along to consumers.
    On the contrary: the diamond and jewelry industries support this 
bill, in part, because they are concerned that their sales may be hurt 
if they do not provide consumers with assurances that their diamonds 
are conflict-free. Some are even investing in advertising to convey 
that message, despite warnings by the Federal Trade Commission and an 
industry ethics body that this claim cannot be supported until there is 
a system in place such as the one the bill encourages.
    If this problem is not addressed, jewelers likely will feel growing 
pressure to distance their wares from these atrocities. Advertising and 
other costs, including lost sales--likely would be a heavier burden 
than anything a system of controls like the ones required by the bill 
might impose.
    Q. Will passage of this bill hurt America's effort to build a 
coalition against terrorism?
    A. The Revolutionary United Front in Sierra Leone is a terrorist 
organization, according to the State Department. Moreover, there is 
strong evidence that al Qaeda, Osama bin Laden's organization, has been 
and still is involved in diamond trading in Africa.
    This bill's primary effect will be to put this resource--the most 
concentrated source of wealth known to mankind--off-limits to 
terrorists now wreaking havoc in Africa, and believed to be planing and 
funding future attacks in America. Given that there is widespread 
acceptance of the need to address the problem of conflict diamonds, and 
because the bill provides so much flexibility to U.S. diplomats, it is 
hard to foresee the day when sanctions are imposed against any country.
    Instead, the bill aims to encourage all countries supplying the 
U.S. market with diamonds to take steps that will ensure Americans 
remain steady consumers of their diamonds--so that this luxury product 
doesn't go the way of ivory and fur in consumers' eyes. Such measures 
are in these countries' own best interests, and most of them are 
working actively to put them into place. The bill's goal is to make 
diamonds a blessing for all countries, instead of the curse they are on 
some. The bill imposes no sanctions and it respects the rights of 
countries involved in the diamond trade to determine how best to 
address smuggling that should have been stopped years ago.
    If it affects the United States' ability to build a coalition 
against terrorism at all, it likely will do so in a positive way--by 
addressing a terrible injustice and helping stop those who would 
terrorize Africans as well as Americans.

                          

    Chairman Crane. We thank you for your testimony. And now 
Frank.

   STATEMENT OF THE HON. FRANK R. WOLF, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF VIRGINIA

    Mr. Wolf. Thank you, Mr. Chairman. I will be brief, too. I 
think Mr. Hall and Mr. DeWine made the case. I think it is 
important for the industry as their plans develop. Quite 
frankly, I know people who will not, absolutely will not, buy a 
diamond today unless they can be absolutely positively 
categorically sure that it is not a blood diamond. They just do 
not want to have a diamond on their hands. So for the industry 
which supports Mr. Hall's bill, it is absolutely critical that 
you pass this.
    Second, given the importance of diamonds for places such as 
South Africa, Namibia, and Botswana, it is critical for them 
that you act to protect the legitimate trade before it is too 
late and the image of diamonds is tarnished forever. Once you 
tarnish an image, it is very difficult, not impossible, but 
very difficult to ever, ever get it back.
    Third, as Mr. Hall said, in this case, and I do not know if 
you have read it, the United States of America versus Osama bin 
Laden, it was the World Trade Center bombing in 1993. We will 
be glad tofurnish it for the record. They talk about diamonds 
helped with regard to funneling and furnishing resources for the 
operation in 1993. Al Qaeda has financial interests in the diamond 
trade. Foti Sanco, the RUF in Sierra Leone, Charles Taylor, they have 
all been trained in Libya. It is almost a loose affiliation with regard 
to the terrorist operations, and for this Congress not to deal with 
this issue would be really wrong.
    Lastly, you got to pass this before the Congress goes home. 
This really is not something that can be kicked over to next 
January. One, if there is an economic boycott, the jewelers on 
Main Street who really should not be hurt, and I think what is 
taking place for them, they are feeling the pain, should not be 
hurt by this. This Congress has to pass this before we go home.
    Obviously, with the support of the majority and the 
minority, you could put it on the supplemental. You could put 
it on--we would take it on a State, Commerce, Justice 
Appropriations bill, or anything, but please find a vehicle 
once you all shape this and work this out.
    I think Mr. Hall and Mr. DeWine have worked out a good one. 
Let it pass before we go home whether it be the first week of 
November or second week in November, because I am afraid that 
if it carries over, one, people are going to think we are 
stupid with terrorists being funded by this operation; and 
secondly, the diamond industry could be severely hurt; and 
thirdly, I think a lot of people in Africa will experience 
tremendous pain and suffering and agony in a way that frankly 
none of us want.
    So thanks for the hearings. Thanks for moving this process 
fast and hopefully we can make it public law before 
Thanksgiving. Thank you very much and I yield back the balance 
of the time.
    [The prepared statement of Mr. Wolf follows:]
Statement of the Hon. Frank R. Wolf, a Representative in Congress from 
                         the State of Virginia
    Thank you, Mr. Chairman. I appreciate the opportunity to testify 
today about the issue of conflict diamonds. I appreciate your committee 
taking the time to hold this important hearing and I also thank 
Chairman Thomas for his willingness to facilitate the passage of 
conflict diamonds legislation before the end of this session.
    For nearly two years now, I have been supporting the efforts of my 
friend and colleague, Tony Hall, who has truly been the champion in 
bringing Congress's attention to the severe consequences of diamonds 
that fuel civil conflict in several of Africa's most troubled areas 
including Sierra Leone, Angola and the Democratic Republic of the 
Congo. His efforts have brought the world's attention to people blessed 
to live in areas rich in diamond resources, but who have been cursed by 
the violent conflict that these diamonds have caused.
    I also want to recognize and thank the Bush Administration for 
working with us on developing effective legislation to address this 
problem, specifically the State Department and the Office of the United 
States Trade Representative. I especially appreciate their efforts in 
light of recent circumstances, and the attention that the 
Administration is dedicating to the critical needs of our nation's 
security matters, both at home and overseas.
    In the interest of allowing the Committee and the Administration to 
have as much time as possible at this hearing, I will be brief. I just 
want to emphasize why I believe we need legislation such as H.R. 2722, 
introduced by Congressmen Houghton and Rangel with support of 
Congressman Hall and myself, before Congress adjourns this year.
    As this committee is aware, the U.S. is involved in multilateral 
negotiations with over 40 other nations at what is known as the 
``Kimberley Process.'' While it is undoubtedly difficult to have so 
many nations agree on a system of such a complex nature, our passage of 
legislation facilitates this international system. We import almost 70 
percent of the world's jewelry diamonds. We therefore have a unique 
responsibility to address this issue and take steps to only import 
clean diamonds, untainted by the blood of innocent victims. Legislation 
that requires clean diamonds will spur the many nations interested in 
maintaining their imports to the U.S. into making such a system a 
reality.
    At the same time, the legislation has the necessary flexibility for 
the Administration to meet its international trade requirements under 
the WTO and more importantly, enough flexibility for the Administration 
to delay its implementation as the global system becomes a reality. Our 
staffs are ready to continue working with the Office of USTR to meet 
their concerns.
    A second reason why this legislation is so important is for the 
diamond industry itself. While I do not purport to speak for the NGOs 
on their future plans, I do believe that failure to pass legislation 
will result in a significant consumer backlash in the near future. This 
will be especially true as new conflicts develop or old ones resurface. 
For instance, Angola's conflict rages on and recently the UNITA rebel 
group has shown signs of again heightening the violence. Given the 
importance of diamonds for places such as South Africa, Namibia and 
Botswana, it is critical that we act to protect the legitimate trade 
before it is too late and the image of a diamond is tarnished forever.
    Finally, I would like to address the issue of conflict diamonds in 
relation to recent events. As President Bush has stated so eloquently, 
the scope and reach of global terror networks such as Al Qaeda will 
require our fighting them on all fronts. One of these will be on the 
financial front and the Treasury Department has already taken steps in 
this direction.
    Diamonds are easy to launder and court testimony after the World 
Trade Center bombing in 1993 indicates that Al Qaeda has financial 
interests in the diamond trade. While it is impossible to know how 
closely tied in this group or other groups are to those who trade in 
conflict diamonds, it is significant that such connections may exist.
    According to the State Department, the RUF rebel leaders in Sierra 
Leone are a terrorist group. Many of their leaders have connections to 
traders of conflict diamonds in Lebanon and, of course, were very 
closely connected to Liberian President Charles Taylor. In short, there 
is a global network of ``bad guys'' out there. Passage of this 
legislation will at least impart some accountability to a highly 
launderable item and make it more difficult for any criminal or 
terrorist organization to use it as a financing mechanism.
    I would like to end with one closing thought. Members of this 
committee are some of the strongest and most eloquent advocates for 
free trade, globalization and international commerce. You point to the 
great economic opportunity that increased commerce offers for both our 
country and developing nations as well. I share and understand this 
basic principle.
    However, too often the argument of free trade and globalization is 
framed too simplistically--you are either for or you are against. 
Rather, I believe that cleaning up the diamond trade offers unique 
opportunity to address the issue in more realistic terms--international 
commerce with accountability. The benefits of the diamond trade need to 
reach the people on the ground that live in these regions. If we can 
successfully address the issue of conflict diamonds, human rights, 
labor conditions and the general welfare of people living in these 
conflict areas will improve.
    Again, thank you for giving me the opportunity to testify here 
today. With the Chairman's permission, I will submit my entire written 
testimony for the record.

                                

    Chairman Crane. Well, we thank you both for this commitment 
to this effort, and we will proceed now. I want to get one 
thing straight, though, Frank. You did say the first or second 
week of November, not December; right?
    Mr. Wolf. Well, I think we will be out of here; my sense we 
will be out of here in the first or second week or November. 
That would be my hope.
    Chairman Crane. That would be.
    Mr. Wolf. Yeah.
    Mr. Levin. Whenever we leave, we should have passed this, 
and it is a tribute to the two of you and others who have been 
toiling to get this done, and I think we owe it to you, and you 
would say, and you are right, to the people of Africa, as well 
as the terrorist connection. So we will do everything we can.
    Chairman Crane. Thank you. Amo.
    Mr. Houghton. Let me just ask one question. Aside from the 
humanitarian issue, which is enormous, what is the main 
economic impact here? Because it depresses the price of 
diamonds so that the people who are producing diamonds can help 
those people in need in their country? What is it?
    Mr. Hall. Well, just take one country, Sierra Leone. Sierra 
Leone should be one of the richest countries in the world. It 
has diamonds. It has an abundance of water. It has great soil. 
It has beaches. It has a lot of fish. They could have all kinds 
of industry there.
    And yet what has happened over the years is they rank last 
in the world when the United Nations looks at a country's gross 
national product, infant mortality rates, et cetera. They rank 
either second to last or last because they do not declare their 
resources, they have not done that for years because there has 
been so much killing and smuggling conflict diamonds out in 
ways other than through the government.
    If the diamonds could just go through the government of 
Sierra Leone, there would be a tax, there would be a license; 
the money would go to some of the poorest people in the world.
    Mr. Houghton. So basically it is a resource for the 
country.
    Mr. Hall. It is a resource for the country.
    Mr. Houghton. And it is being sucked out illegally and 
therefore no benefits come back to the government to be able to 
do the things they need for their people.
    Mr. Hall. That is the first benefit. One of the second 
benefits is the United States has invested a couple billion 
dollars in these countries over the past decade, and yet $10 
billion has been sucked out of these countries in conflict 
diamonds. So, the money is not going where it should be going. 
If that money, if a portion of that $10 billion could stay in 
the country, it could save us money and help a lot of people.
    Mr. Houghton. Thank you very much. Thanks, Mr. Chairman.
    Chairman Crane. Well, gentlemen, again, we thank you, and 
your written statements will be made a part of the permanent 
record.
    Mr. Hall. Thank you.
    Chairman Crane. And with that, now I would like to call our 
next panel: Alan Eastham, special negotiator for conflict 
diamonds at the U.S. Department of State; and James Mendenhall, 
deputy general counsel, Office of the United States Trade 
Representative.
    And gentlemen, if you can please try and keep your oral 
testimony to approximately 5 minutes, any written statements 
will be made a part of the permanent record, and with that we 
will proceed with Mr. Eastham first.

  STATEMENT OF ALAN EASTHAM, SPECIAL NEGOTIATOR FOR CONFLICT 
               DIAMONDS, U.S. DEPARTMENT OF STATE

    Mr. Eastham. Thank you very much for the chance to come 
before you today to report on our efforts to deal with the role 
of diamonds in conflict. I am very grateful to the Committee 
for organizing what I think will be a very significant event in 
terms of raising public and official awareness of this problem 
and of the need to do something about it, as has been testified 
by the previous panel.
    The natural wealth which is represented by diamonds ought 
to be a source of funds for development and human welfare in 
Sierra Leone, Angola, and other countries in Africa. Instead, 
in too many cases, the money produced by diamond sales provides 
the funding for rebel movements to purchase illicit arms, to 
support rebel armies, and to prolong civil wars that have 
terrorized societies and destroyed communities. This is the 
case in Angola and Sierra Leone.
    The Fowler Report in March 2000 and the landmark report by 
the British NGO Global Witness last year helped to build a 
consensus within and outside governments that we must confront 
and break the linkage between diamonds and conflict while 
permitting the legitimate trade to continue and flourish.
    Our objective in these efforts is to choke off the money 
from diamond sales that fuels violence and to use that money to 
build peace and stability in the countries which are affected 
by conflict now.
    We have attacked this problem through two avenues: the 
United Nations Security Council and the Kimberley Process. We 
recognized in this effort that it will take joint action by all 
diamond trading nations, producers and traders, to take 
effective action, and that it will be much more effective than 
action by one country alone. We are still convinced this 
approach is valid. It is consistent with our international 
obligations. It recognizes the inherent nature of the diamond 
trade and it is a reflection of the interconnected global 
market realities of today's world.
    In the Security Council, we chose to support prohibiting 
direct or indirect import of diamonds from Angola and Sierra 
Leone except through controlled certificate of origin regimes.
    More recently, we have supported efforts by the Security 
Council to reduce sanctions leakage to try to dry up funding 
for these insurrections. The most significant of these efforts 
was U.N. Security Council Resolution 1343 last May that banned 
rough diamond imports from Liberia. That was in response to 
Liberia's support for the RUF.
    Outside the formal U.N. processes, we have sought a broader 
solution to the conflict diamonds problem through what has come 
to be known as the Kimberley Process. The Kimberley Process has 
held four meetings this year with over 35 governments 
participating along with non-governmental organizations and 
members of industry to establish the details of a certification 
system as called for by the U.N. General Assembly in its 
resolution of December 1, 2000.
    I am pleased to report that Kimberley has maintained its 
commitment to the road map which was agreed earlier this year. 
At the most recent meeting in September in London, delegates 
revised a draft document that sets out the essential elements 
of a system including the use of forgery resistant certificates 
and tamper-proof containers for shipments of rough diamonds, 
internal controls and procedures to provide credible assurance 
that conflict diamonds do not enter the legal market, and 
effective enforcement of the system through dissuasive and 
proportional penalties.
    The London meeting in our view made significant progress. 
However, we recognized there was not as much progress as we 
would have liked in coming to conclusions about the obligations 
that governments and industries would undertake in an 
internationally agreed certification system.
    Some of these questions are quite significant and how we 
answer them in Kimberley goes to the heart of whether a global 
system will be effective. I know members are very concerned 
about the amount of time this is taking. I know you will ask me 
whether I think Kimberley will succeed. Given where it stands 
at the moment, I do not have an answer to that question. What I 
can assure you is that the team that I will take to Luanda and 
to Botswana later in the year will put maximum effort to 
achieving a workable and effective system to break this 
linkage.
    We appreciate your interest, Mr. Chairman. The sponsors of 
the Clean Diamonds Act have realized a significant 
accomplishment in the reaching a consensus between industry and 
the non-governmental organizations. With that, Mr. Chairman, in 
summary, I have run out of time and I will defer to your 
questions later on.
    [The prepared statement of Mr. Eastham follows:]
 Statement of Alan Eastham, Special Negotiator for Conflict Diamonds, 
                        U.S. Department of State
    Thank you for this opportunity to report on our efforts to deal 
with the role of diamonds in conflict. I am very grateful to the 
Committee for organizing what I believe will be a very significant 
event, a chance for the world to see first-hand the interest in 
Congress in this issue and to assemble the views of various experts as 
we prepare for the next round of ``Kimberley Process'' talks in Angola 
at the end of this month.
    The natural wealth represented by diamonds should be a source of 
funds for development and human welfare in Sierra Leone, Angola and 
other countries in Africa. Instead, in all too many cases, the money 
produced by diamond sales provides the funding for rebel movements to 
purchase illicit arms and to support rebel armies, prolonging civil 
wars that have terrorized societies and destroyed communities. While 
conflict diamonds have been estimated to make up only about four 
percent of the world diamond trade, they have a disproportionate impact 
on the welfare of certain populations.

    --LIn Angola, where UNITA exported between $3 and 4 billion worth 
of diamonds from 1992 to 1998, over half a million lives have been 
lost, more than three and a half million people have been displaced, 
and over 300,000 refugees have fled the country.
    --LIn Sierra Leone, diamonds have helped transform a band of about 
400 rebels of the RUF into an army of thousands that has become 
infamous for its brutal treatment of civilians, including particularly 
horrific atrocities against children. The civil war in that country has 
killed more than 50,000 people, displaced over one-third of the 
country's population of 4.5 million inhabitants, and sent over 500,000 
refugees abroad.

