‘Conflict’ Resolution?

By the time this summer’s World Diamond Congress began in Antwerp, the conflict diamond issue had grown into an out-of-control, Hydra-headed monster. The normally low-key event became a magnet for politicians, non-governmental organizations (NGOs), and members of the media, all demanding to know what was being done about the problem. “The industry has a type of cancer,” one participant noted.

Yet, the three-day meeting and shmooze-fest ended on a buoyant note, with most participants hopeful that the industry had made genuine progress in putting this damaging and morally troubling issue behind it. Not wanting the issue to dominate coverage of the event, the International Diamond Manufacturers Association-one of two groups meeting at the congress-announced an ambitious package of proposals on the first day. The proposals would establish a system to certify a diamond’s origin and keep “conflict diamonds” from legally entering cutting centers.

IDMA’s proposal exceeds the demands of most of the NGOs, and it made headlines around the world. Officials at the World Federation of Diamond Bourses, the other organization at the Congress, were notified of IDMA’s announcement only hours in advance and were taken aback at the sudden action by its smaller sibling. But WFDB officials quickly realized they had little choice and signed on to IDMA’s plan after only hours of deliberation.

Aside from that minor bump, the plan-which had been shown ahead of time to Global Witness, the NGO that has taken the lead on the issue-won nearly unanimous plaudits. By the congress’s conclusion, instead of bashing the industry, everyone was praising it. “The industry’s done a remarkable amount,” said Canadian ambassador Robert Fowler, head of the Sanctions Committee on Angola-who also warned the industry that it had better follow up on its promises. The NGOs, who had spent the last seven or so months accusing the industry of inaction, now praised its quick response. “I have never seen an industry respond as quickly as this one has,” said Ian Smillie of Partnership Africa Canada at a news conference. “Instead of putting a PR spin on this, they are actually changing very dramatically. This is a major change for an industry that hasn’t changed much in the last 100 years.” The U.S. government even sent its Belgian ambassador to the De Beers-sponsored gala to offer another helping of praise. Amid all the excitement, few noticed the incongruity of an U.S. government official appearing at a De Beers event.

Not Over. Despite the good feelings, some warned that the issue has not been put to rest. The industry has the formidable task of enacting its plan, which will require the cooperation of the producing and importing countries’ governments-more than 50 in all. Estimates of how long this will take range from months to years. But IDMA president Sean Cohen says, “If there’s a will to do it, I don’t think it will take long at all.”

The joint resolution begins by noting that it’s impossible to determine where an individual rough diamond is from-although parcels can be monitored within a “diamond net.” The “net” sets up a certification system that enables people to determine where diamonds are mined. Every time a rough stone is exported from one country or imported into another, it will be sealed in a tamper-proof container. All information on imports and exports will be entered into a centralized database.

The system is designed to establish what De Beers calls a “chain of warrants,” so that customers can know where a diamond is from. The new system will require additional paperwork and could add cost-the resolution even notes that the industry may self-impose a “minimal levy.” Cohen notes that most of these systems are already in place and just need to be coordinated.

The resolution calls for each country to enact criminal penalties for dealing in conflict goods. In addition, the industry vowed to expel anyone caught dealing in them. “We don’t need these people and don’t want them,” said Peter Meeus, head of HRD, the Antwerp promotional group. But he added that, to kick someone out, “we need facts and figures-not just rumors.” The resolution also calls upon banks, insurance companies, shipping companies, and other providers of goods and services to the industry to expose and cease business relations with traders in conflict goods.

The industry will set up a WDC-a World Diamond Council-to implement and oversee the new system. Former World Federation president Eli Izhakoff will head the council, which already includes many prominent diamantaires as well as the heads of Jewelers of America, the Jewelers Vigilance Committee, and the Gemological Institute of America. Membership may be expanded to include representatives of governments. NGOs have been invited as observers.

