Commodities, Emerging Markets, Frontier Markets, Gemstones

Africa: Blood Diamonds Money

To understand the African diamond trade, you have to know how and why diamonds are exploited in parts of Africa, as well as where this has been and continues to be a problem. 

The most famous colored diamond, Hope Diamond in 1974. Courtesy of Wikipedia.

The most famous colored diamond, Hope Diamond in 1974. Courtesy of Wikipedia.

Experts claim that the illegal sale of blood diamonds has produced billions of dollars to fund civil wars and other conflicts in various African nations, including Sierra Leone (where conflict ended in 2002), Angola, Liberia, Ivory Coastand the Democratic Republic of Congo (DRC). Most of the time, the people behind these civil wars and rebellions oppose legitimate governments and desire control over the area’s lucrative diamond industry, Alia Hoyt a freelance writer living in Atlanta, claims.

Blood diamonds is a term used for a diamond mined in a war zone and sold to finance an insurgency, an invading army’s war efforts, or a warlord’s activity. The term is used to highlight the negative consequences of the diamond trade in certain areas, or to label an individual diamond as having come from such an area.

Brief history of blood diamonds

Angola

Angola, a colony of Portugal, gained independence on November 11, 1975. Although independent, the Popular Movement for the Liberation of Angola (MPLA), theNational Union for the Total Independence of Angola (UNITA), and the National Liberation Front of Angola (FNLA) fought in a civil war from 1974 to 2001.

Between 1992 and 1998, in violation of the 1991 Bicesse Accords, UNITA sold diamonds, valued at $3.72 billion, to finance its war with the government.

The UN recognized the role that diamonds played in funding the UNITA rebels and in 1998 passed United Nations Security Council Resolution 1173 and United Nations Security Council Resolution 1176, banning the purchase of Blood diamonds from Angola. Resolution 1173 was the first resolution by the UN which specifically mentioned diamonds in the context of funding a war.

Reports estimated that as much as 20% of the total production in the 1980s was being sold for illegal purposes and 19% was specifically conflict in nature.

By 1999, the illegal diamond trade was estimated by the World Diamond Council to have been reduced to 3.06% of the world’s diamond production. The World Diamond Council reported that by 2004 this percentage had fallen to approximately 1%, where it has remained.

Despite the UN Resolution, UNITA was able to continue to sell or trade some diamonds in order to finance its war effort. The UN set out to find how this remaining illicit trade was being conducted and appointed Canadian ambassador Robert Fowler to investigate. In 2000, he produced the Fowler Report, which named those countries, organizations and individuals involved in the trade. The report is credited with establishing the link between diamonds and third world conflicts, and led directly to United Nations Security Council Resolution 1295, as well as the Kimberley Process Certification Scheme.

ivory coast

Ivory Coast began to develop a fledgling diamond mining industry in the early 1990s. A coup overthrew the government in 1999, starting a civil war. The country became a route for exporting diamonds from Liberia and war-torn Sierra Leone. Foreign investment began to withdraw from Ivory Coast. To curtail the illegal trade, the nation stopped all diamond mining and the UN Security Council banned all exports of diamonds from Ivory Coast in December 2005.

Despite UN sanctions the illicit diamond trade still exists in Ivory Coast. Rough diamonds are exported out of the country to neighboring states and international trading centers through the northern, Forces Nouvelles controlled section of the country, a group which is reported to be using these funds of chele to re-arm.

Democratic Republic of Congo

The Democratic Republic of the Congo (formerly Zaire) has suffered numerous looting wars in the 1990s, but has become a member of the Kimberley Process and now exports about 8% of the world’s diamonds. Once, one of De Beers’ most celebrated and priceless diamonds, the D-colour 200 carats (40 g) Millennium Starwas discovered in the DRC and sold to De Beers, in open competition with other diamond buyers, between 1991 and 1992.

Liberia

Liberia was engaged in a civil war between 1989 and 2003. In 2000, the UN accused Liberian president Charles G. Taylor of supporting the Revolutionary United Front(RUF) insurgency in neighboring Sierra Leone with weapons and training in exchange for diamonds. In 2001, the United Nations applied sanctions on the Liberian diamond trade. In August 2003, Taylor stepped down as president and, after being exiled to Nigeria, faced trial in The Hague. On July 21, 2006 he pleaded not guilty to crimes against humanity and war crimes, of which he was found guilty in April 2012. On May 30, 2012, he began a 50-year sentence in a high security prison in the United Kingdom.

Around the time of the 1998 United States embassy bombings, al-Qaeda allegedly bought gems from Liberia as some of its other financial assets were frozen.

Having regained peace, Liberia is attempting to construct a legitimate diamond mining industry. The UN has lifted sanctions and Liberia is now a member of the Kimberley Process.

In December 2014 however, Liberian diamonds were reported to be partly produced using child labor according to the U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor.

Zimbabwe

Zimbabwe diamonds are not considered conflict diamonds by the Kimberley Process Certification Scheme.

In July 2010, the Kimberley Process Certification Scheme agreed that diamonds from the country’s disputed Marange Diamond Fields could be sold on the international market, after a report from the Scheme’s monitor a month earlier described diamonds mined from the fields as conflict-free.