    The Fowler Report of March 2000 on UNITA activity in Angola and the 
landmark report by the British NGO Global Witness helped to build a 
consensus within and outside governments that we must confront and 
break the linkage between diamonds and conflict, while permitting the 
legitimate trade, a source of wealth for nation-building, to continue 
and flourish. Our government began to work towards this goal with the 
objective of choking off the money from diamond sales that fuels 
violence and building peace and stability in west and central Africa. 
At the same time, we recognized that the economies of other countries, 
such as those in southern Africa, benefit greatly from diamond exports 
and must not be harmed by our efforts to stop conflict diamonds.
    We have attacked conflict diamonds through two avenues: the United 
Nations and the Kimberley Process. We chose to do so because we 
recognized that joint efforts by all diamond trading nations would be 
immeasurably more effective than action by one country alone. We are 
still convinced that this approach is valid. It is consistent with our 
international obligations. It recognizes the inherent nature of the 
diamond trade. And it is a reflection of the inter-connected global 
market realities of today's world.
    In the United Nations Security Council, we chose to prohibit the 
direct or indirect import of diamonds from Angola and Sierra Leone, 
except through controlled certificate of origin regimes. USAID assisted 
the government of Sierra Leone in developing a certification system 
that provides a secure, legitimate channel for diamonds to be exported 
from that country.
    More recently, we have supported efforts by the Security Council to 
reduce sanctions leakage to try to dry up funding for these 
insurrections. The most significant of these was UNSC Resolution 1343 
last May that banned rough diamond imports from Liberia, in response to 
its government's support for the RUF.
    Outside of the formal United Nations processes, we have sought a 
broader solution to the conflict diamonds problem through what has come 
to be known as the Kimberley Process. This Process was initiated in 
Kimberley, South Africa, in May, 2000, when representatives of key 
producing, trading and consuming countries, the diamond industry, and 
civil society began a series of meetings to examine the conflict 
diamonds problem. Their efforts culminated five months later with an 
endorsement of a global system for preventing conflict diamonds from 
entering the legitimate trade. On December 1, 2000, the U.N. General 
Assembly endorsed Kimberley and called for its members to broaden 
participation and develop minimum acceptable standards for 
certification.
    An expanded Kimberley process, with over 35 governments 
participating, has held four meetings this year to establish the 
details of this system. At the first meeting in February in Namibia, 
delegates agreed to a road map that established benchmarks for 
subsequent meetings, with the objective of presenting the details of a 
system to the United Nations Secretary General by December 1, 2001--the 
anniversary of the General Assembly resolution.
    I am pleased to report that Kimberley has kept to this road map. At 
its most recent meeting, on September 11-13 in London, delegates 
revised a draft document that set out the essential elements of a 
system. These elements include: the use of forgery-resistant 
certificates and tamper-proof containers for shipments of rough 
diamonds, internal controls and procedures which provide credible 
assurance that conflict diamonds do not enter the legal market, and 
effective enforcement of the system through dissuasive and proportional 
penalties. The London meeting made significant progress toward 
outlining how this system would work, both in terms of physical 
security of diamond shipments and in the procedural requirements, 
including internal control measures, which would underpin a 
certification system. However, there was not as much progress as we 
would have liked in coming to conclusions regarding the obligations 
governments and industry would undertake in such a system.
    Some of these questions are quite significant and how we answer 
them in Kimberley goes to the heart of whether a global system will be 
effective. I know that Members of Congress are very concerned about the 
length of time the Kimberley Process is taking to come to grips with 
these issues, and that you will ask me whether I think Kimberley will 
succeed in the objectives outlined for us in the U.N. General Assembly 
Resolution. Given where Kimberley stands at the moment, I don't have an 
answer to that question; what I can assure you, though, is that the 
U.S. team will put its maximum effort toward achieving a workable 
system in the two remaining meetings forecast in the roadmap.
    Kimberley participants plan to hold two more meetings before 
preparing the mandated December report for the Secretary General. At 
these meetings, we will focus the discussion on the essential elements 
of a system that will work, that is simple, effective, and cost-
effective, and that will to the maximum extent possible get to the 
heart of the problem so that we can move on to put it in place and 
break the link between the diamond trade and conflict.
    We appreciate congressional interest in addressing the conflict 
diamonds problem, which has helped to motivate Kimberley participants 
to work more quickly towards developing a global system. The 
congressional sponsors of the Clean Diamonds Act have realized a 
significant accomplishment by bringing together the diamond industry 
and interested non-governmental organizations in support of a single 
piece of legislation. We also appreciate their efforts to listen to our 
views, and their willingness to learn about the Kimberley Process.
    At this stage, it is fairly clear that we will need legislation to 
implement the system that Kimberley participants devise. We favor 
passage of a bill along the lines of the Clean Diamonds Act that is 
consistent with our goals as I have outlined them above. With 
significant issues of policy still to be decided by Kimberley 
participants, it is important that any legislation enacted within the 
United States be crafted to authorize what is needed to put the 
Kimberley system into place and permit what may be necessary in the 
future.
    Let me repeat: We remain committed to creating the most effective 
system possible to control the trade in conflict diamonds and are 
pleased to work with Congress towards achieving this goal. We will 
certainly need Congressional support, and we will probably need 
legislation if we are to carry out the steps eventually to be agreed 
within the Kimberley process. We will work closely with you, with your 
staff, with industry, and with the NGOs toward this end.

                                

    Chairman Crane. Thank you, Mr. Eastham. And now Mr. 
Mendenhall.

   STATEMENT OF JAMES E. MENDENHALL, DEPUTY GENERAL COUNSEL, 
        OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

    Mr. Mendenhall. Thank you, Mr. Chairman. Thank you for 
inviting me to testify before you today. The stories that we 
have all heard and the pictures that we have seen of the 
atrocities linked to groups profiting from the sale of conflict 
diamonds are truly horrible. We heard testimony to that effect 
earlier today, and it is truly moving.
    The USTR wholeheartedly supports efforts to deal 
effectively with this problem and is committed to working with 
Congress to devise an effective solution. As we all recognize, 
preventing trade in conflict diamonds is an extremely 
complicated problem that defies simple solutions. Input and 
good faith cooperation from all sides is crucial if we are 
going to succeed in stopping trade in conflict diamonds.
    In our view, the types of measures that will make a system 
effective are the same types of measures that will ensure that 
the United States and other nations of the world are acting in 
conformity with their international obligations. These two 
concerns, effectiveness and international sustainability, go 
hand in hand.
    In designing a regime to prevent trade in conflict 
diamonds, three important goals must be taken into account. 
First, the regime should be effective. Second, it should be 
internationally sustainable and should minimize the impact on 
the legitimate diamond trade which is crucial to many African 
countries. And finally, it should not undermine efforts to 
negotiate an international regime through the Kimberley 
Process.
    As we continue to work with you and your staffs, we should 
keep these three goals in mind. In addition, it is important to 
recognize that the diamond trade is very complex and any system 
that attempts to address the problem of conflict diamonds must 
take into account several complicating factors.
    First, it is very difficult to identify and track diamonds 
as they move through the stream of commerce. This is not a 
problem that is unique to conflict diamonds, but is instead a 
problem that is inherent to the manner in which diamonds are 
distributed and processed. The diamond trade is fluid and 
multinational. Diamonds often cross borders multiple times 
between the point of extraction and the point of final sale.
    They are mixed and sorted with diamonds from many sources 
along the way and it is very difficult and sometimes impossible 
to trace the origin of any particular diamond by the time it 
reaches the border of the United States. Due in large part to 
these difficulties, the origin of diamonds is usually reported 
as the country of export rather than the country where the 
diamonds were actually extracted.
    Second, conflict and other illicit diamonds often enter the 
international stream of commerce through smuggling or other 
illegal behavior which may conceal the actual origin of a 
diamond. In some cases, governments may be complicit in 
laundering conflict diamonds. The most notable example of this 
phenomenon is Liberia, and this is one reason why the U.N. 
Security Council has called on countries to prohibit the 
importation of any rough diamonds from Liberia.
    The third complicating factor is that any remedy for the 
problem must be finely tuned to minimize the impact on the 
legitimate diamond trade. We should not lose sight of the fact 
that most diamonds are not conflict related. In fact, several 
African countries are dependent on trade in legitimate 
diamonds. Disrupting the ability of these countries to bring 
their diamonds to market could have a potentially devastating 
and destabilizing impact on these economies. And as a result, 
well intentioned efforts to stop trade in conflict diamonds 
could, if not designed properly, be counterproductive.
    Multinational efforts to deal with the problem of conflict 
diamonds have focused on two fronts: United Nations sanctions 
and the negotiation of an international certification regime in 
the Kimberley Process. The U.N. sanctions have been imposed on 
three countries: Sierra Leone, Angola, and Liberia.
    In Sierra Leone and Angola, certain areas of the country 
are controlled by rebel groups that are mining and trafficking 
in diamonds in order to fund their activities. Consequently, 
the U.N. Security Council has issued resolutions calling on 
countries not to import diamonds from these countries unless 
the diamonds are accompanied by a certificate of origin issued 
by the internationally recognized authority. A certificate of 
origin is only issued for diamonds that are mined in areas 
controlled by the government.
    Liberia presented a different problem and called for a 
different solution. Liberia has a history of acting as a 
conduit for conflict diamonds coming from other countries. Many 
diamonds from Sierra Leone, for example, were smuggled into 
Liberia and exported as if the diamonds originated in Liberia. 
As a result, the Security Council issued a resolution calling 
on all countries to prohibit the importation of any rough 
diamonds from Liberia as I noted earlier.
    The Kimberley Process is a much broader initiative. Over 30 
members of the international community including the United 
States have come together to negotiate an effective 
international regime to eliminate trade in conflict diamonds.
    The members of the Kimberley Process are grappling with all 
of the difficult issues outlined above and we are under a 
deadline to complete our work and report to the U.N. by 
December of this year. Thus, there is a developing 
international framework for addressing the problem of conflict 
diamonds and this work will only come to fruition with the full 
cooperation of all relevant actors including governments, 
industry, and the NGO community.
    In fact, without cooperation and international consensus, 
it may be difficult to resolve some of the apparently 
intractable problems surrounding the effort to prevent trade in 
conflict diamonds.
    Any attempts to deal with this problem at the national 
level prior to the completion of the Kimberley Process should 
be designed in a way to give further impetus to the 
negotiations and to allow the United States to plug into the 
international system once it is in place.
    Thank you again for the invitation to testify here today, 
and I look forward to working closely with you and your staffs 
in the future to address this difficult and complex problem. 
Thank you.
    [The prepared statement of Mr. Mendenhall follows:]
Statement of James E. Mendenhall, Deputy General Counsel, Office of the 
                   United States Trade Representative
INTRODUCTION

    Thank you for inviting me to testify before you today. The stories 
that we have all heard, and the pictures that we have seen, of the 
atrocities linked to groups profiting from the sale of conflict 
diamonds are truly horrible. USTR wholeheartedly supports efforts to 
deal effectively with this problem and is committed to working with 
Congress to devise an effective solution.
    As we all recognize, preventing trade in conflict diamonds is an 
extremely complicated problem that defies simple solutions. Input and 
good faith cooperation from all sides is crucial if we are going to 
succeed in stopping trade in conflict diamonds.
    In our view, the types of measures that will make a system 
effective are the same types of measures that will ensure that the 
United States and other nations of the world are acting in conformity 
with their international obligations. These two concerns--effectiveness 
and international sustainability--go hand in hand.
ADMINISTRATION GOALS

    In designing a regime to prevent trade in conflict diamonds, three 
important goals must be taken into account. First, the regime should be 
effective. Second, it should be internationally sustainable and should 
minimize any impact on the legitimate diamond trade which is crucial to 
many African countries. Finally, it should not undermine efforts to 
negotiate an international regime through the Kimberley Process. As we 
continue to work with you and your staffs, we should keep these three 
goals in mind.
    In addition, it is important to recognize that the diamond trade is 
very complex. Any system that attempts to address the problem of 
conflict diamonds must take into account several complicating factors.
Identifying and Tracking Diamonds through the Stream of Commerce
    First, it is very difficult to identify and track diamonds as they 
move through the stream of commerce. This is not a problem that is 
unique to conflict diamonds. It is instead a problem that is inherent 
to the manner in which diamonds are distributed and processed. The 
diamond trade is fluid and multinational. Diamonds often cross borders 
multiple times between the point of extraction and point of final sale. 
They are mixed and sorted with diamonds from many sources along the 
way. As a result, it is very difficult, and some say impossible, to 
trace the origin of any particular diamond by the time it reaches the 
border of the United States. Due in large part to these difficulties, 
the origin of diamonds is usually reported as the country of export 
rather than the country where the diamonds were extracted.
Government Complicity, Smuggling and Other Illicit Behavior
    Second, conflict and other illicit diamonds often enter the 
international stream of commerce through smuggling or other illegal 
behavior which may conceal the actual origin of a diamond. In some 
cases, governments may be complicit in laundering conflict diamonds. 
The most notable example of this phenomenon is Liberia. As a recent 
report from a UN panel of experts found, ``a large proportion of the 
diamonds entering Belgium under the Liberian label represent neither 
country of origin nor country of provenance [i.e., country of 
transshipment]. Most are illicit diamonds from other countries, taking 
advantage of Liberia's own involvement in the illicit diamond trade, 
its inability or unwillingness to monitor the use of its name 
internationally, and the improper use of its maritime registry.'' \1\ 
This is one reason why the United Nations Security Council has called 
on countries to prohibit the importation of any rough diamonds from 
Liberia.
---------------------------------------------------------------------------
    \1\ Report of the Panel of Experts Appointed Pursuant to Security 
Council Resolution 1306 (2000), Paragraph 19, in Relation to Sierra 
Leone, S/2000/1195, para. 130 (December 20, 2000).
---------------------------------------------------------------------------
Impact of Legitimate Diamond Trade
    Third, any remedy for the problem must be finely tuned to minimize 
the impact on the legitimate diamond trade. We should not lose sight of 
the fact that most diamonds are not conflict-related. In fact, several 
African countries are dependent on trade in legitimate diamonds. 
Disrupting the ability of these countries to bring their diamonds to 
market could have a potentially devastating and destabilizing impact on 
these fragile economies. As a result, well-intentioned efforts to stop 
trade in conflict diamonds could, if not designed properly, be 
counterproductive.
EFFORTS TO ADDRESS THE PROBLEM OF CONFLICT DIAMONDS AT THE 
        INTERNATIONAL LEVEL

    Multinational efforts to deal with the problem of conflict diamonds 
have focused on two fronts--United Nations sanctions and the 
negotiation of an international certification regime in the ``Kimberley 
Process.''
    UN sanctions have been imposed on three countries, Sierra Leone, 
Angola, and Liberia. In Sierra Leone and Angola, certain areas of the 
country are controlled by rebel groups that are mining and trafficking 
in diamonds in order to fund their activities. Consequently, the UN 
Security Council issued resolutions calling on countries not to import 
diamonds from these countries unless the diamonds are accompanied by a 
certificate of origin issued by the internationally recognized 
authority. A certificate of origin is only issued for diamonds that are 
mined in areas controlled by the government.
    Liberia presented a different problem and called for a different 
solution. Liberia has a history of acting as a conduit for conflict 
diamonds coming from other countries. Many diamonds from Sierra Leone, 
for example, were smuggled into Liberia and exported as if the diamonds 
originated in Liberia. As a result, the Security Council issued a 
resolution calling on all countries to prohibit the importation of any 
rough diamond from Liberia.
    The Kimberley Process is a much broader initiative. Over thirty 
members of the international community, including the United States, 
have come together to negotiate an effective international regime to 
eliminate trade in conflict diamonds. The members of the Kimberley 
Process are grappling with all of the difficult issues outlined above 
and are under a deadline to complete our work and report to the UN by 
December of this year.
    Thus, there is a developing international framework for addressing 
the problem of conflict diamonds. This work will only come to fruition 
with the full cooperation of all relevant actors, including 
governments, industry, and the NGO community. In fact, without 
cooperation and international consensus, it may be difficult to resolve 
some of the apparently intractable problems surrounding the effort to 
prevent trade in conflict diamonds.
    Any attempts to deal with this problem at the national level prior 
to the completion of the Kimberley Process should be designed in a way 
to give further impetus to the negotiations and to allow the United 
States to plug into the international system once it is in place.
    If we are not careful, the focus of the multinational effort could 
easily shift away from dealing with the root problem of conflict 
diamonds to finding ways to deal with conflicting national 
certification regimes. If this is the turn the international 
negotiations take, then the result will be confusion and an enormous 
disruption of trade. It is in everyone's interest to avoid this 
outcome.
    Thank you again for the invitation to testify here today. I look 
forward to working closely with you and your staffs in the future to 
address this difficult and complex problem.

