Global Value Chains
International Trade Patterns
Social & Political Factors
Bibliography

 

Social & Political Factors

Conflict Diamonds & The UN
Kimberley Process & World Diamond Council
Child Labor, Media, & Consumer Response

Within the diamond industry, there are a number of crucial social and environmental factors that must be considered. These include conflict diamonds, child labor, the role of state institutions, blood diamond campaigns, and the resulting effects on global demand. These are all important in terms of social welfare, but increasingly they are directly affecting production and consumption patterns as well.

Conflict Diamonds

Source: www.cincinnati.com 1

The United Nations defines conflict diamonds as "diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally recognized governments, and are used to fund military action in opposition to those governments or in contravention of the decisions of the Security Council."2 These diamonds are also knows as “blood diamonds.”Conflict diamonds captured the world's attention during the civil war in Sierra Leone in the 1990s. The African diamond industry came under pressure during this period as it became clear that conflict diamonds were playing a role in the brutal wars in Angola, Sierra Leone, Liberia and the Democratic Republic of Congo, among others.

Because diamonds are untraceable, highly valuable and easy to conceal, they are often used by rebel groups in Africa to raise money and to finance arms purchases and other illicit activities. Diamonds are smuggled out of conflict areas and usually taken to neighboring countries to be traded. Once diamonds are brought to market, their origin is difficult to trace; after they are polished, they can no longer be identified.3

 

Source: UN 4

“Illegally traded rough diamonds used for tax evasion and money laundering represent as much as 20 percent of annual world diamond production. The scope of this illicit trade has particularly fuelled the spread of diamonds used by rebel armies to pay for weapons."5 Over the past decade, these diamonds have lead to armed conflict, war, and death, primarily in Angola, Sierra Leone and the Democratic Republic of the Congo, where an estimated of 3.7 million people have died.6

Today, the wars in Angola and Sierra Leone are over and fighting in the DRC has decreased. However, the problem of conflict diamonds hasn’t disappeared; diamonds mined in areas controlled by rebel groups in the Côte d'Ivoire are currently reaching the international diamond market. Conflict diamonds from Liberia are also being smuggled into neighboring countries and exported ostensibly as part of the legitimate diamond trade.7 Further, diamond smuggling has been linked to many terrorists organizations, which is also a factor in the increased attention given to conflict diamonds by the US and other countries. The Conflict-Free Diamond Council reports that Al-Qaeda has been proven to be involved in the conflict diamond trade in at least 3 countries (see chart below).

Countries Where al Qaeda Terrorists Are Involved in the Diamond Trade

Source: Conflict-Free Diamond Council, Global Witness 8

 

Conflict Diamonds and Government Institutions

Individual countries have undertaken various measures to combat the conflict diamond trade, some none at all, and with varrying degrees of sucess. The most notable gains, however, have come from actions taken by the UN.

The United Nations: A Global Respone

Source: UN 9

On December 1st 2000, the United Nations General Assembly adopted a resolution on the role of diamonds in fueling conflict in Africa. In adopting this agenda, the UN recognized that conflict diamonds represent a crucial factor in prolonging brutal wars in many parts of Africa, and underscored that legally traded diamonds contribute to prosperity and development in other African regions. The UN’s Security Council inititated a campaign that aimed to stop the trade of conflict diamonds, which included investigations of the illicit trade of uncut diamonds in Angola, Congo, and Sierra Leone. One of its explicit goals was to publicly name those individuals and countries that were suspected of engaging in diamond trafficking. Under Chapter VII of the United Nations Charter, targeted sanctions have been applied against UNITA in Angola and the Sierra Leone rebels, including a ban on their main source of funding - illicit diamonds. Diamond sanctions have also been applied against Liberia, but are not yet in effect. Because the humanitarian and economic impact of sanctions has been questioned in the past, the new UN campaign seeks to make sanctions more selective and better targeted, and reportedly include more rigorous enforcements in its effort to maintain international security and peace. 10

Two historical examples will highlight the UN's role in the conflict diamond indutry, and African conflict more generally. In 1992, following an Angolan rebel movement and UNITA's rejection of the results of the United Nations monitored election, the UN Security Council imposed the first of a series of arms, travel and financial sanctions on UNITA. It also established a Sanctions Committee consisting of all the members of the Council to monitor and report on the implementation of the mandatory measures. However, due to poor enforcement of the sanctions and UNITA’s power in Angola’s diamond producing areas, "rebel" leaders were able to smuggle diamonds and consequently finance their own re-arming. In 1998, UNITA violated a peace agreement and returned to war. After the Angolan government took control over the major diamond producing areas, reports indicate that UNITA’s access to diamonds decreased. It is estimated that in 2002, between $350 million and $450 million worth of diamonds were smuggled out of Angola. This represents almost half of Angola’s yearly output and 5% of annual rough diamond sale worldwide.11 However, since regulations technically prohibit the illegal diamond trade, this type of trade is usually notreported. The illegal diamonds often come out of Angola and are mixed with legally mined diamonds for sale. Therefore, we are unable to gauge the exact extent to which conflict diamonds exist within Angola's borders, among others. Further, since these conflict diamonds often get mixed up with "legal" diamonds, even empirical evidence of global "legal" imports and exports should be questioned. Angola, in many ways, is representative of the difficulties associated when governing bodies attempt to address issues of conflict diamonds. The UN has suceeded in creating trade sanctions in the past, but this is particularly difficult if not impossible when the trade in question is illicit and often concealed.

The second example is Liberia. In March 2001, arms, diamonds, and travel sanctions were imposed on the Liberian government after its alleged support of military operations and conflict diamonds in Sierra Leone and New Guinea. Reports indicate that the sanctions indeed facilitated improvements in the security and political infrastructure. Two arms embargoes were imposed on Liberia: One in 1992 in response to the civil war and a second one in 2001. However, arms still continued to enter the market, and these both finance and are financed by the conflict diamond industry. The Liberian government argued that they needed arms to protect the country from attacks by rebel groups. Today the country remains under a UN embargo and is assisted by international agencies and companies. Liberia is currently developing a diamond monitoring system in accordance with Kimberley Process standards.12 Liberia is also a good example because it highlights some of the tensions the UN must consider between legitimate government agencies and the "illegitimate" or "rebel" groups within them. Not only are these borders often blurred and indeed non-existent, but sometimes sanctions must be placed on the whole country to reach the reach the groups in question.

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