Brussels — The Brussels conference at the end of last month, bringing together 38 government delegations, the European Union, the International Customs Union, the UN sanctions committee on Angolan diamond smuggling, the World Diamond Council and a number of NGOs, failed to achieve much progress in curbing illegal 'conflict diamond' exports, according to the non-governmental organisation most involved in countering the trade.

'Global Witness' blamed the lack of any negotiating mandate for the US delegation - the US market is good for some 60 per cent of finished gemstones. Belgium was, however, lauded for its initiative in setting up certification controls on the spot in Angola and Sierra Leone as well as at home in Antwerp, against fraudulent diamond exports.

The negotiations were supposed to extend the certification procedure deployed in Belgium on a world scale. Antwerp accounts for some 85 per cent of raw diamond imports, including stones from Angola, Sierra Leone, or Liberia. An estimated 3.7 percent of diamonds come from conflict zones, including the DR Congo, Sierra Leone, and Angola, according to UN figures.

The conference, April 25-27, was the sixth in the so-called 'Kimberley Process' to control the 'conflict' or 'blood diamond' trade world-wide, since an UN commission lead by Canadian ambassador Robert Fowler singled out the trade as one of the main sources of finance for violent conflicts, especially in Africa.

A considerable part of the market for raw diamonds and finished stones (where Antwerp, Bombay, New York and Tel Aviv are the major processing centres) is of doubtful origin. The Brussels conference officially recognized this at 4 per cent of turnover, a figure withheld, for instance, by De Beers Central Selling Organisation. There are, however, major divergences on this estimate. Independent diamond market experts estimate the figure as high as 14 per cent (worth around US$6 bn a year). A part of this would be of Russian origin.

Not tackled but mentioned at the conference was a new phenomenon of 'trade in certificates'(falsified or not) which could well have the potential to ground the whole 'Kimberley Process'.

Once a certificate is obtained at an early stage of its handling for an individual stone, the certificate - and not necessarily the material stone - is subject to free trade rules and can be negotiated indefinitely. Control mechanisms over the later stages are as yet absent.

Angola model for DRC

On the margins of the Brussels conference the DR Congo signed an agreement with Belgium to install a certification procedure like that in Angola and Sierra Leone. The DRC is abandoning its national control monopoly (via its central bank exchange mechanisms) in favour of a multilateral certification arrangement along the Sierra Leonean model (where expatriate experts, in this case from the Antwerp Diamond Exchange, occupy key posts). At the same time non-official Congolese diamond exports from rebel forces exploiting diamond fields in the Congolese north-east will meet more obstacles, presuming that neighbouring countries adhere to the certifications, too (their official position).

Second, the DRC will step back from the claimed privatisation of the Congolese diamond market (set in place by Laurent Kabila, who tried to channel diamond exports through a privately controlled bank). Now vendors and exporters will be free to sell to any of the prospective ten diamond buying comptoirs.

The success of this manoeuvre in turn depends on the outcome of an on-going power struggle in politics and in the courts in which the Congo state - and President Joseph Kabila - are trying end a contract with the Israeli IDI diamond. Company. This deal, concluded by Laurent Kabila, gave a monopoly to IDI to buy stones on DRC territory. However, the part payment conditions have not been met by IDI, according to the now official DRC position.

The next meeting in the 'Kimberley Process' round is scheduled for June in Moscow. This could be the ultimate test of whether the scheme will work, according to Global Witness.

Angolan diamonds

A recent report submitted to the UN Security Council showed that Ascorp - a joint venture of the Angolan government, Israeli businessman Lev Leviev, and Belgium's Omega Diamonds - contributed to increased diamond exports worth more than a $100 million last year.

Ascorp, set up last year to become the single diamond marketing channel for Angola's diamonds, began full operation in February 2000. It bought diamonds worth $746m and paid $59.16m in taxes between February and December 2000, compared to 1999, when Angola produced $650m worth of diamonds and paid taxes of only $21m.

Although the UN report recognises that illicit diamonds are still reaching the market, it says that "the sanctions have brought about reform of official Angolan diamond-trading structures, producing a novel approach to resolving problems on the ground, which should be considered as an option for application in other African diamond mining countries."