                                

    Chairman Crane. Thank you for your testimony.
    Mr. Eastham, there are a lot of statistics floating around 
about how big the trade in conflict diamonds is. How do you 
determine how many diamonds come out of rebel mines in Sierra 
Leone, and is this based upon conjecture or information about 
specific diamonds being smuggled out and put into circulation?
    Mr. Eastham. Mr. Chairman, not only are statistics 
difficult to come by on conflict diamonds, I have found in my 1 
month on the job as the negotiator on this subject that it is 
difficult to come by accurate statistics on the legitimate 
trade in diamonds, much less to divide out the conflict portion 
of the trade.
    The best estimate that I have seen which is derived from 
non-governmental sources is that the value of conflict diamonds 
would be in the neighborhood of $250 to $300 million a year at 
point of origin where the rough diamonds are originally sold.
    That would be as a percentage of the trade something less 
than 5 percent of the trade in diamonds. Nevertheless, it 
yields a significant amount of funding. It is very, very 
difficult to trace the movement of rough diamonds when they are 
traded in an illicit and smuggled way, and the purpose of the 
Kimberley Process, Mr. Chairman, is to try to choke off that 
particular source of revenue for insurgencies, in addition, as 
I think was identified by Mr. Hall, we want to put the diamonds 
into a legitimate chain of trade where they can be taxed and 
where the revenue from that taxation can be used for legitimate 
purposes.
    Chairman Crane. Would it be helpful to move legislation 
this year that is both WTO compliant, helpful to stop trade in 
conflict diamonds, and would not cause problems in the 
remainder of the negotiations, and if so, what would that 
legislation look like?
    Mr. Eastham. Mr. Chairman, we have been studying this issue 
with a great sense of urgency within the administration for the 
past several months in close collaboration with the interested 
Members of Congress, the sponsors of the bills in both houses.
    We have in recent weeks since the conclusion of the last 
round of Kimberley been attempting to take a look at what 
legislation might be appropriate and have not come to a formal 
conclusion within the administration about what approach to 
legislation should be taken.
    Let me offer you my perspective as the participant and the 
leader of the delegation in the last round of the Kimberley 
talks, and as the prospective leader of the delegation which 
will go to Luanda in 3 weeks time for a further round.
    It is fairly clear to me, Mr. Chairman, that we are very 
likely to need legislation in order to implement an eventual 
Kimberley Process understanding on certification of rough 
diamonds. When we were in London, I told the assembled group 
that based on my own analysis of the situation, the United 
States did not have explicit legislative authority to do some 
of the things which were contemplated in the Kimberley Process 
agreement.
    I asked our colleagues in the Kimberley Process to identify 
for me as precisely as possible what they felt the obligations 
of governments would be. We did not get to the point in that 
discussion, Mr. Chairman, that would lead me to come forward 
with precise legislative language for you, so my inclination as 
the head of the delegation would be to say that in the absence 
of clarity about the ultimate obligations which would be 
created by Kimberley, it would be very difficult to craft 
legislation which would be both sufficiently authoritative and 
sufficiently flexible to give us what we need at this point.
    I hasten to add, however, that I am not saying ``no'' when 
I say that. We will continue in the coming days and weeks 
leading up to Luanda to stay in close touch with industry, with 
the NGOs, and with staff members here on the Hill to see 
whether we can craft something which would meet the 
requirements.
    Chairman Crane. Are there links between diamonds and Osama 
bin Laden?
    Mr. Eastham. Mr. Chairman, I have heard the mention of that 
on several occasions already this morning, and I am aware of 
the one report relating back to the 1993 bombing and to a 
transaction in diamonds which was contained in the public 
record of that case. I have not done a detailed analysis of 
that, and I am not aware of a substantial connection, but if I 
may reserve on that and go back and consult my colleagues on 
it. I did not realize that was going to be an issue of such 
concern this morning, sir.
    Chairman Crane. Thank you. Mr. Mendenhall, in my view, 
making the system effective and WTO consistent are not mutually 
exclusive. Can you comment on this, and how can we get at these 
rebel diamonds and comply with WTO?
    Mr. Mendenhall. Mr. Chairman, I agree that making a system 
effective and WTO consistent are not, in fact, mutually 
exclusive. In the view of USTR, in fact, effectiveness is in 
many ways inextricably intertwined with WTO consistency, and I 
think it is possible to design a bill, and we are working with 
the staffs of the sponsors and with some of the staff, some of 
your own staff, to develop ideas that will allow us to address 
both of those problems at the same time. Thank you.
    Chairman Crane. Very good. Mr. Rangel.
    Mr. Rangel. Thank you, and thank you Mr. Chairman, for 
having hearings on this very sensitive and serious issue, and 
thank both of you for trying to bring me and others up to some 
degree of expertise. I am going to ask the Chairman's question 
in a different way. The authors of this legislation that would 
put restrictions on the importation of certain diamonds have 
been working very hard to make certain that it is WTO 
consistent and that we comply with the directions of the USTR, 
and that is one of the reasons why this Committee has not 
drafted the legislation.
    But if we were to draft the bill based on the input that 
you will give us, what harm would we bring to Kimberley or to 
the delegation that you are leading, Mr. Eastham. If some 
Members of the Congress might believe that if we give you a 
stated position and legislate America's position and is signed 
into law, we would like to believe that you are better armed to 
negotiate a better deal in this area. What harm would we do by 
not waiting until you decide what we should do? Mr. Eastham.
    Mr. Eastham. Mr. Rangel, my main concern in that area would 
be the very real possibility that we would have to come back at 
a second bite at the apple with the Congress.
    Mr. Rangel. What damage could we do to you in the job that 
you have to perform and that you do so well?
    Mr. Eastham. I think damage would be overstating it. The 
point I am making is that the Kimberley Process is a 
cooperative one in which all issues are open. And we are not 
foreclosing one approach or another approach to attacking this 
problem. We would be obliged to follow the laws of the United 
States. We all take an oath to do that. And I think that the 
effect of legislation would be to some extent, and I would say 
damage might be overstating it, but it would be to narrow down 
the options that I would have available to put forward to agree 
to things at Kimberley.
    I will give you an example off the top of my head. One 
provision which exists at the moment in the Kimberley Process 
is a provision, a guideline, which states that in order to 
issue a re-export certificate, the guideline states the 
government would have to rely on an assurance from an exporter 
of rough diamonds from the United States that that person had 
the entire chain of warranties in their possession at the time 
of the proposed export.
    To my understanding, that issue is not addressed in the 
legislation. It is a subject which we will need to discuss at 
some length, I believe, with industry at this stage so that we 
are sure that we have a full understanding of industry's 
position on this. But under the legislation as crafted with the 
definition of the export certificate, which is contained in it, 
I would be on shaky ground to ask industry to come forward with 
a chain of possession of that nature such as is contained in 
the present Kimberley document.
    It is a question not of doing damage, but of retaining the 
full flexibility to agree or disagree with the Kimberley 
Process.
    Mr. Rangel. Thank you. Mr. Mendenhall, would there be any 
objection from USTR if we just moved the legislation in its 
present form, or after receiving whatever recommendations your 
office may give? Would there be any objections from the USTR 
with us moving forward now?
    Mr. Mendenhall. Mr. Rangel, my understanding is that we are 
continuing to work with the staffs of the sponsors of the 
legislation and with Ways and Means staff and that the bill 
will continue to evolve. I think we have a constructive dialog 
going on and we are giving our input. We plan to provide 
further input. We plan to come forward with more specific 
proposals on how we can address our concerns in any legislation 
this year.
    Provided our concerns regarding effectiveness, 
international sustainability, and the relationship with the 
Kimberley Process are addressed, I think USTR would be willing 
to support efforts to move forward. But we need to make sure 
that all of those concerns are taken into account.
    Mr. Rangel. Well, that is not exactly an answer to my 
question. I am satisfied that this Committee is respectful of 
the reservations you have about the legislation that is before 
us. I am not satisfied that the authors of the legislation 
believe that we should wait any longer before we enact into 
law.
    Your response to me, have you shared that with the authors 
of the legislation and do they agree with you that this is an 
ongoing process and their willingness to wait until you believe 
that it is necessary to legislate? Is that generally 
discussions you have had with them? That is Hall, Wolf, and 
DeWine.
    Mr. Mendenhall. My understanding is that they are willing 
to work with us on coming up with a solution that everyone 
believes is effective and addresses those concerns. I 
understand the urgency in moving forward with legislation, and 
we are willing to help in that effort, and that is my 
understanding from our meetings with the representatives and 
with their staffs as well. But we do understand the urgency of 
that.
    Mr. Rangel. Next time you meet with them tell them to share 
that view with the members of this Committee as well, their 
willingness to work with you and to be satisfied that we are 
making progress and that they are willing to wait until you 
call upon us to legislate.
    Mr. Mendenhall. I can assure you that Ambassador Zoellick 
fully supports the efforts to work with the sponsors of the 
legislation and their staff and has tasked me and various 
members in the agency to make all efforts we can to assist in 
that effort.
    Mr. Rangel. But it would help me if Mr. Zoellick would 
reiterate his support for the members that have drafted the 
legislation before us.
    Mr. Mendenhall. I understand. Thank you.
    Mr. Rangel. Thank you.
    Chairman Crane. Thank you. Mr. Houghton.
    Mr. Houghton. Thank you, Mr. Chairman. I am a little 
confused here. You really want to tighten up--and I am talking 
to you, Mr. Mendenhall at this particular point--tighten up the 
process, and yet at the same time I think the greater 
flexibility that you have, the broader, the looser the process, 
so that you can get at wherever you need, would be the most 
effective approach. You do not know what the Kimberley Process 
is going to produce. You do not know whether the $5 million is 
going to help. You do not know whether cutting off funds from 
Ex-Im (Export-Import Bank) and OPIC (Overseas Private 
Investment Corp.) is really going to be effective or not. Don't 
you want a sort of a broader, more flexible approach here?
    Mr. Mendenhall. Absolutely. I think a flexible approach is 
essential to make the system effective for a variety of reasons 
because I think the situations in various countries differ both 
in terms of whether they are conflict countries or non-conflict 
countries and in their ability to implement the obligations 
that we may ask them to undertake. I fully agree that 
flexibility is an important part of any regime and should be an 
important part of any measure that the United States takes.
    Mr. Houghton. Yes, but I thought the thrust of some of your 
remarks was to narrow this process.
    Mr. Mendenhall. I am sorry if I was not clear in my earlier 
remarks. I did not mean to imply that we should narrow our 
flexibility in applying measures. That was not my purpose. What 
I was suggesting is that there are ways to tailor the 
legislation to make it more effective and to make it 
internationally sustainable both from a political and a legal 
standpoint.
    Mr. Houghton. Do you have any comments, Mr. Eastham?
    Mr. Eastham. I agree with my colleague. I think from the 
point of view of negotiator and from the point of the view of 
the Kimberley Process, and this is the same point I was making 
to Mr. Rangel earlier, was that the greater the flexibility in 
the range of tools we can apply the better.
    Of course, Mr. Houghton, the greatest, in one sense the 
most flexible and most powerful tool that we have applied to 
conflict diamonds is the tool of the mandatory U.N. Security 
Council Resolution implemented in this country with the use of 
the International Emergency Economic Powers Act.
    My preference would be to find a way to legislate 
specifically on conflict diamonds and to keep that as distinct 
body of the law and implement the process through legislation 
rather than through the use of those big powerful guns which 
would provide an opportunity for congressional consultation, 
but which do not benefit from the specific authorization of the 
U.S. Congress.
    Mr. Houghton. I just have one other question. Legislation 
passes. Kimberley Process works. Then what is the key to 
monitoring this? What is going to be the critical element to 
make this effective?
    Mr. Eastham. That is a very difficult question, and if you 
study, Mr. Houghton, the reaction to the London meeting on the 
part of some of the non-governmental organizations which have 
been intimately involved in this process from the beginning, 
you will find that that was a very critical issue to the NGOs 
as to how the monitoring process would work.
    In my view, the Kimberley Process should mandate as much 
transparency as is possible in terms of production of trade 
statistics in almost real time, production of statistics on the 
movement of diamonds across borders so that smart people can 
study those statistics to detect anomalies which might need to 
be addressed. We are dealing with a commodity here which is 
highly valuable and which can move undetected in a way that 
very few commodities in the world can move.
    And the objective of the Kimberley Process is to set up a 
system wherein the legal trade is legal. We all will know that 
it is legal and we can see it happening. We will need a very, 
very good statistical and monitoring system as an outcome of 
Kimberley in order to be able to detect anomalies. One of the 
greatest concerns, for example, is the question of transforming 
rough diamonds, which are the subject of Kimberley, into 
polished diamonds and entering them into the legitimate trade 
as polished diamonds in a way which is unconstrained at the 
moment.
    And I think it is very, very important to have statistics 
to be able to understand very quickly if something like that is 
happening to circumvent what eventually comes out of Kimberley.
    There are some interesting facts which have been shown by 
the good statistics that the Belgian government maintains on 
the diamond trade. You can identify certain countries where the 
capacity for mining diamonds is very small and the movement of 
diamonds into international trade is very large, and I think 
that it is that sort of anomaly which we will have to correct 
in Kimberley.
    Mr. Houghton. I am sorry to ask this question, but I feel 
that I should. So sort of sum that up in a sentence in terms of 
the key monitoring steps.
    Mr. Eastham. Good statistics, transparency. You have to 
have some transparency on the part of industry in terms of 
internal movements of diamonds, and I support the concept of 
independent monitoring. The NGOs call that external monitoring 
which means that the industry would not monitor industry. You 
would have government monitor industry; you would have industry 
involved in some way.
    In a sentence, we need to build in some checks and balances 
to make sure that we know what is going on in the diamond trade 
so that we can keep conflict diamonds out of the legal trade.
    Chairman Crane. Mr. Herger.
    Mr. Herger. Thank you very much. Mr. Mendenhall, if I could 
get your opinion on this. Do you feel that this legislation and 
the fact that the Congress is working on this helps put, if you 
will, emphasis or perhaps even positive pressure on these 
international groups like Kimberley Process to move perhaps a 
little more quickly than they might have otherwise and try to 
come up a solution a little sooner to these incredibly 
horrendous crimes that are taking place?
    Mr. Mendenhall. I believe many countries are probably 
monitoring very closely what the United States is doing here. I 
have not been as intimately involved with the Kimberley Process 
as my colleague has and that may be a question that may be more 
appropriate for him.
    I guess my concern, which is a concern that I think I share 
with the State Department, is that if we do go forward and if 
the purpose of the legislation is to give momentum to the 
Kimberley Process, we need to make sure that the legislation 
does not, in fact, work at odds with what may come out of 
Kimberley. The mechanism that we use, the legislation that we 
adopt, needs to be capacious enough, it needs to be flexible 
enough, to allow the United States to participate in Kimberley. 
It should not get ahead of where the Kimberley participants 
are.
    There are several very complex questions that are still 
being worked out in the Kimberley Process. Given that it is an 
international process with cooperation by many governments, the 
NGO community and the business community, they may hit upon 
ways to address this problem that will be very effective. I 
think we need to be concerned about adopting measures that 
preempt that process or undermine it.
    Mr. Herger. How long has the Kimberley Process been going 
on now? Do you know, Mr. Eastham?
    Mr. Eastham. It has been in two stages. It has been about a 
year and a half since the meeting in Kimberley which launched 
the process. I would mark the real definitional phase of that, 
though, from the first of December of last year when the U.N. 
General Assembly passed Resolution 55/56, which gave some 
direction and required a report at the end, so there have been 
two phases of it.
    Mr. Herger. Mr. Eastham, the same question to you. Do you 
feel the emphasis in the U.S. Congress to move forward with 
legislation indicating certainly the great importance that the 
Congress places on it gives emphasis to perhaps move along more 
rapidly the Kimberley Process?
    Mr. Eastham. Yes, sir, I think that emphasis of the 
Congress and the NGO community but certainly the Congress 
because the Congress has the power to make laws is a very 
important element in stimulating action on the part of the 
Kimberley Process.
    When we were in London at the last meeting, on the Senate 
side the bill moved as an attachment to an appropriations 
measure, and that was very much on the minds of the other 
delegations at Kimberley. That is one example.
    I think that there is a general recognition that the 
Congress is pushing the administration to take action on this, 
and there should be a recognition--if there is not, I will 
state it explicitly--that if Kimberley does not eventually 
produce, and by eventually I mean by the first of December, a 
workable certification system, that the Congress will certainly 
act.
    Congress may act before that. That is within your purview. 
And I have heard the recommendation from Mr. Hall and Mr. Wolf 
this morning that you move in the next week or two. So Congress 
may act sooner, but it will certainly act following the 
conclusion of the current Kimberley road map and the report to 
the Secretary General which is going to be at the end of it. So 
I think that is very much in the minds of our partners in the 
Kimberley Process and it does give it a sense of urgency and a 
sense of importance.
    Mr. Herger. Very good. Thank you very much, both of you. 
Thank you, Mr. Chairman.
    Chairman Crane. Mr. McDermott. Oh, Mr. McDermott is not 
here. Mr. Camp or--I am sorry--Mr. Jefferson.
    Mr. Jefferson. Thank you, Mr. Chairman, and I thank you for 
this hearing. This is a very important subject. We are all 
concerned about the presence of what we call conflict diamonds 
in the world community and the atrocities that they are 
connected with. All of us have that concern. Many of us have 
also been concerned about how this legislation might affect 
diamond trade in countries like Botswana, Namibia, South 
Africa, and Tanzania that have legitimate diamond operations.
    And, therefore, with the help of Mr. Rangel and Mr. Payne, 
we were successful with the Chairman's acquiescence in adding 
some provisions in the bill that acknowledge that and that 
tries to make sure that whatever we do with respect to 
eliminating the atrocities that we are all concerned about that 
we do not do it in such a way that we forget about the 
constructive work that is being done in developing countries, 
and that our work here works to eliminate the trade in conflict 
diamonds but not in legitimate diamonds.
    And so I am pleased that we are focusing on this issue, and 
I want to recognize the Honorable A.M. Duvay who is Botswana's 
Special Envoy to the United States. He is here in the audience. 
I had the pleasure of going to Botswana in April--he was here 
in the audience--meeting with President Mogae with about five 
other Members of Congress. We had a chance to take a firsthand 
look at Botswana's diamond regime.
    We investigated how the legislation before us would affect 
that and we discovered that Botswana is particularly vulnerable 
in this situation, and that it is the largest producer of gem 
quality diamonds in the world and that unlike some African 
nations, the Botswana diamond trade is entirely legitimate and 
tightly controlled, as you know.
    So I want to, Mr. Chairman, make the point and underscore 
the point again that we all support legislation to eliminate 
conflict diamonds, but we ought to make sure that we do it the 
right way, and I think the inclusions of section 2 in the 
Findings and the new sections added to the bill will be very 
helpful in that respect.
    I want to, if I might, introduce into the record a letter 
from the Special Envoy, whose name I mentioned earlier, that 
congratulates Mr. Rangel and Mr. Payne and myself for work on 
this bill and for visiting the country back in April, and those 
of us who did, and that points out the interests of the 
Botswanagovernment in making sure that whatever we do here 
takes into account and protects legitimate trade in diamonds, and that 
it recognizes that it is our process, it is our decision to make, and 
they do not want to interpose themselves into this discussion.
    But they want us to know about how important it is for 
their country, for their development, and they speak to this 
issue without taking a position on the bill. They are careful 
not to do that, but just want to inform the Committee of where 
they stand.
    So, Mr. Chairman, if I might, I would like to have leave to 
introduce a copy of this letter into the record of the 
Committee's proceedings so that we may be aware of the interest 
of the Botswana government in this very important topic.
    Chairman Crane. Without objection, so ordered.
    Mr. Jefferson. Thank you, Mr. Chairman.
    [The information follows:]

