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he ancient Greeks called diamonds the tears of the

ds. Today, we know that natUlal diamonds consist ofghly compressed carbon molecules. They have become

symbol of beauty, power, wealth, and love. Neverthe-

ss, diamonds and the diamond tr ade are plagued by a

d reality: the exploitation of populations for diamond

traction and the use of diamond pr ofits to fund terror-

activity and rebel groups.

Trade in diamonds is highly profitable. They are

adily convertible to cash, small and easily transport-

le, not detectable by dogs, nor do they set off metal

tectors. Unfortunately, these virtues also make them

easy target for money laundering activities byterrorist

d rebel groups. In addition, their high value encour-

es some diamond-producing countries to employ

eans of extraction which may violate human rights.

onsider the case in Botswana where a rich diamond de-

sit was discovered on the land belonging to a tribal

oup, the Bushmen. The government forcibly resettled

e 2,500 Bushmen.

HE DIAMOND PRODUCTIONROCESS: FROM MINE TO MARKET

amonds are mined in several different ways: from open

ts, underground, in alluvial mines (mines located in

cient creek beds where diamonds were deposited by

eams), and coastal and marine mines. Despite advan-

s in technology, diamond excavation remains a labor

tensive process in most areas of the world. Over 156

llion carats of diamonds are mined annually (one

rat isthe equivalent of 0.2 grams). -

Once diamonds have been excavated, they are sorted,hand, into grades. While there are thousands of catego-

s and subcategories based on the size,quality, color, and

ape of the diamonds, there are two broad categories of

amonds-gem-grade and industrial-grade. On average,

ose to 60 percent of the annual production is of gem-

ality. In addition to jewelry, gem-quality stones are used

r collections, exhibits, and decorative art objects. Indus-

al diamonds, because of their hardness and abrasive

alities, are often used in the medical field, in space pro-

ams, and fordiamond tools.After the diamonds have been sorted, they are trans-

rted to one of the world's four main diamond tr ading

nters-Antwerp, Belgium (which is the largest), New

ork, United States; Tel Aviv, Israel; and Mumbai,

India. Daily, between 5 and 10 million individual stones

pass through the Antwerp trading center. After theyhave been purchased, the diamonds are sent off to be

cut, polished, and/or otherwise processed. Five countries

currently dominate the diamond pr ocessing industry-

India, which is the largest (pr ocessing 9 out of every 10

diamonds); Israel; Belgium; Thailand; and the l]nited

States, with China emerging as a new processing center.

Finally, the polished diamonds are sold by manufactur-

ers, brokers, and dealers to importers and wholesalers all

over the world, who in turn, sell to retailers. The total

timeframe from the time of extraction to the time at

which the diamond is sold to the end consumer iscalled

the "pipeline" and usually takes about two yea~s.

THE NOT SO DAZZLING SIDE OF THE

DIAMOND TRADE

While women across the world may hope for a diamond

on their finger, the industry's sparkling reputation has

been tarnished. Reports have shown that profits from

the diamond tr ade have financed deadly conflicts in Af-

rican nations such asAngola, Sierra Leone, Congo, Cote

d'ivoire, and Liberia. In addition, reports by the Wash-

ington Post and Global Witness, a key organization in

Democratic

Republic

of Congo

Angola

NamibiaBotswana

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onitoring the global diamond trade, revealed that Al

aeda used smuggled diamonds from Sierra Leone, most

kely obtained via Liberia, to fund its terrorist activities.

amonds that have been obtained in regions of the

orld plagued by war and violence have thus been nick-

med "conflict diamonds" or "blood diamonds."