The industry’s substantial concessions notwithstanding, most expect the now-ubiquitous NGOs to keep the pressure on. Some even worried that hopes had gotten too high, and that if the industry drags its feet or can’t put the plan together, it could wind up in more trouble than before. Even amid all the nice words at the final press conference, Global Witness’s Alex Yearsley said, “It’s too early to say the industry has cleaned itself up.” The next day, Yearsley was on CNN, calling the industry “antiquated” and implying it only made its move because of NGO pressure. For their part, the people behind the resolution said they wouldn’t have agreed to such a major change unless they thought it was the right thing to do.

Victory for NGOs. The industry’s proposal was a major victory for the NGOs, particularly Global Witness, which has been working on the issue for nearly two years. Last October, the London-based group, whose office consists of only nine people, started a conflict diamond consumer awareness campaign partially funded by the British Foreign Office. The PR effort surpassed even its organizers’ expectations. Just prior to the World Diamond Congress, there were “conflict diamond” features in bothVanity Fair andNewsweek, and new articles appeared almost daily. Even in Antwerp, attendees weren’t free from the steady drumbeat of publicity. On the first day, attendees were greeted by an article in theInternational Herald Tribune on “Africa’s Death Gems.”

Most worried it could only get worse. On the eve of the congress, Global Witness issued a statement threatening to kick its campaign up a notch if the industry didn’t comply with its demands. The issue was also on the verge of exploding in the United States. Right before the congress opened, a group of 60 American NGOs formed a “conflict diamond” coalition and threatened to initiate a loud “consumer awareness” campaign here.

Even though many remain wary of the NGOs, at the final press conference, Cohen praised them for raising the industry’s consciousness. And although the industry repeatedly stressed that conflict diamonds account for only 4% of world production, Cohen said, “Whether it’s four percent or a half of a percent, that’s one diamond too many. Conflict diamonds are not acceptable. We don’t want diamonds to be part of the conflict equation.”

Will the proposals eradicate conflict stones? Even Yearsley acknowledges that “no system can be 100%,” but he adds that his group wouldn’t have spoken so highly of the plan if it didn’t think it would work. More importantly, no one is sure if any of this will help the groups’ real goal-halting the wars. Fowler said there are reports that the Angolan rebel group UNITA is having trouble arming itself, which could be a result of the diamond embargo. And Smillie notes that the new system is “not just about current conflicts, but conflict prevention”-especially since some of these conflicts are essentially about control of diamond resources.

The proposal may even help problems it wasn’t intended to solve. Martin Rapaport, the price guru and commentator, notes that the “diamond net” proposal will mean more transparency-and perhaps less corruption-in the African mining sector.

Other issues. Even if the conflict diamond issue is settled-and that’s a big “if”-it raises other questions that may linger. The debate has made diamond people think about issues like their responsibility to Africa that they never discussed publicly before. Many are justifiably proud of the contribution diamonds have made to the economies of African nations like Botswana, whose diamond revenues have made it one of the continent’s wealthiest and most stable countries. Some even use the term “prosperity diamonds”-as opposed to “conflict” ones-to drive home the point that most diamonds are forces for good. This was echoed by a Botswanan mining official who spoke at the congress and warned that any campaign that hurts diamonds would hurt his country-though he used the term “development diamonds,” since he didn’t think the word “prosperity” applied to his country.

But there’s a flip side to the industry’s effect on Africa that the industry may just be coming to terms with. Over the years, it has dealt with many unsavory characters, such as Mobuto Sese Seko, the notorious dictator of Zaire. But in an era when noisy pressure groups hold corporations to greater social responsibility, that may no longer be acceptable.

In fact, the conflict diamond issue was not the only potentially damaging controversy at the congress. The Belgian diamond workers’ union staged protests on the issue of child labor, a problem the industry says was eradicated long ago.

If nothing else, this experience proves that the diamond trade is a juicy target for pressure groups-it’s built, after all, around an image-based, arguably non-essential product. (It would be harder to boycott, say, oil.) So even if the conflict diamond issue fades, the industry’s days of accountability may have just begun.