                                Embassy of Botswana
                                       Washington, DC 20036
                                                    October 4, 2001

The Honorable William J. Jefferson
240 Cannon House Office Building
Washington, DC 20515

Dear Congressman Jefferson,

    We understand that the House Ways and Means Committee's 
Subcommittee on Trade, will hold a hearing on ``Trade in African 
Diamonds,'' on Tuesday October 9th, 2001.
    Knowing of your longstanding activity on the Subcommittee relating 
to this issue, we thought it important again to share Botswana's view 
with you. Botswana was honoured to host the congressional fact-finding 
mission that you led in April this year. We were particularly pleased 
that you were able to observe our diamond industry firsthand and be 
briefed by both public and private officials.
    President Mogae paid a visit to Washington shortly thereafter, in 
June, to brief Congress on the vital role that the diamond industry 
plays in the economic and social development of Botswana. We are 
grateful that you and your colleagues in the Congressional Black Caucus 
received the President so warmly, and that he was able to hold such 
productive discussions with the congressional leadership.
    During the meetings in Botswana, we demonstrated to your delegation 
that Botswana's diamond industry is 100% secure and legitimate. It is 
the economic bedrock of our 35-year-old democracy. Through the 
exploitation and careful management of our natural resources, 
especially diamonds, we have achieved remarkable economic development 
over the last 25 years. Botswana as you know, is now hailed as one of 
the fastest growing economies in the world. Our economic prosperity for 
example has allowed us to develop one of the world's most comprehensive 
anti-HIV/AIDS efforts, as we face the most devastating pandemic in 
Africa. We believe that the example of Botswana illustrates, as 
President Mogae said in his Washington speech, the good that diamonds 
can accomplish when responsibly used by nations, as against the evil 
they can do when commandeered and exploited by corrupt and 
unaccountable leaders as is happened in some countries. Congressman 
Jefferson, we applaud you, Congressman Payne, and Congressman Rangel 
for your efforts to recognize and make this distinction as your 
Congress deliberates this issue.
    During your visit you were also able to observe that our diamond 
mines and sorting floors have developed the highest level of security 
comparable to the best in the world. Our export pipeline is seamless, 
from the valuation floors in Gaborone, to the sales floors at the 
Diamond Trading Co. in London. The entire production of Botswana's 
rough diamonds is exported through this channel. Furthermore under our 
Mines and Minerals Act, all mineral rights belong to the nation, and 
government issues mining leases for development and extraction. We 
therefore have considerable leverage and control over our mining 
industry.
    We have made clear in all our discussions with you how we abhor the 
presence of diamonds in the market, that are now playing a direct role 
in the atrocities taking place in some countries on our Continent. 
Botswana is eager to find a cooperative solution to the issue of 
conflict diamonds. However, it must be a solution that not only bans 
such diamonds from the trade, but that also safeguards the legitimate 
market upon which our country is so dependent. A solution that helps to 
prevent the spread of regional conflicts; and preserves the ability of 
peace-loving democracies like ours, to use their mineral wealth for the 
good of their citizens. We therefore support the UN General Assembly 
Resolution 55/56 of December 1st, 2000, and are active participants in 
the Kimberley Process. We believe that ultimately we must have an 
international agreement on certification through the Kimberley Process 
to effectively protect the legitimate diamond trade.
    Congressman, we have great respect for your legislative process. We 
applaud your efforts and those of your colleagues, to confront the 
serious issue of conflict diamonds. And, again we especially thank you 
and your colleagues for all your endeavors to protect democratic 
economies such as Botswana who do not trade in conflict diamonds.
    With my best wishes,
    I remain, Yours Sincerely
                                                  A.M. Dube
                                             Minister/Special Envoy

                          

    Chairman Crane. Mr. English.
    Mr. English. Thank you. Mr. Mendenhall, reviewing my 
colleague Mr. Houghton's legislation, in your view, would this 
legislation if enacted be enforceable?
    Mr. Mendenhall. I am sorry? Would it be enforceable?
    Mr. English. Yes.
    Mr. Mendenhall. There are certain aspects of the bill that 
we have concerns about that we have raised with staff of the 
members who sponsored the legislation. We are working through 
those issues with them.
    Mr. English. Would you care to elaborate?
    Mr. Mendenhall. We have raised concerns with them about--it 
is essentially the same questions that are being debated in 
Kimberley, which are how do you track a diamond as it moves 
through the international stream of commerce, and do we have a 
system that is actually going to be workable, and is the 
industry going to come forward with proposals like a chain of 
warranties or something else that will actually be enforceable 
and confirmable or verifiable by Customs authorities?
    There is flexibility built into the bill. We have questions 
that we have raised about certain aspects of the bill and how 
it deals with, for example, transshipment through various 
countries. My understanding is that we have an ongoing dialog 
with them to see how this is going to play out. We need to 
confirm how the bill is going to work in practice and there are 
some ambiguities that I think need to be cleared up.
    Mr. English. Accepting those ambiguities, do you have any 
cost estimates of what it would cost for the United States to 
implement this new regime?
    Mr. Mendenhall. I do not have a cost estimate. That 
question would be appropriate for Customs to answer. They are 
going to be responsible for implementing this for the United 
States. And so I am not in a position to answer that question. 
I do not know.
    Mr. English. Mr. Eastham, would you care to comment on any 
of those points?
    Mr. Eastham. Let me agree that we do not know what the cost 
of implementing the bill would be. I suspect that the marginal 
cost would be fairly low. But since Customs is already 
implementing the control regimes on Sierra Leone and Angola, I 
would just endorse the views that Mr. Mendenhall has expressed 
on the other aspects of it.
    Mr. English. Thank you. I have no further questions, Mr. 
Chairman.
    Chairman Crane. We want to express appreciation to both of 
you for your participation today, and we look forward to 
working with you in the future on this issue.
    And with that, we shall move to the final panel, and that 
is Matthew Runci, president and chief executive officer of 
Jewelers of America, Inc., in New York City; Cecilia Gardner, 
general counsel, World Diamond Council, New York City; Rory 
Anderson, government relations manager for Africa area, World 
Vision; and Adotei Akwei, senior advocacy director of Amnesty 
International.
    And if you folks will be seated, we shall proceed in the 
order that I presented you, and I would ask you all if you 
will, please, try and keep your oral testimony to 5 minutes or 
less and your written testimony will be made a part of the 
permanent record, and with that, Mr. Runci, you can open up.

   STATEMENT OF MATTHEW RUNCI, PRESIDENT AND CHIEF EXECUTIVE 
  OFFICER, JEWELERS OF AMERICA, INC., NEW YORK, NEW YORK, AND 
 EXECUTIVE DIRECTOR, WORLD DIAMOND COUNCIL, NEW YORK, NEW YORK

    Mr. Runci. Mr. Chairman and members of the Trade 
Subcommittee, thank you for this opportunity to testify in 
support of the Clean Diamonds Trade Act, the purpose of which 
is to choke off illicit traffic in conflict diamonds.
    We in the industry would like to thank Congressman Hall, 
Congressman Wolf, as well as Senator DeWine, who have appeared 
this morning, for their courageous leadership and persistence 
in connection with this matter.
    I am Matthew Runci, president and chief executive officer 
of Jewelers of America and executive director of the World 
Diamond Council. Jewelers of America, founded in 1903, 
represents more than 10,000 U.S. retail jewelers including 
family-owned stores and major national chains.
    The World Diamond Council representing all segments of the 
diamond and jewelry industries here and abroad was founded a 
year ago to establish a workable system to eliminate trade in 
conflict diamonds. Both organizations--along with trade groups 
associated with the importing, processing and distribution of 
diamonds in the United States--urge prompt enactment of H.R. 
2722. This legislation is a major and essential step in 
eliminating the illicit trade in conflict diamonds. Both moral 
and business imperatives underpin our position. Halting this 
insidious traffic also serves the U.S. foreign policy goal of 
encouraging stability and economic progress in developing 
African nations.
    The moral case here is undeniable. Rebels and bandits in 
parts of Africa have used the profits from diamonds they 
appropriate to fuel their violent activities. Innocent citizens 
have suffered deprivation and terrible atrocities as a direct 
result. While criminals have grown rich, the economies of 
Sierra Leone, Angola, and the Democratic Republic of Congo have 
been impoverished. This evil cycle must end.
    The business factor is also clear. Gems are objects of 
beauty and symbols of enduring affection. They have value 
because of the positive feelings they evoke. If consumers come 
to believe that the diamonds they might buy are connected to 
violence, the effects could be very damaging to thousands of 
businesses and to their employees. The threat exists even 
though it is clear that only a very small proportion of the 
world supply can be linked in any way to conflicts. And it 
exists even though there has been some progress toward 
eliminating conflict diamonds, thanks to the efforts by the 
United Nations, individual governments, non-governmental 
organizations, and the industry.
    The fact remains that as of today it is impossible for a 
retail jeweler to tell a customer with absolute certainty 
whether a particular stone offered for sale is conflict free. 
So there is a cloud over our industry casting a shadow not only 
on American retail establishments but also on all segments of 
the industry here and abroad.
    Removing this cloud requires firm and timely action by the 
U.S. Government--specifically, enactment of the legislation now 
before you. In recent years, as awareness of the conflict 
diamond problem has grown, there have been several positive 
steps, as I mentioned a moment ago. One of these is the effort 
originally launched by South Africa now grown to include more 
than 30 countries called the Kimberley Process.
    Just last month, I was in London for the latest Kimberley 
Process meeting, where there was agreement in principle on the 
ingredients of an international monitoring system to protect 
the legitimate supply chain from exploitation by those dealing 
in conflict diamonds.
    While we applaud this work--as well as the steps taken by 
the United Nations--the fact is that a catalyst is required to 
put in place the controls necessary to eliminate conflict 
diamonds. Because the United States is the largest importer of 
diamonds, we have the opportunity and the obligation to provide 
that catalyst.
    Enacting H.R. 2722 would serve that purpose admirably. It 
would, first of all, allow the importation of diamonds and 
diamond jewelry into the U.S. only from countries that have 
adopted effective controls on the import and export of rough 
diamonds. This alone would be a great incentive for other 
nations to take appropriate action within an acceptable time 
table. The legislation would also encourage the President to 
negotiate an international agreement leading to a global 
control system.
    H.R. 2722 and its Senate companion, S. 1084, include a 
number of other strong features. The Clean Diamonds Trade Act 
is totally consistent with the resolutions adopted by both the 
U.N. Security Council and the General Assembly. It is also 
consistent with the principles approved by the Kimberley 
Process.
    Finally, this legislation is truly a consensus measure. 
Interested members of both Houses and of both parties support 
this bill. So does a broad coalition of humanitarian and faith-
based organizations concerned with the issue. Jewelers of 
America, the World Diamond Council, and others representing 
segments of the industry also believe that this legislation is 
both sound and absolutely necessary for the success of our 
campaign to rid the world of conflict diamonds.
    Again, my many thanks for the opportunity to testify. I 
will be happy to take any questions you may have.
    [The prepared statement of Mr. Runci follows:]
   Matthew Runci, President and Chief Executive Officer, Jewelers of 
   America, Inc., New York, New York, and Executive Director, World 
                  Diamond Council, New York, New York
    Mr. Chairman and Members of the Trade Subcommittee, thank you for 
this opportunity to testify in support of the Clean Diamonds Trade Act, 
the purpose of which is to choke off illicit traffic in conflict 
diamonds.
    I am Matthew Runci, president and chief executive officer of 
Jewelers of America and executive director of the World Diamond 
Council. Jewelers of America, founded in 1903, represents more than 
10,000 U.S. retail jewelers, including family-owned stores and major 
national chains. The World Diamond Council, representing all segments 
of the diamond and jewelry industries here and abroad, was founded a 
year ago to establish a workable system to eliminate trade in conflict 
diamonds.
    Both organizations--along with trade groups associated with the 
importing, processing and distribution of diamonds in the U.S.--urge 
prompt enactment of H.R. 2722. This legislation is a major and 
essential step in eliminating the illicit trade in conflict diamonds. 
Both moral and business imperatives underpin our position. Halting this 
insidious traffic also serves the U.S. foreign policy goal of 
encouraging stability and economic progress in developing African 
nations.
    The moral case is undeniable. Rebels and bandits in parts of Africa 
have used the profits from diamonds they appropriate to fuel their 
violent activities. Innocent citizens have suffered deprivation and 
terrible atrocities as a direct result. While criminals have grown 
rich, the economies of Sierra Leone, Angola, and the Democratic 
Republic of the Congo have been impoverished. This evil cycle must end.
    The business factor is also clear. Gems are objects of beauty and 
symbols of enduring affection. They have value because of the positive 
feelings they evoke. If consumers come to believe that diamonds they 
might buy are connected to violence, the effects could be very damaging 
to thousands of businesses--and their employees. The threat exists even 
though it is clear that only a very small proportion of the world 
supply can be linked in any way to conflicts. And it exists even though 
there has been some progress toward eliminating conflict diamonds, 
thanks to efforts by the United Nations, individual governments, non-
governmental organizations, and the industry.
    The fact remains that--as of today--it is impossible for a retail 
jeweler to tell a customer with absolute certainty whether a particular 
stone offered for sale is conflict free. So there is a cloud over our 
industry casting a shadow not only on American retail establishments 
but also on all segments of the industry here and abroad.
    Removing this cloud requires firm and timely action by the U.S. 
Government--specifically, enactment of the legislation now before you. 
In recent years, as awareness of the conflict diamond problem has 
grown, there have been several positive steps, as I mentioned a moment 
ago. One of these is the effort originally launched by South Africa, 
now grown to include more than 30 countries, called the Kimberley 
Process.
    Just last month, I was in London for the latest Kimberley Process 
meeting, where there was agreement in principle on the ingredients of 
an international monitoring system to protect the legitimate supply 
chain from exploitation by those dealing in conflict diamonds.
    While we applaud this work--as well as the steps taken by the 
United Nations--the fact is that a catalyst is required to put in place 
the controls necessary to eliminate conflict diamonds. Because the 
United States is the largest importer of diamonds, we have the 
opportunity--and the obligation--to provide that catalyst.
    Enacting H.R. 2722 would serve that purpose admirably. It would, 
first of all, allow the importation of diamonds and diamond jewelry 
into the U.S. only from countries that have adopted effective controls 
on the import and export of rough diamonds. This alone would be a great 
incentive for other nations to take appropriate action within an 
acceptable timetable. The legislation would also encourage the 
President to negotiate an international agreement leading to a global 
control system.
    H.R. 2722 and its Senate companion, S. 1084, include a number of 
other strong features. The Clean Diamonds Trade Act is totally 
consistent with the resolutions adopted by both the U.N. Security 
Council and the General Assembly. It is also consistent with the 
principles approved by the Kimberley Process.
    Finally, this legislation is truly a consensus measure. Interested 
Members of both Houses and both parties support this bill. So does a 
broad coalition of humanitarian and faith-based organizations concerned 
with the issue. Jewelers of America, the World Diamond Council, and 
others representing segments of the industry also believe that this 
legislation is both sound and absolutely necessary for the success of 
our campaign to rid the world of conflict diamonds.
    Again, my thanks for the opportunity to testify. I will be happy to 
take any questions you may have.

