Diamond Trade

Diamond Trade versus Human Rights 

Blood diamonds', which conjure images of strife, illegal mining, and merciless, armed rebel groups in war-torn African nations, is once more arraigning countries against one another. And India - the world's largest importer of rough diamonds, buying $15 billion worth in the last financial year - has been pitchforked straight into the middle of an acrimonious global debate on what exactly constitutes a conflict or blood diamond.

"We are a middle country (in the value chain) engaged in a tightrope walk," says Sabyasachi Ray, executive director, Gems and Jewellery Export Promotion Council (GJEPC). The Indian industry, which employs 1.3 million and exported $23.3 billion of cut and polished diamonds in 2011-12, is caught between two antagonistic forces: the producing countries from where it sources much of the rough diamonds (Africa) and the consuming countries to which it sells finished diamonds (the US and Europe).

This quandary played out last week at a meeting of a global grouping that decides diamonds from which countries are tainted - blood diamonds - and therefore should be avoided. Over four days of a Kimberley Process (KP) meeting in Washington DC, most African and Asian members, including India, threw cold water over moves by a grouping of western nations, including the US, to infuse a stronger dose of human rights into the existing definition of a conflict diamond.

The Kimberley Process Certification Scheme is an initiative of 75 governments, the diamond industry, trade and civil society, trying to stem the flow of conflict diamonds. When it came into force in 2003, the intent was to block diamonds from countries that faced a UN ban. The definition of conflict diamonds arrived at was: "rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments".

The KP has been fairly successful as blood diamonds in trade channels over the past nine years has, according to the GJPEC, fallen from 5 per cent to about 1 per cent now. Only one country, Cote d' Ivorie, is under KP sanctions. The KP is now riled by a sense of inadequacy, especially in the context of Zimbabwe, which is expected to, with its newfound deposits, become the largest producer of diamonds in the near future.

Any boycott of Zimbabwe has significant implications for the Indian diamond industry, which imports about 6 per cent of its roughs - in value terms, about $900 million - for processing from this nation. Even as Zimbabwe emerges from a short period of a KP ban on exports, a new definitional debate that centres around human rights is beginning. The country doesn't really fit the worn-out KP definition as the conflict there is of state oppression. There is no rebel army. The Robert Mugabe government and the army have also been charged of illegally using diamond revenue to fund the ruling party.