The use of diamonds for illicit activities has been

despread. During the Bush War of Angola in 1992, Jo-

s Savimbi the head of a rebel movement called

NIT A (National Union for the Total Independence

Angola), extended his organization into the vast dia-

ond fields of Angola. In less than one year, UNIT A's

amond smuggling network became the largest in the

orld-netting hundreds of millions of dollars a year

th which it purchased weapons. Diamonds were also a

eful tool for buying friends and supporters and could be

ed as a means fOf stockpiling wealth.Soon warring groups in other countries such as

erra Leone, Liberia, and the Democratic Republic of

ongo adopted the same strategy. For example, the RUF

Revolutionary United Front) in Sierra Leone, a group

at achieved international notoriety for hacking off the

ms and legs of civilians and abducting thousands of

ildren and forcing them to fight as soldiers, controlled

e country's alluvial diamond fields.

According to current diamond industry estimates,

nflict diamonds make up between 2 and 4 percent ofe annual global production of diamonds. However, hu-

an rights advocates disagree with that number. They

gue that up to 20 percent of all diamonds on the mar-

t could be conflict diamonds.

iamonds are generally judged on the "Four Cs": cut,

rat, color, and clarity; the international community

s recently pushed for the addition of a "fifthC": con-

ct. On November 5, 2002, representatives from 52

untries along with mining executives, diamond deal-

s, and members from advocacy groups met in Inter-

ken, Switzerland to sign an agreement that they hoped

ould eliminate conflict diamonds from international

ade. The agreement was called the Kimberley Process

nd took effect on January 1, 2003.

The Kimberley Process is a United Nations-backed

rtification plan created to ensure that only legally

ined rough diamonds, untainted by conflicts, reach

tablished markets around the world. According to thean, all rough diamonds passing through or into a par-

cipating country must be transported in sealed, tam-

r-proof containers and accompanied by a government-

sued certificate guaranteeing the container's contents

required to certify that the containers have not been

tampered with and are instructed to seize all diamonds

that do not meet the requirements.

The agreement also stipulates that only those coun-

tries that subscribe to the new rules will be able to trade

legally in rough diamonds. Countries that break the rules

will be suspended and their diamond trading privileges

will be revoked. Furthermore, individual diamond trad-

ers who disobey the rules will be subject to punishment

under the laws of their own countries.

Several advocacy groups have voiced concerns that the

Kimberley Process remains open to abuse and that it will

not be enough to stop the flow of conflict diamonds.

Many worry that bribery and forgery are inevitable andthat corrupt governments officials will render the

scheme inoperable. Furthermore, even those diamonds

with certified histories attached may not be trustworthy.

Alex Yearsley of Global Witness, an advocacy group try-

ing to raise global awareness about conflict diamonds,

predicts that firms will "be a bit more careful with their

invoices" as a result of the implementation of the Kim-

berley Process, but warns, "if you're determined, you can

get around this process." A 2005 report published by

Global Witness highlighted shortcomings of the Kim-

berley Process and made specific recommendations for

its improvement. For example, the report urges govern-

ments to implement stricter policies of internal control,

advocates for the diamond industry to publicize names of

individuals in companies found to be involved in the

conflict trade, and pushes for the United Nations to con-

sider implementing sanctions against diamonds from

Cote d'Ivoire.

The General Accountability Office, the investiga-

tive arm of the U.S. Congress, also voiced concerns

in a report: "[T]he period after rough diamonds. enter

the first foreign port until the final point of sale is cov-

ered by a system of voluntary industry participation and

self-regulated monitoring and enforcement. These and

other shortcomings provide significant challenges in cre-

ating an effective scheme to deter trade in conflict

diamonds."

Government organizations and policy groups are not

the only ones bringing the problem of conflict diamonds

to light. Rapper Kanye West released a song entitled

"Diamonds from Sierra Leone" after hearing about theatrocities of conflict diamonds in Africa. "This ain't

Vietnam still/People lose hands, legs, arms for real," he

raps. A Hollywood movie, The Blood Diamond, starring

Leonardo DiCaprio, also features an ethical dilemma

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ecently, a number of new technologies have emerged

at, if adopted by the diamond industry worldwide,

ould change the way that diamonds are produced,

aded, and sold. Several U.S. companies, using ma-

hines produced byRussian scientists, have been able to

ake industrial and gem-grade diamonds artificially. In

rms of industrial-grade diamonds, which comprise at

ast 40 percent of all annual diamond production, this

ould mean tremendous cost savings for industries using

ndustrial diamonds and the elimination of conflict dia-

onds from industrial uses. For gem-grade diamonds the

ability of synthetic diamonds is questionable. This is

rgely due to the success of past diamond marketing

ampaigns-most consumers see synthetic diamonds as

nferior to natural ones.