                                

    Chairman Crane. Thank you, Mr. Runci. Ms. Gardner.

  STATEMENT OF CECILIA GARDNER, EXECUTIVE DIRECTOR, JEWELER'S 
 VIGILANCE COMMITTEE, NEW YORK, NEW YORK, AND GENERAL COUNSEL, 
           WORLD DIAMOND COUNCIL, NEW YORK, NEW YORK

    Ms. Gardner. Thank you, Mr. Chairman. I am Cecilia Gardner. 
I am the executive director and general counsel of the Jewelers 
Vigilance Committee (JVC), and I am general counsel of the 
World Diamond Council. I am grateful to the Subcommittee for 
the opportunity to testify on the critical need for enactment 
of legislation to eliminate conflict diamonds. I also would 
wish to join with Mr. Runci's comments that we are grateful to 
Congressman Hall and Congressman Wolf and others for their 
continued interest, concern and hard work in this area.
    The Jewelers Vigilance Committee is a committee formed in 
1917 with a membership of 11,000 retailers, manufacturers, and 
related enterprises. We emphasize self-regulation and 
compliance with all relevant laws. With this mission in mind, 
it was natural for the JVC to become a founding constituent of 
the World Diamond Council, which was organized in the summer of 
2000 for the purpose of constructing an effective system to 
protect the legitimate supply chain of diamonds worldwide from 
the pollution of conflict diamonds.
    My experience has been to participate in all of the 
meetings of the Kimberley Process, essentially from the 
inception after the U.N. Resolution and the World Diamond 
Council, after the World Diamond Council was formed, in the 
year 2000.
    This morning I would like to provide a brief summary of the 
international efforts to end this trade. This will provide the 
context for our view that enactment of the Clean Diamonds Trade 
Act is necessary to get the job done.
    As you know, for several years, an awareness of this 
problem grew and it was the subject of a number of Security 
Council and General Assembly resolutions at the U.N. The 
administration's acts over the past few years also have been in 
compliance with those U.N. initiatives.
    Meanwhile, evidence mounted that proceeds from diamonds 
were a leading source of revenue to rebels and adventurers 
whose only cause was profit. The societies of Angola, Sierra 
Leone, and the Democratic Republic of Congo were crumbling in 
the process.
    While the immediate victims were the innocent citizens of 
these nations, there were other prospective casualties starting 
with peaceful African nations that rely heavily on legitimate 
extraction and export of diamonds. Ultimately, a global 
industry in which the United States is a major participant 
could be blighted and therefore a coordinated international 
response was necessary, and this is what brought into being the 
ad hoc coalition which has come to be known as the Kimberley 
Process after the site of its first meeting.
    At the same time, the World Diamond Council was formed, an 
industry coalition that had its initial organizing meeting in 
September of 2000. These efforts have had some success. The 
Kimberley Process is a process in which the World Diamond 
Council is intimately involved, and we have agreed on main 
ingredients of an international monitoring system to protect 
the legitimate supply chain.
    In fact, the features of that system are already being 
employed pertaining to the rough diamond trade from Sierra 
Leone, Angola, Guinea to Belgium. There is broad agreement in 
the Kimberley Process to various elements that are very similar 
to that that is contained in this legislation.
    While these and other points of agreement represent 
progress, the picture is still very incomplete. What is missing 
is effective implementation of these very excellent goals. The 
World Diamond Council believes that legislative action by the 
United States is immediately necessary to achieve a catalyst to 
the Kimberley Process.
    Interested parties for months have debated the details of 
the legislation and now we have found common ground in the form 
of the Clean Diamonds Trade Act. It encompasses the very best 
features of earlier bills. It is enforceable. It provides the 
executive branch sufficient flexibility. It is consistent with 
the principles adopted by the U.N., and it is consistent with 
what is being formulated in the Kimberley Process.
    It serves the interests of all diamond producing nations. 
It does not impinge on the U.S. commitments to the World Trade 
Organization. It is very unusual, as Members of Congress know, 
for an industry to come to Washington to request government 
intervention in its affairs, but conflict diamonds pose a very 
unusual menace.
    The industry has gone a long way into meeting this 
challenge, and now the government's assistance is necessary to 
complete the job. Thank you for your attention, and I would be 
happy to answer any questions that you have.
    [The prepared statement of Ms. Gardner follows:]
Cecilia Gardner, Executive Director, Jeweler's Vigilance Committee, New 
 York, New York, and General Counsel, World Diamond Council, New York, 
                                New York
    I am Cecilia Gardner, executive director of the Jewelers Vigilance 
Committee and general counsel of the World Diamond Council. I am 
grateful to the Subcommittee for the opportunity to testify on the 
critical need for enactment of legislation to eliminate conflict 
diamonds.
    The Jewelers Vigilance Committee, with a membership of 11,000 
retailers, manufacturers and related enterprises, dates to 1917. We 
have the task of upholding ethical standards in our business, 
emphasizing both self-regulation and compliance with all relevant laws.
    With this mission in mind, it was natural for the JVC to become a 
founding constituent of the World Diamond Council. The WDC was 
organized during the summer of 2000 for the purpose of constructing an 
effective system to protect the legitimate supply chain of diamonds--
worldwide--from pollution by conflict diamonds.
    This afternoon I would like to provide a brief summary of the 
international efforts to end the conflict diamond trade. This will 
provide context for our view that enactment of the Clean Diamonds Trade 
Act is necessary to get the job done.
    For several years, as awareness of the problem grew, attempts were 
made to counter it. For instance, in June of 1998, Security Council 
Resolution 1173 targeted Angola's illicit diamond trade; two years 
later, Security Council Resolution 1306 aimed at illegal exports from 
Sierra Leone. Other measures sought to deal with Liberia's role in 
illicit traffic and related issues.
    Country-specific executive orders by both the Clinton 
Administration and the current administration followed these U.N. 
initiatives. Each was appropriate, but proved to be insufficient. For a 
brief period in 1999, it was thought that Sierra Leone would be spared 
further suffering thanks to the Lome peace accord--which the U.S. 
helped to broker--but that agreement was short-lived.
    Meanwhile, evidence mounted that proceeds from diamonds were a 
leading source of revenue to rebels and adventurers whose only cause 
was profit. The societies of Angola, Sierra Leone and the Democratic 
Republic of Congo were crumbling in the process. While the immediate 
victims were the innocent citizens of those nations, others were 
prospective casualties--starting with peaceful African countries that 
rely heavily on legitimate extraction and export of diamonds. 
Ultimately, a global industry, in which the United States is a major 
participant, could be blighted. Therefore a coordinated, comprehensive 
international response is necessary.
    This realization called into being--in the spring of 2000--an ad 
hoc coalition that came to be known as the Kimberley Process, after the 
site of its first meeting in South Africa. Soon after, all the 
significant private-sector members of the diamond industry met in 
Antwerp. That session adopted a set of strong principles to protect the 
legitimate supply chain and authorized creation of the WDC, an industry 
coalition that had its organizing meeting in September 2000. 
Representatives of American organizations and individual companies have 
played prominent roles in the WDC from the beginning. I have been among 
the WDC team participating in Kimberley working sessions in Africa and 
Europe.
    These efforts have had some success. With the advice of the WDC, 
the Kimberley Process has agreed on the main ingredients of an 
international monitoring system to protect the legitimate supply chain. 
The major features of that system are now being employed in a pilot 
program that controls the export of rough diamonds from Sierra Leone to 
Belgium. Last December, the U.N. General Assembly unanimously endorsed 
the same principles and called for comprehensive application by all 
relevant countries.
    There is broad agreement on the following:
     LCountries significantly involved in the extraction, 
processing, transshipment and importation of diamonds should adopt 
compatible monitoring methods.
     LThis system should include, among other things, use of 
counterfeit-proof certificates of origin of rough diamonds, tamper-
proof containers for shipments, and electronic data bases to track 
shipments.
     LViolators should be subject to stiff penalties.
     LLegitimate diamond producing countries should not be 
adversely affected by the monitoring regime.
    While these and other points of agreement represent progress, the 
picture is still incomplete. What is missing is effective 
implementation of these excellent goals.
    The World Diamond Council believes that legislative action by the 
United States is necessary to achieve this breakthrough. Interested 
parties for months debated the details of the legislation and now we 
have found common ground in the form of the Clean Diamonds Trade Act. 
It encompasses the best features of earlier bills. It is enforceable. 
It provides the executive branch sufficient flexibility. It is 
consistent with the principles adopted by the U.N. and the Kimberley 
Process. It serves the interests of all the African diamond-producing 
nations. It does not impinge on U.S. commitments to the World Trade 
Organization. It is what American importers and retailers need to 
protect their reputation and their products' standing in the 
marketplace.
    Members of Congress know that is very unusual for any industry to 
request government intervention in its affairs. But conflict diamonds 
pose a very unusual menace. The industry has gone a long way toward 
meeting this challenge. Now the government's assistance is necessary to 
finish the job.
    Thank you for your attention. I would happy to answer any questions 
you might have.

                                

    Chairman Crane. Thank you, Ms. Gardner. Ms. Anderson.

STATEMENT OF RORY E. ANDERSON, GOVERNMENT RELATIONS MANAGER AND 
      AFRICA POLICY SPECIALIST, WORLD VISION UNITED STATES

    Ms. Anderson. Thank you, Mr. Chairman, for the opportunity 
to present testimony to the Subcommittee on solutions to the 
trade in conflict diamonds. My name is Rory Anderson, 
government relations manager and Africa policy specialist for 
World Vision, the largest privately funded international relief 
and development organization in the U.S.
    Currently, World Vision implements more than 6,000 relief, 
rehabilitation and long-term development projects in 95 
countries.
    Mr. Chairman, you and the Committee have had a chance to 
review my testimony which describes in specific detail how the 
trade in conflict diamonds in Sierra Leone, Angola, and the 
Congo contributes to war, poverty, and human misery. I was in 
Sierra Leone and Liberia only 2 months ago, and it was my 
second visit to Sierra Leone in less than a year.
    The images of children, some as young as 5 months, with 
arms and legs cut off by rebel soldiers will remain with me 
forever. After seeing these faces of suffering in Sierra Leone, 
I can honestly say that terrorism is not only a phenomenon that 
is rooted in extremist Islamic fundamentalism. Terrorism, which 
is the planned systematic violent attacks against unarmed non-
combatant civilians, has been a central platform to the wars in 
Sierra Leone, Angola, and the DRC (Democratic Republic of the 
Congo).
    Terrorism has become a conventional weapon in 21st century 
warfare, making war more brutal and more costly. Although 
terrorism has become a conventional method, it is mostly 
sustained through underground networks of money laundering and 
weapon smuggling and trading in conflict diamonds.
    As an internationally valued commodity, diamonds have 
become the dollar, particularly in Sierra Leone. Because 
diamonds can move so easily and quickly, a dealer can buy low, 
sell high and reap high windfall profits, particularly during 
the height of a war. For the seemingly intractable war in 
Sierra Leone, the point of the war may not be to actually win 
it, but to engage in profitable crime under the cover of 
warfare.
    As documented in the U.N. Panel of Experts Report submitted 
to the U.N. Security Council in December of 2000, the 
Revolutionary United Front in Sierra Leone is able to obtain 
large quantities of arms and military equipment and related 
material largely as a result of the purchasing power it derives 
in the sale of conflict diamonds, and the willingness of some 
major arms producing countries to sell weapons and with 
disregard to the final end users.
    Given this awful reality, what can we do? What are the 
solutions? Mr. Chairman, I believe that there are two 
significant solutions which will make a tremendous difference 
in eradicating the trade in conflict diamonds.
    The first solution is swift enactment of the Clean Diamonds 
Trade Act. Mr. Chairman, World Vision and the Campaign to 
Eliminate Conflict Diamonds, which is a coalition of more than 
150 non-governmental organizations and faith groups, 
unanimously applaud and welcomes the leadership that this 
Committee has shown by introducing the Clean Diamonds Trade 
Act.
    If you do not object, I would like to submit for the record 
a letter of endorsement signed by over 70 religious 
organizations from across the country, ranging from Jewish, 
Catholic, and a variety of protestant churches who all call for 
the swift enactment of U.S. legislation to prevent conflict 
diamonds from being sold in America.
    Mr. Chairman, America consumes 65 percent of the world's 
supply of diamonds. We in the campaign believe that the Clean 
Diamonds Trade Act will make a significant contribution because 
it sets up a system of transparent controls for the importation 
of all diamonds including rough, polished and diamond jewelry. 
Diamonds are the most concentrated form of wealth known to 
humanity. They are also the most easily smuggled.
    But the Clean Diamonds Trade Act specifies certification 
standards for the importation of diamonds which will create a 
clean stream of diamonds entering into the U.S. market. The 
system's implementation will be monitored by a diverse 
presidential commission, which will consist of representatives 
from NGOs, industry and government. Tough penalties are also 
specified for those who are dealing in conflict diamonds.
    Further, we believe that this bill gives the administration 
maximum flexibility to implement effective controls.
    Mr. Chairman, a second solution is strong U.S. leadership 
at the international level. One of the greatest strengths of 
the Clean Diamonds Trade Act is that it is explicitly linked to 
the ongoing global diamond certification agreement, also known 
as the Kimberley Process.
    A diamond is an international commodity that requires 
international cooperation. If there is to be proper oversight, 
U.S. legislation is crucial, and we believe that U.S. 
legislation is shaping and helping to invigorate the 
international process and it mirrors the specifications which 
are being discussed at the international level.
    This said, we also acknowledge that the only way to 
effectively root out the trade in conflict diamonds is to have 
universal standards of packaging and oversight of all diamond 
producing, polishing and importing countries.
    A tiered system prejudiced against African producing 
systems and lax on importing and polishing countries creates 
new loopholes for transshipment of blood diamonds. If this were 
the case, conflict diamonds could simply be laundered through 
Canada, Australia, or any other peaceful country. A global 
certification system with standard import packaging and 
controls including international independent monitoring of 
diamond exports from mine to finger is the only way to 
effectively end the trade in conflict diamonds while protecting 
the legitimate diamond industry.
    Mr. Chairman, I had the privilege to attend and participate 
as an NGO representative in the recent meetings held in London. 
Though the process is slow in getting definitive consensus, we 
believe that the Clean Diamonds Trade Act is helping to bring 
countries around, and we believe that invigorated U.S. 
leadership is necessary at the highest levels to accomplish an 
effective workable system.
    Mr. Chairman, in conclusion, we at World Vision and the 
entire Campaign to Eliminate Conflict Diamonds firmly believe 
that American gifts of love should not be financing acts of 
terror. The diamond ring on your finger or my finger should not 
come at the expense of the finger of a child in Sierra Leone.
    The Campaign to Eliminate Conflict Diamonds firmly calls 
upon Congress to enact the Clean Diamonds Trade Act and we call 
upon the Bush Administration to demonstrate a high level of 
leadership in the negotiations of the international diamond 
certification system. Thank you.
    [The prepared statement of Ms. Anderson follows:]
Statement of Rory E. Anderson, Government Relations Manager, and Africa 
             Policy Specialist, World Vision United States

          Conflict Diamonds: Funding Conflict, Fueling Change

Intro/Opening

    Thank you, Mr. Chairman, for the opportunity to present testimony 
to the Trade Subcommittee on solutions to the trade in conflict 
diamonds. My name is Rory Anderson, Government Relations Manager and 
Africa policy specialist for World Vision, the largest privately-funded 
international relief and development organization in the U.S. 
Currently, World Vision implements more than 6,000 relief, 
rehabilitation and long-term development projects in 95 countries.
    Mr. Chairman, it is nothing new that natural resources, from 
diamonds to oil, have often had 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 type of ideological loyalty. There 
has been clear evidence, including on going warfare, in the diamond 
rich countries of Sierra Leone, Angola and the Democratic Republic of 
the Congo that diamonds are at the heart of the matter, and access to 
diamonds and other natural resources have become a primary incentive 
for war.

Definition

    There are various nuanced definitions of the term conflict 
diamonds. In this testimony, my definition seeks to address current as 
well as potential situations where the sale of diamonds could be used 
to sustain violent conflict. Conflict diamonds are stones which 
originate from areas under the control of forces that are in opposition 
to democratically elected and internationally recognized governments; 
or diamonds used by state institutions or non-state forces to fund 
campaigns of human rights abuses against civilians. Some argue that 
diamonds don't kill people, rather, people and guns kill people. But 
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. 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 easily 
be smuggled in a shoe, sock, or any kind of body orifice, and can go 
undetected through most metal detectors or x-ray machines.

