[House Hearing, 106 Congress]
[From the U.S. Government Printing Office]




                       TRADE IN AFRICAN DIAMONDS

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON TRADE

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 13, 2000

                               __________

                             Serial 106-72

                               __________

         Printed for the use of the Committee on Ways and Means


_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402


                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
68-040                     WASHINGTON : 2000


                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
H.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman

BILL THOMAS, California              SANDER M. LEVIN, Michigan
E. CLAY SHAW, Jr., Florida           CHARLES B. RANGEL, New York
AMO HOUGHTON, New York               RICHARD E. NEAL, Massachusetts
DAVE CAMP, Michigan                  MICHAEL R. McNULTY, New York
JIM RAMSTAD, Minnesota               WILLIAM J. JEFFERSON, Louisiana
JENNIFER DUNN, Washington            XAVIER BECERRA, California
WALLY HERGER, California
JIM NUSSLE, Iowa


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                                                                   Page

Advisories announcing the hearing................................     2

                               WITNESSES

U.S. Department of State, William B. Wood, Principal Deputy 
  Assistant Secretary, International Organization Affairs........    32

                                 ______

Diamond Manufacturers and Importers Association of America, 
  Jeffrey Fischer................................................    58
Gemological Institute of America, William E. Boyajian............    73
Global Witness, Alex Yearsley....................................    52
Hall, Hon. Tony P., a Representative in Congress from the State 
  of Ohio........................................................     7
Jewelers of America, Inc., Matthew A. Runci......................    39
McKinney, Hon. Cynthia A., a Representative in Congress from the 
  State of Georgia...............................................    20
Payne, Hon. Donald M., a Representative in Congress from the 
  State of New Jersey............................................    17
Physicians for Human Rights, Holly Burkhalter....................    61
Rough Diamond Consultancy, J.F. ``Jack'' Jolis...................    69
Wolf, Hon. Frank R., a Representative in Congress from the State 
  of Virginia....................................................    14
World Diamond Council:
    William E. Boyajian..........................................    73
    Matthew A. Runci.............................................    39

                       SUBMISSIONS FOR THE RECORD

Diamond Dealers Club, New York, NY:
    Jacob Banda, letter..........................................    86
    Mayer Herz, statement........................................    13
Liberia, Republic of, His Excellency William V.S. Bull, 
  Ambassador to the United States, letter and attachment.........    84
MONDERA.com, New York, NY, Mayer Herz, statement.................    13
Rosen, Elly, Appraisal Information Services, Brooklyn, NY, Gems 
  and Jewelry Reference, and Appraiser's Information Network, 
  statement......................................................    82
Women's Commission for Refugee Women and Children, New York, NY, 
  Mary Diaz, statement...........................................    87
World Vision, Rory E. Anderson, statement........................    89

 
                       TRADE IN AFRICAN DIAMONDS

                              ----------                              


                     WEDNESDAY, SEPTEMBER 13, 2000

                  House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 9:35 a.m., in 
room 1100, Longworth House Office Building, Hon. Philip M. 
Crane (Chairman of the Subcommittee) presiding.
    [The advisories announcing the hearing follow:]

ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
August 10, 2000
No. TR-23

          Crane Announces Hearing on Trade in African Diamonds

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, announced today that the 
Subcommittee will hold a hearing on trade in African diamonds. The 
hearing will take place on Tuesday, September 12, 2000, in the main 
Committee hearing room, 1100 Longworth House Office Building, beginning 
at 10:00 a.m.
      
    Oral testimony at this hearing will be from both invited and public 
witnesses. Invited witnesses will include officials from the U.S. 
Department of State and the U.S. Department of the Treasury. Also, any 
individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee or for 
inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    Recently, there has been intensified international focus on the 
trade in diamonds and its link to illegal arms trafficking and civil 
war in Africa. Often called ``conflict'' or ``blood'' diamonds, such 
diamonds generally come from mines controlled by rebel forces and are 
traded for arms to fuel civil war in Africa.
      
    Many claim that the Sierra Leone rebel organization Revolutionary 
United Front has engaged in atrocious acts against civilians and has 
been trading conflict diamonds to finance its war against the 
Government of Sierra Leone. On July 5, 2000, the United Nations adopted 
a resolution calling for an 18-month embargo against diamonds from 
Sierra Leone. The resolution calls on member States to ban the 
importation of rough diamonds from Sierra Leone unless those diamonds 
are exported under a certificate system approved by a Security Council 
Sanction Committee. This ban is similar to the U.N. embargo implemented 
against diamonds from Angola in June 1998.
      
