Rough trade in diamonds

Page 52 

Primary resources, from fish and forests to minerals, have been the source of struggles throughout human history. Recent developments, particularly in the diamond trade, show that their bloody legacy is still all too real today. 

Diamonds may enjoy a romantic image as a girl’s best friend, but the precious stones also play a far less appealing role in helping to finance some of the world’s bloodiest conflicts. The trade in illicit rough diamonds funds and prolongs conflicts in Angola, Sierra Leone, Liberia and the Democratic Republic of Congo, and is also being accused of funding international terrorism. Recent reports suggest that Al Qaeda terrorists have raised money through the purchase and sale of illicit diamonds.

Rebel groups in countries such as Angola for years exported and sold diamonds and the vast revenues generated enabled them to re-arm and maintain supplies despite a UN-sponsored peace process. Between 1992 and 1998 Unita sold billions of dollars worth of diamonds, and rebel groups elsewhere in Africa were also able to do the same.

And it is not just a question of diamonds. In fact, a very worrying pattern emerges across the whole natural resource spectrum. The timber trade, for example, includes many similar examples of the role that natural resources play in prolonging conflict and perpetuating poverty (as well as deforestation). During the 1990s the genocidal Khmer Rouge generated US$10-20 million per month from sale of timber alone. A campaign by Global Witness finally saw the Thai government close the land border with Cambodia, cutting off the export route. Within 18 months the conflict was over. More recently, similar illicit trade in timber from the Democratic Republic of Congo and in Liberia is a clear warning signal to the international community that “business as usual” cannot continue to be tolerated when the human and economic cost is so unacceptably high.

A key problem has been the lack of international mechanisms to address this problem. But that is now changing, at least in the case of diamonds, with an international control system due to go into operation in November 2002. This is the culmination of a campaign launched in late 1998 by Global Witness, a UK-based organisation focusing on the role of natural resources in conflict, to alert the world to the links between diamonds and conflict.

Before this, the fact that blue chip diamond buyers, including De Beers, were acquiring rough diamonds originating from armed factions was little known outside the diamond industry. Even where these incidents were known about, the general perception was that the companies were behaving responsibly in buying up diamonds originating from rebel groups, as they were protecting world diamond markets as well as jobs.

The report, A Rough Trade, published in late 1998 by Global Witness demonstrated that it was not only ethically unacceptable to buy from rebels, but it also showed that by providing funds enabling the conflict to continue, the diamond sector was, in effect, presenting the international community with a bill in the form of the cost of peace-process initiatives and humanitarian aid in affected countries. At one point during the 1990s the cost of such international efforts in Angola alone was US$1 million per day. There was a UN embargo on unofficial diamonds from Angola, but it was being totally ignored by the international business and political community. This failure of implementation, the report argued, undermined attempts at peace building in Angola and the credibility of the United Nations and its sanctions mechanisms.

The international community quickly saw that there was a very real problem in terms of the destructive role that diamonds were playing in a number of countries, including Angola and Sierra Leone. By late 1999 behind-the-scenes talks had begun and these developed into what has become known as the Kimberley Process. This is an international effort grouping more than 35 governments, plus active observers from business and NGOs. It is mandated by the UN General Assembly to develop a system to try to exclude conflict diamonds from the legal market. This will include government controls on the export and import of diamonds, while the business side of the diamond industry will be required to develop a chain of warranties to ensure that all diamonds brought to market do indeed come from a legitimate source. The diamond industry is also publicly committed to carrying out independent audits of its control systems.

It has taken much effort to come this far. Before the involvement of an NGO as “honest broker”, there was no independent incentive either for the diamond industry or government to challenge the received wisdom that it was better for all concerned if diamond trading continued on a business-as-usual basis. In the beginning the diamond industry reacted with alarm to the campaign by Global Witness and other NGOs that took up the issues. Even now, many campaign groups are sceptical of their commitments, and governments and the commercial sector will have much to prove once the control system takes effect.

It is simply no longer possible for governments and the international business community to claim ignorance about the role of resources and conflict, and indeed few now try. But there is still a failure at the highest level to tackle the logical next step to develop controls over the way that businesses are able to access all natural resources in areas of conflict, be it diamonds, timber, oil or other national assets.

©OECD Observer No 231/232, May 2002 

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.3% Sep 2020 annual
Trade (G20): -17.7% exp, -16.7% imp, Q2/Q1 2020
Unemployment: 7.3% Sep 2020
Last update: 10 Nov 2020

OECD Observer Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Digital Editions

Don't miss

Most Popular Articles

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2020