The Humanitarian Impact

    For every conflict diamond sold, there is a corresponding 
humanitarian crisis. In Angola, the 1990s proved to be the most violent 
decade and the worst in terms of humanitarian suffering. By November 
1999, 3.7 million, one third of the entire population, were classified 
by the UN as ``war affected'', defined as ``those who depend on 
emergency humanitarian assistance due to war and the resultant loss of 
assets and earning opportunities.'' \1\ Of the 3.7 million, 2.5 million 
are internally displaced, 65% of whom are children under the age of 
fourteen, causing UNICEF to declare Angola ``the worst place for a 
child to grow up.'' \2\ The denial of basic rights to food, education 
and health, coupled with an estimated 6-15 million landmines littered 
throughout the country, claim the lives of 30% of Angola's children 
before they reach the age of five.\3\ In their August 2001 report, the 
UN Office for the Coordination of Humanitarian Affairs identified all 
seventeen Angolan provinces as being insecure and inaccessible because 
of diamond extraction, mine infestation, and sustained violence.
---------------------------------------------------------------------------
    \1\ UN Consolidated Appeal for Angola for Jan-Dec 2000, November 
1999.
    \2\ Angola, A Tangled Web: Many Players in a Complex War, World 
Vision, July 2000, p.10.
    \3\ Ibid., p.17.
---------------------------------------------------------------------------
    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. 30% 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 parts of the 
country. 55% of the population live in conflict affected areas and are 
inaccessible by humanitarian aid.
    Within the current deliberations on conflict diamonds there have 
been fewer references to the Democratic Republic of the Congo (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, I believe, warrants the label of conflict 
diamond for any stone originating from the DRC. 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. Thirty-
four percent of these deaths have been children under the age of five 
(over 590,000), and 47% 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.''

Crime and Terrorism

    In the wake of the September 11 terrorist attacks, there has been a 
necessary increased public attention to terrorism. However, terrorism 
is not a phenomenon that is only rooted in extremist Islamic 
fundamentalism; terrorism--which is planned, systematic violent attacks 
against unarmed, non-combatant civilians--has been a central platform 
to the wars in Sierra Leone, Angola, and the DRC. Terrorism has become 
a conventional weapon in 21st century warfare, making war 
more brutal and more costly. Although terrorism has become a 
conventional method, it is mostly sustained through underground 
networks of money laundering and weapons smuggling. As an 
internationally valued commodity, diamonds have become the dollar, 
particularly in Sierra Leone. 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 
war in Sierra Leone, the point of the war may not be to actually win 
it, 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.\4\
---------------------------------------------------------------------------
    \4\ Smillie et al, p.1.
---------------------------------------------------------------------------
    As documented in the UN Panel of Experts report submitted to the UN 
Security Council in December of 2000, the RUF is able to obtain large 
quantities of arms, military equipment and related material as a result 
of the following key factors:
     Lthe purchasing power it derives from the sale of conflict 
diamonds;
     Lthe willingness of some major arms producing countries to 
sell weapons with disregard as to the final users;
     Lthe willingness of some countries to provide their end-
user certificates and/or to facilitate the safe passage of weapons 
through their territory;
     Lthe largely unregulated activity of international arms 
brokers and their intermediaries;
     Lcorruption;
     Lthe inability of Sierra Leone and its neighbours to 
monitor and control their airspace;
     LLiberia's interest in destabilizing its neighbours.

                       Solutions/Recommendations

    An unlikely coalition between NGOs and the diamond industry, 
calling upon governments to eliminate the trade in conflict diamonds 
has proven to be an effective catalyst for change. This coalition has 
been the impetus for refined U.S. legislation that is currently pending 
before this committee, as well as the current discussions around 
implementing a global diamond certification system which aims to root 
out the blood trade while protecting the legitimate trade. These two 
efforts are solutions that are inextricably linked to accomplishing an 
end in the trade in conflict diamonds. The U.S. consumes 65% of the 
world diamond supply. U.S. economic might and political clout obligate 
us to take real leadership in ending the trade in conflict diamonds, 
protecting American purchases of love from being a subsidy for terror.

The Clean Diamonds Trade Act, H.R. 2722

    Mr. Chairman, World Vision applauds and welcomes the leadership 
that this committee has shown by introducing and quickly acting upon 
the Clean Diamonds Trade Act, H.R. 2722. We believe that this bill will 
make a significant contribution because it sets up a system of 
transparent controls for the importation of all diamonds, including 
rough, polished and diamond jewelry. Diamonds are the most concentrated 
form of wealth known to humanity; they are also the most easily 
smuggled and, therefore, in need of some amount of reasonable controls. 
The Clean Diamonds Trade Act specifies certification standards for the 
importation of diamonds, which will create a ``clean stream'' of 
diamonds entering into the U.S. market. The system's implementation 
will be monitored by a diverse presidential commission which will 
consist of representatives from human rights organizations, industry 
and government. Tough penalties are also specified for those who are 
dealing in conflict diamonds. Further, we believe that this bill gives 
the Administration maximum flexibility to implement effective controls.

Strong U.S. Leadership in the Kimberly Process

    One of the greatest strengths of the Clean Diamonds Trade Act is 
that it is explicitly linked to the on-going international global 
diamond certification system, known as the Kimberly Process. A diamond 
is an international commodity that requires international cooperation 
if there is to be proper oversight. Although U.S. legislation is 
crucial, the only way to effectively root out the trade in conflict 
diamonds is to have universal standards, packaging and oversight of all 
diamond producing, polishing and importing countries. A tiered system, 
prejudiced against African producing countries and lax on importing and 
polishing countries, creates new loopholes for transshipment of blood 
diamonds. Soon, conflict diamonds will simply be laundered through 
Canada, Australia, and other peaceful countries. A global certification 
system, with standard import packaging and controls, including 
international independent monitoring of diamond exports from mine to 
finger, is the only way to effectively end the trade in conflict 
diamonds, while protecting the legitimate diamond industry.
    Mr. Chairman, I had the privilege to attend and participate as an 
NGO representative in the recent Kimberly Process meetings held in 
London last month. Though progress is slow in getting definitive 
consensus on workable international standards, certain key governments 
involved in the diamond trade have made significant progress in 
contributing towards a viable international system. World Vision, and 
my many partners in the Campaign to Eliminate Conflict Diamonds 
encourage the Administration to constructively contribute and engage on 
this issue at the highest levels, particularly as the process reaches 
its conclusion in December. The diamond and jewelry industry are 
important parts of the U.S. economy; constructive U.S. leadership is 
essential to make the Kimberly Process work. Anything less will not 
only be an international embarrassment, but it will tacitly prolong the 
trade in conflict diamonds.

Chain of Warranties

    In the recent round of inter-governmental meetings held in London 
last month, the World Diamond Council proposed a chain of warranties 
systems to support producer government export regimes. It was a short 
proposal, but as described, each industry trader would sign a series of 
invoices, giving a guarantee that stones which a member of the industry 
are handling do not contain conflict diamonds. This proposal needs to 
be further developed, but it is a sound idea, and, if properly 
developed, has the potential to lend support to governments in their 
creation of an export certificate regime. A reliable industry chain of 
warranties, from mine to point of export, can also provide 
infrastructure for international monitoring, and, with the proper 
documentation, it can verify official country and international 
statistics. I encourage the World Diamond Council to seriously develop 
this idea and submit a lengthier proposal for the Kimberly Process 
government participants to consider.

Eliminate the Root Cause

    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. In 
this area, I recommend the following solutions:
    1. LReinforce 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. LAssist rough diamond exporting countries in the areas of good 
governance, linking all types of financial assistance to poverty 
reduction and social reinvestment.
    3. LBuild capacity among grassroots 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 to reinforce the international system, there 
is a foundational need to address the economic reasons why individuals 
trade in conflict diamonds. 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 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 
U.S. food will be used. The goal of this project is to significantly 
improve household food security and sustained productive capacity of 
the Sierra Leonian war-affected 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 war-affected, 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 
non-formal 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 co-existence; 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% 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 community-based 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, including NGOs, 
industry and governments, 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.

                                

    Chairman Crane. Thank you, Mrs. Anderson. Mr. Akwei.
    Mr. Rangel. Mr. Chairman.
    Chairman Crane. Oh, yes. Mr. Rangel.
    Mr. Rangel. Ms. Anderson had asked unanimous consent that a 
list of supporters for the legislation before us be entered 
into the record.
    Chairman Crane. Without objection, so ordered. Mr. Akwei.
    [The information follows:]
               Interfaith Statement on Conflict Diamonds
    As faith communities concerned about peace and justice for all 
God's people, we, the undersigned, want to express our concern over the 
trade in conflict diamonds--gems that are used to fund warfare and 
civilian atrocities--and we want to collectively show solidarity with 
our brothers and sisters who are suffering in Sierra Leone as a result 
of a decade-long civil war where rebels seek to control diamond 
resources. In particular, the brutal tactics of the Revolutionary 
United Front (RUF), who routinely practice mutilation of innocent 
civilians, notably amputation of limbs and other body parts; forced 
recruitment of child soldiers, and abduction of women to be soldiers' 
``wives,'' are all tactics intended to maintain their wicked reign over 
resources. This cannot and should not be tolerated by any member of the 
international community, least of all by those who believe all people 
are God's creation.
    The war in Sierra Leone is not about political liberation or 
religious freedom--it is a war about conflict diamonds, where greed, 
warfare and civilian terror have become a cover for controlling and 
smuggling diamond resources. As Muctar Jalloh, a victim of the Sierra 
Leone conflict explains, the bloodshed in his country ``is simply a war 
over control of diamonds. Little pieces of rock that people around the 
world like to wear on their fingers and hang from their ears. As you 
can see, because of these rocks I no longer have an ear or five of my 
fingers.'' The RUF controls two-thirds of Sierra Leone, including the 
lucrative diamond-mining regions in the north. The sale of these 
illicit gems to the diamond industry--often routed through other 
countries such as Liberia--then supplies a constant stream of funding 
for the rebels' arms purchases, which in turn leads to the continuation 
of war, further displacement of the civilian population, and general 
instability in the West African region. Angola, the Democratic Republic 
of the Congo and many surrounding African countries also have similar 
experiences of human suffering as result of the trade in conflict 
diamonds.
    While the worldwide diamond industry has made encouraging strides 
toward establishing an international diamond certification system that 
seeks to ensure that conflict diamonds are kept out of the retail 
market, the pace of reform is slow. Delays in enacting an international 
system leave millions of people at the mercy of atrocious human rights 
abusers such as the Revolutionary United Front (RUF).
    In response to this situation, we, the undersigned faith 
communities in the U.S., are joining together in support of clean 
diamond legislation, including the Clean Diamonds Act, which would 
prohibit the direct or indirect importation of any and all diamonds and 
diamond jewelry without a global certification system in place. By 
taking leadership, the U.S. can send a message that the trade in 
conflict diamonds is morally egregious and will not be tolerated. Moral 
authority under these circumstances is not an option; it is an 
imperative. The longer it takes to enact an international certification 
system, the more hardship is inflicted on innocent people in Sierra 
Leone, Angola, and the Congo, and the more risk of harm to the 
legitimate diamond-producing nations of Botswana, Namibia, and South 
Africa. It has been written: ``Do not profit by the blood of your 
neighbor . . . you shall not hate your kinsman in your heart. Reprove 
your neighbor but incur no guilt because of him. You shall not take 
vengeance or bear a grudge against your kinsfolk. Love your neighbor as 
yourself'' (Leviticus 19:16-18). Across our faith traditions, we teach 
all to love others and speak up for those who cannot speak up for 
themselves. We stand ready to commit what we can to this fight against 
the use of conflict diamonds which inflict pain and suffering on the 
innocent.
      Signatories of the Interfaith Statement on Conflict Diamonds
                         as of October 1, 2001
Cantor Scott E. Colbert, Executive Vice-President, American Conference 
    of Cantors
Rabbi Paul Menitoff, Executive Vice-President, Central Conference of 
    American Rabbis
Rabbi Lane Steinger, Director, Midwest Council of the Union of American 
    Hebrew Congregations, St. Louis, MO
Rabbi Susan B. Stone, Temple Beth Shalom, Hudson, OH
Rabbi Norman T. Roman, West Bloomfield, MI
Rabbi Sue Levi Elwell, Director, Pennsylvania Council of the Union of 
    American Hebrew Congregations, Philadelphia, PA
Rabbi Jody Cohen, Ft. Lauderdale, FL
Rabbi Melinda Mersack, Shaker Heights, OH
Rabbi Elliott Kleinman, Director, Northeast Lakes Council of the Union 
    of American Hebrew Congregations, Cleveland, OH
Rabbi Karyn Kedar, Director, Great Lakes Council of the Union of 
    American Hebrew Congregations, Northbrook, IL
Rabbi David Fine, Pacific Northwest Council of the Union of American 
    Hebrew Congregations, Seattle, WA
Rabbi Harry Rosenfeld, Buffalo, NY
Rabbi Randi Musnitsky, Washington Township, NJ
Rabbi David Wolfman, Needham, MA
Rabbi Marc Israel, Director of Congregational Relations, Religious 
    Action Center of Reform Judaism
Rabbi David Saperstein, Director and Council, Religious Action Center 
    of Reform Judaism
Eileen B. Weiss, Co-founder, Jews Against Genocide
Roney A. Heinz, International Director, Canaan Christians Fund
Rev. Dr. Leon Spencer, Director, Washington Office on Africa
Rev. Richard P. Roy, M.Afr., Assistant Provincial, Missionaries of 
    Africa
Rev. Daniel Hoffman, Africa Office, Global Ministries, United Church of 
    Christ/Disciples of Christ
Rev. Rich Cizik, Vice-President, National Association of Evangelicals
Rev. Herbert Daughtry, National Presiding Minister of the House of the 
    Lord Church and the Church on the Mound, Brooklyn, NY
Kenneth Hackett, Executive Director, Catholic Relief Services
Kathy Thornton, RSM, National Coordinator, NETWORK
Kathryn Wolford, President, Lutheran World Relief
Larry J. Goodwin, Executive Director, Africa Faith & Justice Network
Serge Duss, Public Policy Director, World Vision
Stephen G. Price, Office of Justice and Peace, Society of African 
    Missions
Rev. Ian B. Straker, member, New York Annual Conference of the United 
    Methodist Church
Rev. Scott Summerville, Pastor, Asbury United Methodist Church, 
    Tuckahoe, NY
Bishop Elias G. Galvan, President, Council of Bishops, and Seattle 
    Episcopal Area
Bishop Warner H. Brown, Jr., Denver Episcopal Area
Bishop John L. Hopkins, Minnesota Episcopal Area
Bishop William W. Hutchinson, Louisiana Episcopal Area
Bishop S. Clifton Ives, West Virginia Episcopal Area
Bishop Alfred Johnson, New Jersey Episcopal Area
Bishop Hae-Jong Kim, Pittsburgh Episcopal Area
Bishop Linda Lee, Michigan Episcopal Area
Bishop Ernest S. Lyght, New York Episcopal Area
Bishop Joel N. Martinez, San Antonio Episcopal Area
Bishop Felton Edwin May, Washington Episcopal Area
Bishop Susan Morrison, Albany Episcopal Area
Bishop Albert Frederick Mutti, Kansas Episcopal Area
Bishop Edward W. Paup, Portland Episcopal Area
Bishop Joe E. Pennel, Jr., Richmond Episcopal Area
Bishop Sharon Z. Rader, Wisconsin Episcopal Area
Bishop Beverly J. Shamana, San Francisco Episcopal Area
Bishop B. Michael Watson, South Georgia Episcopal Area
Bishop Peter D. Weaver, Philadelphia Episcopal Area
Bishop Timothy W. Whitaker, Florida Episcopal Area
Jim Winkler, General Secretary of the General Board of Church and 
    Society
Aleticia Tijerina, Arizona
Esther Bohn Groves
Mary Alice and Kent Warner, Center Harbor, New Hampshire
Rev. Laurence C. Zirschky, Pastor of Spiritual Formation, Chapel Hill 
    Presbyterian Church, Gig Harbor, WA
Rev. Dr. Earl Palmer, Senior Pastor, University Presbyterian Church, 
    Seattle, WA
Dr. Phil Eaton, President, Seattle Pacific University, Seattle, WA
Gordon Aeschliman, President, Target Earth, Villanova, PA
Dr. John Crosby, Senior Pastor, Christ Presbyterian Church of Medina, 
    MN
Leighton Ford, President, Leighton Ford Ministries, Charlotte, NC
Paul Kennel, President, World Concern, Shoreline, WA
Dr. William L. Flanagan, Mission Pastor, St. Andrew's Presbyterian 
    Church, Newport Beach, CA
Bart Campolo, President, Mission Year, Philadelphia, PA
Richard J. Mouw, President and Professor of Christian Philosophy, 
    Fuller Theological Seminary, Pasadena, CA
Tony Campolo, Professor of Sociology, Eastern College, St. Davids, PA
Rev. Dr. M. Craig Barnes, Senior Pastor, National Presbyterian Church, 
    Washington, DC
Ronald J. Sider, President, Evangelicals for Social Action, Wynnewood, 
    PA
Millard Fuller, Founder and President, Habitat for Humanity, Americus, 
    GA
Peter Vander Meulen, Coordinator, Office of Social Justice and Hunger 
    Action, Christian Reformed Church of America
Paul Kortenhoven, Director, Christian Reformed Church Mission to Sierra 
    Leone, Christian Reformed Church of America
Kay M. Shively, Special Assignment and Recruitment Specialist for 
    Global Missions of the Church of God, Anderson, IN
Dr. Peter Borgdorff, Executive Director of Ministries, Christian 
    Reformed Church of America
Dr. Steve Hayner, Senior Associate Pastor, High Point Church, Madison, 
    WI
David Beckmann, President, Bread for the World, Washington, DC
Rev. Doug Calhoun, Pastor, Church of Christ Oak Brook, Oak Brook, IL
Debra Braaksma, Africa Office Mission Services Unit, Reformed Church in 
    America
Ken Hackett, President, Catholic Relief Services (relief and 
    development arm of the U.S. Conference of Catholic Bishops), 
    Baltimore, MD
Rev. Dr. Michael Curry, Director of Outreach Ministries, Church of God, 
    Anderson, IN