 

Kimberley Process Certification Scheme

On July 19, 2000, the World Diamond Congress adopted at Antwerp a resolution to strengthen the diamond industry’s ability to block sales of conflict diamonds. The resolution called for an international certification system on the export and import of diamonds, legislation in all countries to accept only officially sealed packages of diamonds, for countries to impose criminal charges on anyone trafficking in conflict diamonds, and instituted a ban on any individual found trading in conflict diamonds from the diamond bourses of the World Federation of Diamond Bourses. The Kimberley Process was led by the diamond-producing African countries themselves. Also in tourist countries like Dubai and the United Kingdom, before gemstone could be allowed through their airport to other countries, the Kimberley Certification must be presented by the gem’s owner or obtained from a renowned attorney.

On January 17–18 of 2001, diamond industry figures convened and formed the new organization, the World Diamond Council. This new body set out to draft a new process, whereby all diamond rough could be certified as coming from a non-conflict source.

The KPCS was given approval by the UN on March 13, 2002, and in November, after two years of negotiation between governments, diamond producers, and Non-Government organizations, the Kimberley Process Certification Scheme was created.

The Kimberley Process attempted to curtail the flow of conflict diamonds, help stabilize fragile countries and support their development. As the Kimberley Process has made life harder for criminals, it has brought large volumes of diamonds onto the legal market that would not otherwise have made it there. This has increased the revenues of poor governments, and helped them to address their countries’ development challenges. For instance, around $125 million worth of diamonds were legally exported from Sierra Leone in 2006, compared to almost none at the end of the 1990s.

Alex Yearsley, a conflict resources expert, who was today’s guest of Sophie Shevardnadze, a correspondent for RT and the granddaughter of former Georgian President and Soviet minister of foreign affairs Eduard Shevardnadze,  has been leading a campaign against the ‘blood diamond’ trade.

 


Diamonds in Africa were formed somewhere between 600 million and 3 billion years ago when titanic-force pressure and heat caused carbon 1,200 miles (1,931 km) below the Earth’s surface to crystallize. As recently as a million years ago, erupting molten rock brought the diamonds closer to the Earth’s surface.

Schematic diagram of a volcanic pipe. Courtesy of Wikipedia.

Schematic diagram of a volcanic pipe. Courtesy of Wikipedia.

In mineralogy, diamond (from the ancient Greek ἀδάμας – adámas “unbreakable”) is a metastable allotrope of carbon, where the carbon atoms are arranged in a variation of the face-centered cubic crystal structure called a diamond lattice. Diamond is renowned as a material with superlative physical qualities, most of which originate from the strong covalent bonding between its atoms. It has the highest hardness and thermal conductivity of any bulk material. Those properties determine the major industrial application of diamond in cutting and polishing tools and the scientific applications in diamond knives and diamond anvil cells.


Courtesy of Wikipedia and RT.

Discussion

One thought on “Africa: Blood Diamonds Money

  1. The definition of a blood diamond given in the article is seriously flawed. It’s based on the definition of a “conflict diamond” in the discredited Kimberley Process regulations – “rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments”

    That definition allows blood diamonds that fund HR violations by rogue regimes to evade regulation completely.

    There is no legal definition of a blood diamond. However, most people agree that diamonds, cut and polished as well as rough diamonds, associated with gross human rights violations are blood diamonds.

    Diamonds that generate revenue used by government forces to commit breaches of international human rights law or international humanitarian law cannot be classified as “conflict diamonds” as the definition only applies to violence perpetrated by rebels. Once a diamond is cut and polished it is no longer subject to any HR regulations. Most blood diamonds enter the supply pipe after the mining stage.

    Rough diamonds represent approximately 20% of the diamond value pipeline. The far more lucrative sector of the supply pipe evaded regulation completely. Despite the spin from vested interests, diamonds sold by jewellers are not regulated by the Kimberley Process or any other HR regulations.

    Israel is one of the world’s leading exporters of cut and polished diamonds. In 2013 diamond exports worth over $19 billion accounted for 29% of Israel’s manufacturing exports. Evidence presented to the Russell Tribunal on Palestine by Israeli political economist, Shir Hever, indicated that the diamond industry in Israel generates about $1 billion annually in funding for the Israel military. The Israeli military killed over 2100 people in Gaza last summer. The vast majority were civilians including over 500 children. A recent UN Human Rights Council report concluded that Israeli forces committed war crimes in Gaza in 2014. Previous reports from the UNHRC, Amnesty International and Human Rights Watch also concluded that Israeli forces committed war crimes in Gaza in 2008/9. Despite the fact that diamonds from Israel are a major source of funding for a regime guilty of gross human rights violations these blood diamonds are sold by the world’s leading jewellers labelled conflict-free in accordance with the bogus System of Warranties introduced by the World Diamond Council.

    Keeping the focus on rough blood diamonds from Africa allows the trade in cut and polished blood diamond to continue unchecked below hte radar of public scrutiny. Consumers are being conned. Blood diamonds from Israel account for 50% of all diamond sales in the US in value terms.

    As long the trade in diamonds that fund human rights violations by government forces are given a free pass consumers cannot have confidence in the ethical provenance of any diamonds.

    Like

    Posted by Wardiamonds (@wardiamonds) | July 19, 2015, 4:28 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Follow Us On Social Media

Google Translate

Our Discussion Groups

Facebook Group
LinkedIn Group

Follow EMerging Equity on WordPress.com

Our Social Media Readers

Digg
Feedly
%d bloggers like this: