The diamond industry should prepare itself for a new wave of intensified demands for consumer boycotts, for diamond value chain monitoring and certification systems which make the Kimberley Process system just a “kindergarten” exercise, for demands which will literally put millions of diamond and jewelry manufacturers and traders in quite a “mission impossible” scenario in which the thin line between what “can be done” and what “cannot be done” is evaporating.

There is no single trigger that sets this “diamond industry’s tsunami scenario”, for lack of a better term, in motion; there are several triggers that will give impetus to a process that is well underway – and more advanced than many of us would care to acknowledge.

This week a Dutch non-governmental organization, NIZA, published a horrifying study on human rights abuses in the diamond-rich provinces of Lunda Norte and Lunda Sul throughout 2004 against both Angolans and foreigners. Since the Angolan government launched its crackdown against diamond smugglers in the Lundas area, there have been occasional reports of unrest and violence at the hands of both the national police and diamond companies' private security firms. The report, says NIZA, "Link the violence to lawlessness and corruption that ensure only a privileged few benefit from the region's diamond wealth".

The atrocities reported by NIZA (demonstrated instances of murders, sexual assaults, shootings, beatings, torture, arbitrary detentions, etc.) are reprehensible – but, basically, I find it hard to accept that diamonds are the cause of these abuses. That may be an irrelevant observation, but it illustrates the vicious circle into which the industry is being drawn. In the conflict diamonds scenarios, there indeed was a direct link between the behavior of lawless rebels (who needed diamonds to get the money to finance the conflict) and diamond mining. In human rights abuses we mainly talk about corrupt governments, about countries where there are no basic human rights, which lack democratic governance and institutions, and where law and order have totally broken down.

The report shows an instance where an artisanal diamond digger (“garimpeiro”) walks into an office of the exclusive diamond buyer (the report refers to SODIAM/LKI and ASCORP) where he is offered such a laughable pittance for his diamonds that he walks out in frustration without selling his diamonds, he then risks being arrested for no cause on trumped up charges. While in police custody, the police will steal his diamonds and, if the digger is lucky, he gets off with only severe beatings. In other instances he may simply end up dead.

These are horrifying stories. These are the stories of thoroughly corrupt countries in which government has eroded the legitimacy of the state as the guardian of the “public interest”, where corrupt elites linked to specific (ethnic, tribal, economic) groups shape the landscape. Countries in which the rule of law is weakly embedded and in which institutions of accountability are grossly ineffective. But basically we find these situations in all countries where the commitment of national leaders to combating corruption is either weak or non-existent.

President George W. Bush has a formula for remedying such situations: bring about a change of regime. Get rid of corrupt leaders (by military means if necessary) and introduce democracy. In democratic systems, it is believed, governments are responsive to the people’s needs and will protect the people’s interests. I am one of those who believe that human rights abuses will only disappear through a transformation of the culture of governance.

The study, entitled “Lundas – The stones of death. Angola’s deadly diamonds: Human rights abuses in the Lunda provinces, 2004”, was conducted by NIZA. For those unfamiliar with this organization, NIZA is a Dutch acronym for the “Netherlands Institute for Southern Africa”, representing an alliance (or actually a merger) of various organizations that fought Apartheid. Now they are committed to wiping out human rights abuses in African countries. Their record shows that they know how to fight with tenacity and persistence to achieve regime change – not by force but by mobilizing world public opinions and through economic boycotts.

NIZA, in this Angola study, is recommending various stakeholders to take certain steps and I won’t repeat all of them in this column. It is recommending to NGOs that they should:

·        Demand from the authorities in their respective countries to ban from their markets not only diamonds coming from areas of armed conflict, but also in areas marked by the systematic violation of human rights, including diamond mining zones where mining takes place in sub-human conditions, as is the case in the Lundas

·        Promote a consumer boycott of Angolan diamonds until such time as the government and the mining companies make efforts to create decent living conditions for the workers. Such efforts must include transparency in the mining industry, to ensure that it funds neither armed conflicts nor corruption among the governments of diamond -producing countries, since both lead to the loss of human life

·        Encourage diamond consumers to demand certificates of origin from jewelers for the precious stones used in the items of jewelry that they buy, guaranteeing not only the quality of the diamonds but also, indirectly, the protection of human lives in the mining areas

Undoubtedly, the diamond industry’s reaction would be: 'We have Kimberley – and Kimberley works. What do they want from us?' As if anticipating such a reaction, NIZA charges in the report that the Kimberley Process doesn’t work in Angola. Worse, NIZA claims that the Angolan government is one of the main defenders and beneficiaries of this mechanism, which allowed it to weaken the rebel forces and help put an end to the armed conflict. By getting rid of the rebels, it is implied, the government can enrich itself better.