                          

 STATEMENT OF ADOTEI AKWEI, AFRICA ADVOCACY DIRECTOR, AMNESTY 
                       INTERNATIONAL USA

    Mr. Akwei. My name is Adotei Akwei, and I am the advocacy 
director for Africa with Amnesty International USA. I am also 
here representing a coalition of over 100 organizations that 
come from a broad spectrum of society. The Campaign to 
Eliminate Conflict Diamonds includes faith-based organizations, 
unions, environmental, humanitarian and human rights 
organizations, and these groups are in turn made up of 
students, retired persons, young professionals, recently 
engaged men and women, newly married couples, and yes, mom and 
pop jewelry store owners.
    Over the last year, these individuals have written letters, 
held vigils and teach-ins and communicated with their 
congressional representatives to raise awareness about the 
issue of conflict diamonds and to try to push the United States 
government to lead the international community toward taking 
effective action against conflict diamonds.
    On their behalf, I would like to express our appreciation 
to you for holding these hearings. The members of the Campaign 
understand that in these difficult and extraordinary times, it 
is not as easy to work on other issues when so much remains to 
be done here in the United States. It is a tribute to you and a 
strong reassurance to the rest of the global community to see 
that even in this period, the United States will not disengage 
from international affairs or shirk its responsibility to be a 
leader on human rights issues.
    I would like to stress this last point, to be a leader on 
human rights issues, because this is what the issue of conflict 
diamonds is about, an effort by the United States Government, 
the diamond industry and the non-governmental sector to take on 
and end one of the most painful and avoidable human rights 
abuses being inflicted on millions of children, women and men 
in sub-Saharan Africa.
    The misappropriation of a valuable natural resource like 
diamonds, the use of revenues acquired from the sale of that 
resource to purchase weapons, drugs, and supplies by armed 
opposition groups, who then commit human rights abuses, is 
unacceptable and avoidable.
    The conflict diamond crisis is unacceptable because in 
addition to the horrific suffering that continues to be 
inflicted to innocent persons in these conflict zones is the 
incalculable loss of development opportunities that legitimate 
and efficient use of this resource could represent.
    It is avoidable because we sitting here in Washington can 
make a difference by helping build an international 
certification system that would ensure a clean stream of 
diamonds from the point of extraction to retail sale and that 
would be transparent and independently monitored.
    H.R. 2722, which complements and helps buildup to ongoing 
Kimberley Process negotiations, does this by empowering the 
U.S. Customs Service to permit diamond imports only from those 
countries thathave adopted strong and effective controls on the 
exportation and importation of rough diamonds to ensure that conflict 
diamonds do not enter the international stream of commerce.
    For the last 2 years, various parties in this initiative 
have worked to try to cut off the revenue flows from the 
illicit sales of diamonds to armed groups like the 
Revolutionary United Front in Sierra Leone and to break the 
linkage between the innocent American consumer, the legitimate 
diamond industry and RUF atrocities.
    In other words, Mr. Chairman, this bill, H.R. 2722, 
represents the coming together of a broad variety of groups, 
individuals and companies all with the same goal, ending the 
brutal and avoidable human rights abuses that are linked to 
conflict diamonds.
    This is why I am sitting here before you today, along with 
my colleagues from the diamond industry and with Members of 
Congress, to urge you to take this legislation and the energy 
and support of all the sectors behind it I have mentioned and 
make a difference. Pass H.R. 2722 before you go out on recess.
    I would like to just make a few comments on H.R. 2722 
before wrapping up. First, input for this legislation has come 
from the industry, from sectors of the administration, notably 
Customs, and international as well as U.S. non-governmental 
organizations.
    The bill has been shared and previewed with members at the 
Kimberley Process and we, therefore, feel that there has been a 
common agreement and approach on the way in which the bill is 
drafted and also for the action to be taken by the United 
States Congress.
    I would also say that this is supportive and complementary 
to the Kimberley Process and all three of my colleagues have 
also mentioned that. It in no way undermines this and, in fact, 
leaves the President the necessary flexibility to negotiate and 
to come into compliance with his WTO obligations.
    As drafted, all efforts have been made to make this bill 
responsible and effective. Our colleagues in the industry who 
helped draft this legislation were obviously careful to ensure 
that our actions and this bill would not hurt the legitimate 
trade in diamonds.
    Our colleagues in the industry are also aware of the need 
for prompt action. The longer this problem persists, the more 
damage is done to the industry and its products. I would also 
say that we have tried to make this bill as procedurally 
correct while remaining as effective as possible.
    Input from the Department of State and USTR has been sought 
and I must confess has not been met with the same energy and 
enthusiasm for detail as we have had here on the Hill. 
Unfortunately, that pattern seems to have continued today.
    I would just again end by saying that this bill is a 
responsible bill. It will make a big difference and there is 
certainly no time left for the people in Sierra Leone, Angola, 
and the DRC to wait for yet another couple of months while the 
negotiations in Kimberley drag on and eventually come to the 
same principles and standards that are in H.R. 2722. Thank you.
    [The prepared statement of Mr. Akwei follows:]
 Adotei Akwei, Africa Advocacy Director, Amnesty International USA \1\
    Mr. Chairman, and other distinguished members of the Ways and Means 
Committee on behalf of the 380,000 members of Amnesty International USA 
and the million members of Amnesty International worldwide I would like 
to thank you for holding these hearings and for giving me and my 
colleagues the opportunity to testify.
---------------------------------------------------------------------------
    \1\ This testimony could not have been prepared without the help of 
Amanda Blair, Eileen Welch and Juliana Phillips.
---------------------------------------------------------------------------
    I am also here representing a coalition of over 100 organizations 
that come from a broad spectrum of society. The Campaign to Eliminate 
Conflict Diamonds includes faith-based organizations, unions, 
environmental, humanitarian and human rights organizations. These 
groups in turn are made up of students, retired persons, young 
professionals, recently engaged women and men, newly married couples 
and yes, mom and pop jewelry store owners. Over the last year these 
individuals have written letters, held vigils and teach-ins and 
communicated with their congressional representatives to raise 
awareness about the issue of conflict diamonds and to try to push the 
United States Government to lead the international community toward 
taking effective action against conflict diamonds. On their behalf I 
would also like to express our appreciation to you for holding these 
hearings. The members of the Campaign understand that in these 
difficult and extraordinary times it is not as easy to continue to work 
on other issues when so much remains to be done here in the United 
States. It is a tribute to you and strong reassurance to the rest of 
the global community to see that even in this period the Untied States 
will not disengage from international affairs or shirk its 
responsibility to be a leader on human rights issues.
    I would like to stress this last point, ``to be a leader on human 
rights issues'' because this is what the issue of conflict diamonds is 
about, an effort by the United States Government, the diamond industry 
and the non governmental sector to take on and end one of the most 
painful and avoidable human rights abuses being inflicted on millions 
of children, women and men in sub-Saharan Africa. The misappropriation 
of a valuable natural resource like diamonds, the use of revenues 
acquired from the sale of that resource to purchase weapons, drugs and 
supplies by armed opposition groups and then commit human rights abuses 
is unacceptable and avoidable. The conflict diamond crisis is 
unacceptable because in addition to the horrific suffering that 
continues to be inflicted to innocent persons in these conflict zones 
is the incalculable lost developmental opportunity that the legitimate 
and efficient use of this resource represents.
    It is avoidable because we sitting here in Washington can make a 
difference by helping build an international certification system that 
would ensure a clean stream of diamonds from the point of extraction to 
retail sale and that would be transparent and independently monitored. 
H.R. 2722 which compliments and helps build up to ongoing Kimberley 
Process, does this by empowering the U.S. Customs Service to permit 
diamond imports only from those countries that have adopted strong and 
effective controls on the exportation and importation of rough diamonds 
to ensure that conflict diamonds do not enter the international stream 
of commerce.
    For the last two years, various parties in this initiative have 
worked to try to cut off the revenue flows from the illicit sale of 
diamonds to armed groups like the Revolutionary United Front (RUF) in 
Sierra Leone and break the linkage between the innocent American 
consumer, the legitimate diamond industry and RUF atrocities.
     LCongressman Hall, and his staff who more than anyone else 
deserve the credit for making this an issue here in Washington and 
getting us to where we are today, introduced the CARAT Acts (H.R. 3188 
and H.R. 5147) and the Conflict Diamond Elimination Act (H.R. 5564) in 
the year 2000. He and Congressman Frank Wolf were also key architects 
in building the blocs of support on the Hill for H.R. 918, the Clean 
Diamonds Act, the Clean Diamonds Act of 2001 in the Senate (S. 1084), 
which was introduced by Senators Durbin, DeWine and Feingold, and 
finally the bill we are discussing here today H.R. 2722, the Clean 
Diamonds Trade Act which was introduced by Congressmen Houghton, 
Rangel, Hall and Wolf.
     LIn the spring of 2000, the NGO community here in the 
United States launched a grassroots campaign to pass legislation in 
Congress that would help end the trade in conflict diamond and support 
the Kimberley Process.
     LIn July of 2000 the international diamond industry 
meeting in Antwerp to try and address the problem of conflict diamonds 
launched the World Diamond Council and presented its Antwerp 
Resolution. Following the United Nations Security Council and General 
Assembly Resolutions # on conflict diamonds, the diamond producing 
countries, led by South Africa, initiated the Kimberley Process to 
develop a global system to regulate and prevent the trade in conflict 
diamonds.
    In other words Mr. Chairman this bill, H.R. 2722, represents the 
coming together of a broad variety of groups, individuals and companies 
all with the same goal: ending the brutal and avoidable human rights 
abuses that are linked to conflict diamonds. This is why I am sitting 
here before you today along with my colleagues from the diamond 
industry, and with Members of Congress, to urge you to take this 
legislation and the energy and support of all of the actors I have 
mentioned and make a difference: pass H.R. 2722 before you go out on 
recess.
    As there are other persons on this panel who I know will address 
both the international Kimberley Process and some of the technicalities 
of the bill, I would like to take this opportunity to review why we are 
here and why this legislation is needed now.

The Cost of Conflict Diamonds

    The conflict diamonds crisis has been linked to wars in three 
African states, Sierra Leone, Angola and the Democratic Republic of the 
Congo. My testimony will focus on the conditions in those countries in 
an effort to show the impact of the unfettered trade in diamonds. I 
would like to add that while these may be the most visible casualties 
of conflict diamonds, the negative impact of this trade is much 
broader: it affects other countries that act as transshipment centers, 
many of which outside of Africa. As the following details highlight the 
damage done by conflict diamonds in these three countries alone is 
justification enough to pass this legislation.

Sierra Leone

    The ten year war in Sierra Leone has been waged through extremely 
brutal tactics by the opposition Revolutionary United Front (RUF) that 
has yet to communicate a cause beyond securing control over the 
country's diamond producing areas. The RUF has both fought for and been 
able to continue fighting because of diamonds. The link has been 
documented by a number of groups apart from AI including the UN panel 
of experts (detail).
    Amnesty International has been monitoring and trying to protect 
fundamental human rights in Sierra Leone from well before the current 
10 year civil war began. All armed groups have committed war crimes and 
crimes against humanity, including RUF forces, the Armed Forces 
Revolutionary Council (AFRC), government forces, including the Sierra 
Leone Army and the Civil Defense Forces (CDF), and international peace-
keeping forces of the Economic Community of West African States, ECOWAS 
referred to as ECOMOG.
    The RUF forces have been responsible for war crimes and crimes 
against humanity throughout a conflict during which civilians have 
borne the brunt of the violence. According to the U.S. Committee for 
Refugees (USCR) that as of August 1, between 900,000-1.4 million Sierra 
Leoneans had been uprooted, a figure that included both refugees and 
internally displaced persons.
    AI estimates that thousands of men, women and children have been 
deliberately and arbitrarily killed or had their hands, arms or other 
limbs brutally cut off. Rape and other forms of sexual violence against 
girls and women have been widespread and systematic. Most of the 10,000 
children--both boys and girls--estimated to have been associated with 
fighting forces in Sierra Leone have been abducted by the RUF and more 
than half of those have been used as combatants. The RUF sustained and 
continues to sustain itself through the sale of conflict diamonds, 
using the revenues from those sales to purchase weapons, supplies and 
drugs, despite UN sanctions diamond exports from areas of Sierra Leone 
not controlled by the government.
    Human rights abuses linked to the fighting with the RUF go back to 
the period of rule by the National Provisional Ruling Council (NPRC), 
headed by Captain Valentine Strasser, which came to power following a 
military coup in April 1992 and ruled until parliamentary and 
presidential elections and the return of a civilian government in March 
1996. Government forces were responsible for extrajudicial killings, 
torture and ill-treatment of captured or suspected rebel forces. They 
were also implicated in serious abuses against civilians, including 
deliberate amputations of hands, in the period leading up to the 
elections in February 1996. No one--from either government or rebel 
forces--alleged to have committed serious violations of international 
humanitarian law during the period of NPRC rule has yet been brought to 
justice.
    Abuses were committed by the Armed Forces Revolutionary Council, 
headed by Johnny-Paul Koroma, who overthrew the elected government of 
President Ahmad Tejan Kabbah in a military coup in May 1997 and ruled 
until February 1998 when it was removed from power by forces of the 
Economic Community of West African (ECOWAS) Ceasefire Monitoring Group 
(ECOMOG) and the government of President Kabbah was restored. Shortly 
after the military coup, the RUF joined forces with the AFRC. The rule 
of law collapsed completely. Hundreds of people were arbitrarily 
arrested and detained; many were tortured and ill-treated. Physical 
assault, amounting to torture or ill-treatment, of civilians by AFRC 
soldiers and RUF members was routine. There were also reports of 
extrajudicial executions of those suspected of opposing the AFRC. 
Victims of human rights violations included people associated with the 
government of President Kabbah, journalists, students and human rights 
activists.
    Following the removal of the AFRC and RUF from power, their forces 
unleashed a campaign of terror against civilians. War crimes and crimes 
against humanity reached unprecedented levels. Several thousand 
civilians were brutally killed or mutilated. Hundreds of others, 
including children, were abducted from their villages and forced to 
join their attackers as either combatants or laborers, in conditions 
amounting to cruel, inhuman or degrading treatment. Hundreds of 
abducted girls and women were forced into sexual slavery.
    An incursion by rebel forces into Freetown in January 1999, which 
the RUF termed ``Operation no living thing'', brought to the capital 
the crimes that had been committed in the north and east of the country 
inthe previous eight years. Although it was impossible to ascertain the 
exact numbers of civilian deaths during the incursion, the UN body 
UNOMSIL (the predecessor of UNAMSIL) estimated that up to 5,000 people, 
at least 2,000 of them civilians were killed. Medical authorities in 
Freetown later put the figure of those killed at over 6,000.
    Several hundred civilians, including children, were admitted to 
hospitals in Freetown after having their limbs cut off or suffering 
from other forms of mutilation. In February 1999 medical staff at 
hospitals in Freetown were reported to be treating some 500 victims of 
amputation and mutilation who required surgery. There were likely to be 
many other victims who did not reach medical help and who died from 
their injuries.
    Rape and other forms of sexual violence were systematic and 
widespread during the incursion. Women and girls were rounded up and 
gang-raped by rebel forces. Rebel forces abducted large numbers of 
civilians, including children, from Freetown. Some were selected for 
training as fighters, others used as porters to carry looted goods from 
Freetown to other parts of the country. Women and girls were used for 
sexual purposes. Some 4,000 children were reported missing after the 
rebel incursion. In the eastern part of Freetown, about 90 percent of 
buildings were destroyed.
    ECOMOG forces, together with the CDF, also committed human rights 
violations, including war crimes, during the incursion by rebel forces 
into Freetown. There were reports of large numbers of extrajudicial 
executions by ECOMOG forces and the Civil Defense Forces (CDF) of 
captured or suspected rebels, often after the most cursory 
interrogation and without any real attempt to establish whether the 
captive was guilty or innocent of any crime. In mid-January 1999 at 
least 10 Sierra Leonean staff of humanitarian aid organizations and the 
International Committee of the Red Cross (ICRC) were arrested and 
detained by ECOMOG forces. They were accused of cooperating with rebel 
forces although there was no evidence to substantiate these 
allegations. Most were reported to have been beaten. Aid organizations' 
communications equipment was also confiscated. Ill-treatment or 
torture, including by being beaten, whipped, tied extremely tightly and 
subjected to various forms of public humiliation, was common at ECOMOG 
and CDF checkpoints in Freetown.

