Emad Mekay

WASHINGTON, Oct 9 2006 (IPS) — The United States, the world’s largest consumer of diamonds, should adopt stronger oversight measures to choke off a trade that fuels wars and human rights abuses in many exporting nations, a U.S. Congressional report finds.

The Government Accountability Office (GAO), the watchdog arm of the U.S. Congress, acknowledges in a new report that the United States has enhanced the quality of its rough diamond trade data by improving its collection processes, but says that “work remains to be done”.

The international diamond industry has built up a bad reputation in Africa by funding militants, rebel activities and civil wars in the poor continent in its pursuit of gems.

In December, the U.N. Security Council voted unanimously for a ban on diamond exports from Cote d’Ivoire to stop rebels in the war-divided nation from using gems to purchase arms.

In the United States, the Departments of State, Treasury, Homeland Security and Commerce, and the U.S. Kimberley Process Authority (USKPA), a private entity run by U.S. diamond trade groups that issues rough diamond certificates, have all been responsible for controlling U.S. imports and exports of rough diamonds.

But the 68-page report says that the United States lacks an effective system for confirming receipt of imports – a Kimberley Process requirement for avoiding possible diversions of rough diamond imports.

It also notes that the United States has not had a plan for monitoring USKPA, although it is now developing and testing one.

Washington is aiding some countries known for trading in conflict diamonds such as Sierra Leone and Liberia in their efforts to comply global rules, but the process remains severally constrained by the limited capacity and resources of these countries, the report says.

The audit complained of the lack of any common rough diamond policies among the countries vulnerable to illicit cross-border diamond trading.

International donors and diamond-producing countries are now considering a regional approach to boost the effectiveness of donor assistance, but a deal has not yet been struck.

The study recommends that several U.S. departments carry out more accurate reporting of the U.S. rough diamond trade. It specifically calls for physical inspections and confirmation of rough diamond import receipts with foreign exporting authorities.

Watchdog groups said the findings of the report showed the need for the U.S. government to act more aggressively to curtail illicit practices and to better implement the 2003 Clean Diamond Trade Act.

“This report shows that the U.S. government has inadequately enforced the Clean Diamond Trade Act, undermining global efforts to keep conflict diamonds out of the legitimate diamond trade,” said Corinna Gilfillan of the international watchdog group Global Witness.

“This is alarming given that proceeds from the diamond trade have been used by warlords and rebel groups in Africa to finance devastating wars, while terrorists and organised crime groups have used diamonds for money-laundering and other illicit purposes,” she said.

Activists say the findings of the report are particularly important because they urge improvements in the world’s largest diamond consuming country. The United States buys 65 percent of the world’s diamond production.

“Given that the U.S. is the world’s largest consumer of diamond jewelry, the U.S. government must take a leadership role by making sure that its own laws are robust in keeping out conflict diamonds, supporting the Kimberley Process and protecting the legitimate diamond trade,” said Ian Smillie of Partnership Africa Canada.

Global Witness and Partnership Africa Canada say the GAO report shows that conflict diamonds may be entering the U.S. because of major weaknesses in the implementation of the Clean Diamond Trade Act, the U.S. law which implements the Kimberley Process Certification Scheme.

The accusations were hotly disputed by the World Diamond Council (WDC), the diamond industry group.

WDC Chairman Eli Izhakoff said in a statement that the report did not provide evidence that there are conflict diamonds entering the U.S. market.

“The WDC maintains its position that one diamond traded outside the law is one too many, and we remain committed to building on the success the KP has already achieved,” he said.

Trade in rough diamonds has been getting international attention recently. “Blood Diamond”, a not yet released film starring Leonardo Di Caprio, portrays how money made by the international diamond industry in Africa is used in those countries to bankroll armed conflicts and brutal dictatorships.

A report to the United Nations Security Council in September found that a significant volume of conflict diamonds from the rebel-held area of C- te d’Ivoire was infiltrating the legal diamond trade through smuggling into Ghana, bypassing KP procedures, despite the fact that there is an embargo on diamonds from Cote d’Ivoire because of the role they are playing in increasing that country’s conflict.

Watchdog groups say that that example undermines the fundamental aim of the three-year-old Kimberley Process, which was established to ensure that all rough diamonds traded internationally are conflict-free.