William B. Wood -Testimony Before the Trade Subcommittee

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Statement of William B. Wood, Principal Deputy Assistant Secretary,

International Organization Affairs, U.S. Department of State

Testimony Before the Subcommittee on Trade

of the House Committee on Ways and Means

Hearing on Trade in African Diamonds

September 13, 2000

The Administration has been concerned for some time about the role the illicit trade in diamonds can play in motivating and fueling conflict, especially in Africa. Illicit trade in diamonds has played a particularly pernicious role in the internal conflicts in Angola, Sierra Leone, Liberia, and elsewhere in Africa. Diamonds, like illicit drugs, frequently are found in isolated regions, bear little or no evidence of their origin, and embody a high value in a relatively small and concealable volume. Unlike illicit narcotics, there is a large, legitimate market in diamonds in Africa, Europe, Asia, and the United States.

As conflicts in Africa proliferated in the mid-1990’s, and especially following the breakdown of the Luanda Peace Accord in Angola and the resumption of fighting there, international attention focused on ways to reduce these conflicts by eliminating the illicit trade in diamonds which fueled these insurgent movements.

To address this problem, the United States and the United Kingdom worked together to launch a series of consultations with leaders from the governments of diamond-trading nations, legitimate private diamond enterprises, and non-governmental organizations.

In June, 1998, the United States supported Security Council resolution 1173 which, inter alia, prohibited the direct or indirect import from Angola of all diamonds not controlled through the Certificate of Origin regime of the Angolan government. Subsequently, with the assistance of Canada, Chairman of the UN Sanctions Committee for Angola, the Security Council explored and approved new steps to reduce the substantial evasions of sanctions which continued to finance UNITA operations. This effort still goes on.

This year, following the breakdown of the Lome Agreement which provided a framework for peace in Sierra Leone, the Security Council acted again. In July, 2000, the Security Council in Resolution 1306 placed a mandatory prohibition on the purchase of diamonds from Sierra Leone not certified by the government of that country. Since, at that time, there was no regime for certification of diamonds, the practical effect was a mandatory boycott on all diamonds believed to originate in Sierra Leone. Subsequent to the UN resolution, the United States participated in a mission to Sierra Leone with the UK and Belgian governments and the Belgian Diamond High Council and continues to support the government’s efforts to design a credible and effective certification regime.

We see the effort in Sierra Leone to create a certification system for rough diamonds, based on an improved version of the system used in Angola, as a model for other diamond exporting countries. These country-specific certification regimes could then be linked into a network with key importing and cutting and polishing centers in Belgium, Israel, India, and elsewhere, forming the basis for an eventual international certification system for rough diamonds.

As you can see, the effort to halt the illicit use of diamonds to sustain armed conflict is a serious effort and also quite new. We are working hard to develop the techniques and mechanisms to put an end to the misuse of some of nature’s most beautiful stones to serve some of mankind’s most hideous purposes.

We are also working hard to ensure that measures to block the illicit trade in diamonds do not have the unintended effect of damaging the legitimate diamond industry. Botswana, a democratic nation with one of the world’s highest incidences of HIV/AIDS, is dependent on an active diamond sector for its economic health. South Africa relies on its diamond sector. Close allies in Europe, such as the Belgians and Dutch, rely on a healthy, legitimate trade in diamonds for part of their national income. Israel is an active participant in the legitimate international diamond trade. And the United States, the largest consumer of diamonds in the world, is the home of a substantial diamond-trading sector. Equally important, nations in crisis such as Sierra Leone and Angola would benefit enormously if diamonds, now traded illegitimately by insurgents, could be rechanneled through legitimate markets to provide employment, taxable income, and another source of stability for the country.

The Administration is committed to working with governments, private industry, and non-governmental organizations to end the large-scale diversion of internationally traded diamonds by unlawful, violent, or destabilizing elements. We have seen good cooperation. The diamond industry, both because of its desire to distance itself from the misuse of its product, and to avoid being identified with that misuse, has actively participated. I am pleased to report that the resolution adopted by the Congress of the World Council of Diamonds in Antwerp in July, which Congressman Hall addressed, constitutes a very constructive initiative to address the problem of conflict diamonds.

A key element of the evolving U.S. approach has been cooperation with the concerned diamond-producing states in southern Africa, spearheaded by South Africa. Beginning with the convening of a technical forum in Kimberly, South Africa in May of this year, the South Africans have led what has come to be known as the Kimberly Process, a series of working group meetings made up of a wide variety of key governments, industry, and NGOs, which will culminate in a Ministerial meeting in Pretoria South Africa on September 21. As an active member, the U.S. has worked to broaden the participation of this group so that it now includes not only Belgium, but also the other key producing and manufacturing countries, specifically Canada, Russia, Israel, and India.

The broad proposal which will be discussed at the Ministerial meeting next week is an international certification system for rough diamonds, building on the systems in Sierra Leone and Angola. Similar to the industry’s proposal, such a system would require that all rough diamonds have to be accompanied by a forgery-proof certificate of origin or legitimacy issued by a state diamond authority. Each country would be responsible for registering its exports and imports in a database to enable verification and reconciliation.

The key to making such a system effective is to gain the agreement of all countries which trade in rough diamonds to participate in and enforce it. This is where the Kimberly process has played a critical role in bringing together the major players in the diamond trade. However, we are well aware that we must next move to a broader inter-governmental forum, possibly under the auspices of the UN, which engages all the countries which trade in diamonds.

Under such a system, consumers buying a diamond in any jewelry store would have the assurance that the diamonds they were buying are in fact legitimate, and are not playing a role in perpetuating devastating wars in Africa.

This approach is in line with our efforts in the Group of 8 which resulted in a call by the Heads of State and Government this summer for an “international conference, building on Security Council Resolution 1306 and the ‘Kimberly’ process launched by the Government of South Africa, to consider practical approaches to breaking the link between the illicit trade in diamonds and armed conflict,” including a possible international agreement on certification for rough diamonds.

More recently, in the declaration adopted last week by the UN Security Council Summit, the Heads of State and Government decided to take resolute action in areas where illegal exploitation and trafficking of high-value commodities contributes to the escalation or continuation of conflict.

I know all of us wish that we had readily available technology for marking diamonds or determining their origin geologically, but unfortunately that does not exist. That is why we have turned to a certification system. Nevertheless, we do believe that such technology could be available in another few years and will work to encourage and support these research and development efforts.

We have already achieved a remarkable level of collaboration between governments, industry and NGOs -thanks in large part to the efforts of organizations like Global Witness – that we would not have dreamed possible a year ago. While we have some hurdles ahead of us, particularly in getting broader international participation and ensuring compatibility with prevailing international trade obligations, I am confident that we will overcome the remaining challenges.

Thank you for your interest. I welcome any questions you may have.

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