Angola

    The linkage between the sale of diamonds and the ability of the 
National Union for the Total Independence of Angola (UNITA) to wage its 
brutal insurrections has been extensively documented by numerous 
sources. In 1998 Global Witness released its report entitled Rough 
Trade: The Role of Companies and Governments in the Angolan Conflict. 
In 2000, the Fatal Transactions: An investigation into the Illicit 
Diamond Trade report was released by experts linked with Global 
Witness. On March 10, 2000 the Report of the Panel of Experts on 
Violations of Security Council Sanctions Against UNITA was released by 
the UN. All of the reports documented UNITA's use of revenues from 
diamond sales to purchase weapons, wage war and commit systematic human 
rights abuses. The cost to the Angolan people has been enormous and 
sadly has not ended yet.
    Since gaining independence in 1975, there has been conflict between 
government forces of the MPLA and UNITA. Both government forces and 
UNITA have been responsible for large-scale human rights violations 
including killings of civilians, torture and the use of landmines.
     LIn 1991 AI reported that violations occurred against 
prisoners, including captured combatants and others suspected of 
political opposition. In 1993 we estimated that 1,000 people were dying 
every day as a result of the conflict. The 1993 report also stated that 
there were reports of targeted killings on both sides and that 
prisoners were ``disappearing'' from their cells.
     LWhile no universally accepted figure has been presented, 
it is estimated that tens of thousands of people have died as a result 
of fighting.
     LIn our 2000 report we found that UNITA was responsible 
for mutilating and abducting hundreds of civilians including women and 
children.
     LIn its 2001 World Refugee Survey report, the USCR noted 
that ``anywhere from 1 to 3.5 million Angolans had been displaced as a 
result of the war. In 2000 alone 300,000 persons were uprooted. 
Thousands of people were displaced by the armed conflict and increased 
insecurity.''

The Democratic Republic of the Congo

    Amnesty International is continuing to investigate details of the 
linkages between conflict diamonds and the conflict in the DRC. In our 
September 2001 report entitled Democratic Republic of Congo: Rwandese-
controlled east: Devastating human toll, AI stated that
          ``Many of the killings are occurring in areas rich in 
        minerals, where economic exploitation of minerals and other 
        natural resources continues. While this economic exploitation 
        has directly enriched and motivated some individual RPA 
        commanders, it is also financing the Rwandese war effort and 
        sustaining the Rwandese military presence in the region. Such 
        exploitation is allowing the Rwandese to continue a war in 
        which human rights are dramatically violated.''
    In the same report we also state that:
          ``During the first year of the war, many influential 
        governments, including the UK, the U.S., and Belgium, supported 
        the Rwandese government's stance. However, fighting between 
        Rwanda and Uganda in Kisangani exposed to the international 
        community that the illegal exploitation of DRC resources was a 
        significant objective of the war. Since then, Rwanda's motives 
        for the continuing occupation of part of DRC are increasingly 
        being questioned.''
    If natural resources such as diamonds and coltan and timber (those 
that are mentioned most often) are in any way involved in fueling or 
facilitating the military efforts of the warring parties, then the 
details on human rights abuses listed below underscores the critical 
need for this legislation to be enacted.
    AI has reported on the serious and systematic human rights 
violations in the Democratic Republic of the Congo prior to the 
outbreak of the war that started in 1996. However we would agree the 
conflict has caused a dramatic deterioration in the protection of human 
rights. While we continue to investigate the details of role played by 
diamonds and other natural resources in the DRC conflict we can already 
report on the scale of the abuses that the conflict has caused.
    According to our colleagues at the USCR at the end of 2000, 2.1 
million persons had been displaced. Of these 1.8 were internally 
displaced and 350,000 had been forced in to refugee status. USCR also 
estimates that 200,000 civilian deaths had been caused by violence and 
that another 1.5 million deaths had been caused by war-induced 
malnutrition and diseases.
    AI has detailed information about torture and other forms of cruel, 
inhuman or degrading treatment committed by all warring parties. Human 
rights abuses included:
     Ltorture by the DRC government forces--security forces 
routinely used torture against known or suspected government opponents, 
particularly those thought to threaten the authorities' hold on power, 
government critics, journalist--who have been particularly targeted to 
intimidate and prevent them from writing or publishing articles that 
criticize the government, its senior officials or its policies, human 
rights defenders in an attempt to intimidate them and cause them to 
desist from carrying out their work.
     Lrape by security forces--many women in the DRC have been 
subjected to rape and other forms of sexual violence by members of the 
security forces. Details on the number of incidences of rape are 
thought to be seriously under-reported as investigations into cases of 
rape are extremely difficult particularly because of the social stigma 
associated with it.
    Abuses have also been committed by the forces opposing the DRC 
government.
    Rwandese and Ugandan government forces have committed:
     Ltorture--scores of people were subjected to severe forms 
of torture to dissuade the disgruntled population from joining an armed 
uprising against Congolese armed political groups and the governments 
of Burundi, Rwanda and Uganda seeking to overthrow the DRC government.
    Congolese armed opposition groups are also guilty of:
     Ltorture--like the DRC government, its armed Congolese 
opponents, particularly the RCD-Goma and the RCD-ML, have used torture 
as a weapon against their critics or those suspected of or known to 
support their opponents. In the same way that human rights abuses such 
as deliberate and arbitrary killings have been carried out with their 
allies from Rwanda and Uganda, torture is also reported to be carried 
out together with or even at times ordered by the allies.
     Lrape and other forms of sexual violence by armed 
opposition groups--girls and women of all ages has been extensively 
used by armed opposition groups and foreign government forces 
supporting them in eastern and other parts of the DRC. Rape has 
effectively been used as a weapon of war against sections of the 
population that are known for or suspected of supporting their 
opponents, including by humiliating them. Women and girls of all ages 
are the most vulnerable to this form of torture, but it is also used by 
the armed groups as a reprisal against their male opponents, as well as 
a demonstration of their military superiority over their opponents who 
are shown to be unable to protect the women.

Conclusions

    Mr. Chairman, legislation before you would require the Customs 
Service to permit diamond imports only from those countries that have 
adopted strong and effective controls on the exportation and 
importation of rough diamonds to ensure that conflict diamonds do not 
enter the international stream of commerce. We believe that this bill, 
H.R. 2722, will buttress and encourage the international Kimberley 
Process along in its efforts to create an international certification 
system. The Kimberley system would remove conflict diamonds from 
legitimate channels of commerce by ensuring a clean stream of diamonds 
from the point of extraction to retail sale. The system would be 
transparent and independently monitored.
    I will end by saying that both the non-governmental groups and the 
diamond industry share the view that the U.S. legislation should be 
drawn as tightly as possible, so as to exclude every possible conduit 
for the entry of conflict diamonds into the United States and prevent 
any group like UNITA, rebel groups in the DRC or the RUF from 
benefiting from diamond sales made here in the U.S. market. This can 
only happen if H.R. 2722 is passed. On behalf of Amnesty International 
USA and the Campaign to Eliminate Conflict Diamonds I urge this 
Committee to support H.R. 2722.
    Thank you.

                                

    Chairman Crane. Thank you. I would like to put a question 
to all of you and get your responses, and I know you jointly 
support legislation to create control systems to prevent the 
import of conflict diamonds. But there have been many versions 
by either the industry NGOs or members, and can you comment on 
why the divided sides, on the same issue, though, do not 
support earlier versions offered by either side?
    Mr. Runci. Mr. Chairman, I think that from the outset all 
parties involved, from our perspective certainly, shared a 
commitment to find a solution. But the approaches we took to 
devising solutions I think were defined largely by the 
directions from which we came, the context in which we operate.
    Our concern as industry from the outset was in supporting a 
solution which would, as was said earlier, not harm the 
legitimate diamond trade, the economies of those countries with 
legitimate diamond industries.
    I think from the perspective of civil society, the 
superseding goal was to stop the--from the outset--was to stop 
the trade and end the connection between diamonds and violence, 
to stop the violence. I think we reached common ground when we 
found the technical means in June to accomplish that and agreed 
to terms.
    Commitments I think were strong from all sides from the 
outset. I think our approach is different given the various 
directions from which we came, but I think we found common 
ground because of our desire to effect a solution this year, 
and our strong commitment not to allow technical differences, 
which were really what separated us before, technical 
differences, from standing in the way of getting behind a 
consensus solution that Congress could enact this year because 
we are united in our commitment not to allow this issue to 
linger and drift in the international community any longer than 
it has to date.
    Chairman Crane. Ms. Gardner.
    Ms. Gardner. I would only add to that that part of the 
process was an educational one on both sides. The diamond 
industry and the pipeline for diamond trading is extremely 
complex. The goal was to create an effective system that was 
credible and would be practical and would not present 
obstruction to legitimate trade, and the varying competing and 
differing approaches were ultimately brought to consensus, I 
think, through a process of mutual education on both sides.
    Chairman Crane. Ms. Anderson.
    Ms. Anderson. I would just resound with what my two 
colleagues have said here, that I think the more communication 
we had and the greater understanding we had of our differing 
constituencies, we were able to work out the technical details 
and come to consensus. Thank you.
    Chairman Crane. Mr. Akwei.
    Mr. Akwei. I would agree that we not only had an 
educational process, which basically improved the content of 
the bill, and I think all of us would agree that H.R. 2722 is 
the strongest of all of the different legislative initiatives 
that we worked on individually, but also as part of our 
educational process got beyond some misconceptions and 
suspicions of each other, and I think that has been extremely 
important.
    Chairman Crane. Mr. Rangel.
    Mr. Rangel. Thank you, Mr. Chairman. I am extremely 
impressed not only with your testimony but the process that you 
went through to get this consensus. It is very unusual for an 
industry to be coming to the Congress asking for control 
guidelines, but none of the testimony that I have heard this 
morning has given me any reasons why we should not legislate, 
and certainly if anything, it should be considered as impetus 
for the administration and our negotiators to move forward.
    I assume all of you heard the testimony of the State 
Department and the Trade Representative. Are you fearful that 
legislation would interfere with their ability to try to 
negotiate this thing out? Anybody? Ms. Gardner.
    Ms. Gardner. If I may, Congressman. I have been intimately 
involved with the Kimberley Process from the first point after 
the December resolution in the U.N. that asked for the 
international conference to produce a result, and I intend to 
be a participant both in Luanda in Botswana and come up with 
the ultimate results.
    I have no doubt in my mind that indeed this legislation 
will serve as a catalyst to that process, not at all as any 
kind of complicating or interfering factor whatsoever.
    Mr. Rangel. What do you think the main reason is as to why 
they have not been able to resolve this diplomatically?
    Ms. Gardner. I am not sure that I would say that it has not 
been resolved. It is a process. We have a work plan so to 
speak; we have dates and deadlines to meet and so far we have 
met them all. I have no reason to doubt that by the deadline 
that has been provided by the road map which is the December 
meeting in Botswana, we will produce a product for 
consideration by the U.N. which will address all of the 
elements that are necessary to provide the control of this 
trade.
    Mr. Rangel. But you are not satisfied that that is enough; 
you still believe that the Congress should enact legislation?
    Ms. Gardner. Yes, I do, and part of that is because of the 
fact that the U.S. is the largest consuming nation of this 
product. I think that while all of the delegations to the 
Kimberley Process are mindful and are concerned with the 
humanitarian rights violations that exist here, there are also 
people involved in the diamond industry and in this trade and 
they want to continue that trade in the most propitious manner 
possible and I think that that includes concluding this 
international agreement and getting on with the business of 
trading diamonds.
    Mr. Rangel. Does any member of the panel disagree with Ms. 
Gardner's observations?
    Ms. Anderson. Mr. Rangel, I would just like to add with Ms. 
Gardner's observations that I think that in our meetings, NGOs 
meeting with the various members of the U.S. delegation who are 
connected to the international process, they themselves have 
told us privately as well as when we have attended the meetings 
that U.S. legislation has been the strongest impetus for the 
administration taking the international process seriously as 
well as other governments taking the process seriously because 
once this bill is passed, they won't be able to get their 
diamonds in here, which we are the largest market. So we feel 
very strongly that U.S. legislation is really necessary to 
invigorating the process. Thank you.
    Mr. Rangel. Thank you, Mr. Chairman.
    Chairman Crane. I have got a question that I failed to ask 
to maybe Mr. Runci, but it may be any of the rest of you, too. 
The Kimberley Process is designed to help countries identify 
the source of diamonds, but they recommend that forgery-proof 
certificates of origin be issued by exporting State 
authorities. How do you create a forgery-proof certificate?
    Ms. Gardner. Mr. Chairman, I think that every effort is 
being undertaken by the Kimberley Process to research the most 
technologically advanced processes by which documentation can 
be made forgery proof. We have had presentations by companies 
who have been involved in the printing of currency and those 
techniques are being contemplated to be used in connection with 
the formulation of the documentation here as well.
    Chairman Crane. Yeah. But I mean currency is not forgery 
proof.
    Ms. Gardner. Well, Mr. Chairman, in my former life as a 
Federal prosecutor with the Department of Justice, I myself 
prosecuted a number of people for counterfeiting American 
currency.
    Chairman Crane. Oh, I am sure that----
    Ms. Gardner. Despite efforts to the contrary, this system 
is going to make every effort to confront and prevent any 
possibility of contravention of the system including using the 
latest technology on documents. We will certainly do what we 
can. Any system to interdict contraband goods is only as good 
as the anticipated problems that it seeks to resolve.
    We are trying to make the system as effective as possible 
including elements of developing documentation that is forgery 
proof.
    Chairman Crane. Forgery proof.
    Ms. Gardner. To the best of our ability.
    Chairman Crane. To the best of the ability. I was going to 
say there is a qualifier in there.
    Ms. Anderson. Mr. Chairman, to add to Ms. Gardner's 
comments, I think some of the checks that are built into the 
system is independent monitoring. So if somebody is able to 
make or plagiarize or make a phony certificate, you have got 
statistics as well as independent monitoring to back up what is 
being produced in the certification process.
    So if you see statistics are inconsistent with the amount 
that is come out of, say, Sierra Leone or Liberia, that will be 
a red flag for independent monitors to see that there is 
something going wrong. So even though you might have problems 
with the certificate, you also have independent monitoring and 
statistics to back up what is coming out of a country. Thank 
you.
    Chairman Crane. Very good. All right. Mr. Houghton.
    Mr. Houghton. I just have one question. First of all, thank 
you very much for your testimony. Let us just assume that the 
things we are doing work out. Kimberley Process is in effect. 
We have legislation. Other countries buy into this. What is the 
big worry 5 years out?
    Mr. Runci. Mr. Houghton, I think the worry that we would 
have is that without such a system in place, this traffic in 
illicit conflict diamonds could recur.
    Mr. Houghton. No, but you got the system in place now. Let 
us just make that assumption. What is the big worry on top of 
all these things which we are doing now?
    Mr. Runci. The only component, sir, that I believe has not 
yet been fully contemplated is a supporting international law 
enforcement authority to ensure that not only that we have 
monitoring but that we have enforcement and consequences 
associated with violations.
    So I would say looking further out from this immediate 
structure that we are talking about this morning, from my 
perspective and the perspective of my colleagues, I think that 
component is an additional feature, not yet fully addressed by 
the process.
    Ms. Gardner. I would add to those comments that the 
participants in the Kimberley Process are fully aware that once 
the process is put in place that experience will be a teacher 
and that we might have to further refine enforcement mechanisms 
based on experience, and the Kimberley Process is already 
contemplating a mechanism to fulfill that obligation as 
experience shows is necessary during the implementation of the 
system as designed.
    Mr. Houghton. But the enforcement mechanism that you 
foresee at the moment when these immediate pieces are in place, 
you feel is adequate?
    Ms. Gardner. I think it has been designed and it is not 
fully formed yet. We are still in the process of fleshing out 
the details. We feel strongly that the enforcement mechanism 
that is contemplated by the system will be effective, will be 
credible, and will be practical as well.
    Mr. Houghton. Yes?
    Mr. Akwei. I would just like to add also that there is no 
system currently in place and so this will represent a major 
step forward not only in terms of the enforcement mechanisms 
that are there now, but also in the data, and I think that is 
one of the things that the industry itself has been very 
forthcoming in admitting, that the transparency of the diamond 
industry will be significantly enhanced and improved because 
you will have statistics on geographical output, you will have 
statistics on how many carats or how many stones are supposed 
to be coming from sources. And that in itself is going to be a 
major leap forward.
    Mr. Houghton. Thank you very much.
    Chairman Crane. Mr. Herger.
    Mr. Herger. Thank you, Mr. Chairman. I really do not have 
any questions. I just want to thank our panelists and everyone 
who is involved on working in this area that is having such 
horrendous results in the lives of so many victims in Africa, 
and everything it is doing as far as terrorism all over the 
world. Again, I want to thank you for you efforts and certainly 
I as one want to work with you and the entire community and 
everyone to further your goals. Thank you very much.
    Chairman Crane. Well, I want to express appreciation to all 
of you for your participation today, too, and we look forward 
to continuing to work with you and to get legislation that 
hopefully will address this problem in a meaningful way. And 
with that, the Committee stands adjourned.
    [Whereupon, at 11:50 a.m., the hearing was adjourned.]

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