The report argues that the system currently in force – which was justified by the necessity to comply with the Kimberley Process requirements – comprises two distinct mechanisms: 

1.        Diamonds produced in licensed workings are transported by the concession holder to SODIAM (associated with LKI, linked with the US citizen Maurice Tempelsman), which is responsible for certification and export. In principle, the absence of state control on the spot and in the registering of diamond buying, as well as the corruptibility of government agents, suggest that tax evasion could be reaching giant proportions 

2.        Concerning the marketing of diamonds produced by informal digging, the system already in existence initially granted a monopoly to ASCORP, controlled by Lev Leviev. ASCORP has now been replaced by SODIAM/LKI, which now in theory has a monopoly over the buying and selling of diamonds produced by artisanal diggers.

The demands of the Kimberley Process include the obligations to register the buying agents (the majority of whom are not Angolan), to identify the sellers and to put in writing the terms of acquisition. “However,” says the report, “it only takes one visit to a diamond-buying centre to confirm that these obligations are not being complied with. On the contrary, the shop signs of the SODIAM buying agents boast of the ‘secrecy’ of the transaction. This is understandable in a social environment where violent crime (whether by the state or by individuals) is an everyday occurrence,” says NIZA.

Then NIZA makes direct and serious accusations over the buying offices (without giving their side or explanations) and concludes that the lack of transparency and control allows these companies: 

1.        To undervalue the volume of its business and thus to pay the state much less than it ought;

2.        To remove the most valuable diamonds from the system and sell them secretly outside Angola at speculative prices; and

3.        Finally, to maintain an opaque market, abusing its exclusivity by imposing monopoly prices on the sellers – entrenched and consolidated by the [almost] non-existence of banks in the Lunda diamond area. In the absence of banks, all transactions are in cash, which obviously facilitates tax evasion and leads to three other perverse aspects of the Lunda economy:

·        It discourages any savings, investment or consolidation of capital in the hands of artisanal diamond diggers or of local agents.

·        By keeping large sums of cash in circulation, it contributes to the speculative pricing of consumer goods, thus ensuring that workers remain on the poverty line and always available to accept work on any condition.

·        Finally, it creates a culture in which crime may flourish, whether in the form of extortion by the authorities, or the attacking and killing of the diamond sellers, or through the natural development of the trade in capital and diamonds.

All these factors explain why places like Cafunfo (where each day, more than $1 million changes hands in the informal diamond trade) have become real international crime capitals. The report estimates that Angola’s informal sector is worth $3 million a day –well over $1 billion a year.

It says that the diamond trade has flourished on the back of a socio-economic system based on opacity, extreme violence and exploitation. In this way, it has also contributed to the immense and uncontrolled wealth that feeds the national and foreign clients of the regime in Luanda.

In its dozens of recommendations, the report calls for a reconsideration of the objectives of the Kimberley Process, so as to include within the category of “conflict diamonds” all those diamonds that come from areas where diamond mining is based on the systematic violation of human rights.

Mindful of its success in fighting apartheid, it calls on the international community to consider imposing sanctions on the international trade in Angolan diamonds until the Angolan state guarantees labor and social standards compatible with the human rights values of the UN system, namely the prohibition of slavery and of inhumane and degrading conditions, basic standards of freedom of movement and communication, and of personal security.

It is probably fair to say that there is not a single person in the diamond and jewelry industry that is willing to condone human rights abuses. Many of the African (and even some non-African) diamond producing countries lack a tradition of democratic governance, may face various degrees of corruption, and, sadly, human rights are not respected in many of these places. Will boycotting the diamonds from these countries benefit the people we all want to help? Will this lead to “regime change”, will this bring democracy to Africa and elsewhere? Life would become so much easier if there was a clear answer to these almost rhetorical questions. 

Have a nice weekend.