Another emerging technology islaser engraving. La-

ers make it possible to mark diamonds--either in theirough or cut stage-with a symbol, number, or bar code

hat can help to permanently identify that diamond.

ompanies that adopt the technology have an interest-

ng marketing opportunity to create diamond brands. For

xample, Intel, a manufacturer of computer chips,

unched a mass marketing campaign "Intel Inside" to

reate br and awareness in the previously homogenous

omputer chip market. While consumers don't buy the

hips directly, they have positive associations with com-

uters using Intel chips-they may even only consider

omputers who have "Intel inside." Likewise, establish-

ng brand awareness and building equity in its name

ould add value to the diamond and help increase con-

umer confidence. Sirius Diamonds, a Vancouver-based

utting and polishing company, now microscopically

aser engraves a polar bear logo and an identification

umber on each gem it p r ocesses. Another company,

Beams Technologies of the United States, is currently

working on a system to embed a bar code inside a dia-

mond (as opposed to on its surface) that would make it

much more difficult to remove.Another option is the "invisible fingerprint"

nvented by a Canadian security company called Iden-

ex. The technology works by electronically placing an

nvisible information package on each stone. The finger-

rint can include any information that the producer de-

ires such as the mine source and pr oduction date.

he data can only be read by Identex's own scanners.

Unfortunately, if the diamond isre-cut, the fingerprint

will be lost, although it can b e r eapplied at any time.

hough this represents a major drawback of the technol-gy, the re-cutting of a diamond is expensive and typi-

ally reduces its size and value. Nevertheless, the

echnology's creators believe that it will soon become an

industry standard because it is a quick and cost-effective

away to analyze a stone. The technology may supple-

ment oreven replace paper certification.

Lastly, processes are being developed to read a di-

amond's internal fingerprint-its unique diamond

sparkle and combination of impurities. The machine

used to do this is called a Laser Raman Spectroscope

(LRS). A worldwide database could identify a dia-mond's origin and track its journey from the mine to

end-consumer. However, creation of such a database

requires large investments for equipment to cope

with the volume of diamonds. Such investment will

only happen if customers are willing to pay for such

identification.

Questions for Discussion

1. In light of the conflict diamond issue, wOlolldyou buy a

diamond? Why or why not?

2. Do you think the diamond industry as a whole has an

ethical responsibility to combat the illicit trade in diamonds?

3. What actions, if any, should the international community

take towards nations or corporations found to be trading

conflict diamonds?

Sources

"A Crook's Best Friend," The Economist, January4,2003.

"AI Qaeda Cash Tied to Diamond Trade," Washington Post,

November2,2001.

"Conflict and Security; Conflict Diamonds Are

Forever,"Africa News, November 8, 2002.

Cowell,Alan. "40 Nations in Accord on 'Conflict Diamonds',"

The New York Times, November 6, 2002.

DeBeers Group, http://www.debeersgroup.com .

Duke, Lynne."Diamond Trade's Tragic Flaw," Washington.

Post, April 29,2001.

Finlayson,David. "Preserving Diamond's Integrity," Vancou-

ver Sun, December 23, 2002.

Fowler,Robert R."Final Report of the UN Panel of Experts

on Violations of Security Council Sanctions Against UNITA,"

(S/2000/203) March 10, 2000.

Jha,Amarendra. "Diamond Pact Hits Surat Cutters," The

Times of India, December 28,2002.

Jones, Lucy."Diamond Industry Rough to Regulate;Central

African Republic Works to Monitor Gem Trade," The Wash-

ington Times, August 22,2002.

"Making It Work: Why the Kimberley Process Must Do More

to Stop Conflict Diamonds," Global Witness, November

2005.