    The United States has been actively involved in efforts to curb 
trade in conflict diamonds. In May 2000 in Kimberly, South Africa, the 
United States, along with South Africa, the United Kingdom, Belgium, 
and representatives of the diamond industry reached an agreement on key 
issues establishing a certification system, accountability and 
oversight for the industry. The United States has also taken a lead in 
establishing Sierra Leone's Commission on the Management of Strategic 
Resources and has committed over $1 million as well as technical advice 
for this effort.
      
    In response to the international focus on conflict diamond trade 
and the U.N. ban against diamonds from Sierra Leone, the World Diamond 
Congress (comprised of the World Federation of Diamond Bourses and the 
International Diamond Manufacturers Association) adopted on July 19, 
2000, a joint resolution laying out a proposal for oversight, 
accountability and specific actions to track the flow of rough 
diamonds. The proposal requires each accredited rough diamond importing 
country to enact ``redline'' legislation prohibiting the importation of 
any parcel of rough diamonds unless such parcel has been sealed and 
registered in a universally standardized manner by an accredited export 
authority from the exporting country. In addition, the proposal does 
the following: (1) calls for the exporting country to implement an 
accredited export system; (2) prohibits the importation of diamonds 
from countries that have not enacted redline legislation; (3) requires 
countries to adopt criminal penalties for trading in illicit rough 
diamonds; and (4) requires adherence to a code of conduct. Under the 
proposal, compliance is to be monitored and controlled by the industry, 
the International Diamond Council.
      
    Under U.S. law, the origin of a cut diamond is the country where 
the diamond was cut, and U.S. Customs does not require any information 
relating to the country of mining of the imported cut diamond. Most 
experts agree that once a diamond has been cut and polished, it is 
difficult to determine the country where it was mined.
      
    There have been a number of legislative proposals in Congress 
seeking to address the trade in conflict diamonds, including banning 
diamonds from specified countries and requiring a certification of 
where the diamond sought to be imported was mined. These proposals have 
not received the support of the Administration, largely because of 
concerns that they are not administrable and have the potential to harm 
legitimate diamond trade.
      
    In announcing the hearing, Chairman Crane stated: ``This hearing 
will provide the Subcommittee with an opportunity to review the options 
available to curtail conflict diamond trade that is World Trade 
Organization (WTO) consistent and does not impact legitimate diamond 
trade. We must break the link that makes diamonds a rebel's best 
friend, but we must also not harm legitimate diamond trade that is a 
vital link to the world's economy.''
      

FOCUS OF THE HEARING:

      
    The focus of the hearing will be to evaluate options available that 
are administrable and WTO consistent and will effectively curtail 
conflict diamond trade without impacting legitimate diamond trade. The 
Subcommittee is interested in receiving testimony on possible 
approaches to this issue, including testimony on current and developing 
technology that can determine the country of mining of a cut and 
polished diamond.
      

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

      
    Requests to be heard at the hearing must be made by telephone to 
Traci Altman or Pete Davila at (202) 225-1721 no later than the close 
of business, Tuesday, September 5, 2000. The telephone request should 
be followed by a formal written request to A.L. Singleton, Chief of 
Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 
Longworth House Office Building, Washington, D.C. 20515. The staff of 
the Subcommittee on Trade will notify by telephone those scheduled to 
appear as soon as possible after the filing deadline. Any questions 
concerning a scheduled appearance should be directed to the 
Subcommittee on Trade staff at (202) 225-6649.
    In view of the limited time available to hear witnesses, the 
Subcommittee may not be able to accommodate all requests to be heard.
      
    Those persons and organizations not scheduled for an oral 
appearance are encouraged to submit written statements for the record 
of the hearing. All persons requesting to be heard, whether they are 
scheduled for oral testimony or not, will be notified as soon as 
possible after the filing deadline.
      
    Witnesses scheduled to present oral testimony are required to 
summarize briefly their written statements in no more than five 
minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full 
written statement of each witness will be included in the printed 
record, in accordance with House Rules.
      
    In order to assure the most productive use of the limited amount of 
time available to question witnesses, all witnesses scheduled to appear 
before the Subcommittee are required to submit 200 copies, along with 
an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, 
of their prepared statement for review by Members prior to the hearing. 
Testimony should arrive at the Subcommittee on Trade office, room 1104 
Longworth House Office Building, no later than Friday, September 8, 
2000. Failure to do so may result in the witness being denied the 
opportunity to testify in person.
      

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect or MS Word format, with their name, address, 
and hearing date noted on a label, by the close of business, Tuesday, 
September 26, 2000, to A.L. Singleton, Chief of Staff, Committee on 
Ways and Means, U.S. House of Representatives, 1102 Longworth House 
Office Building, Washington, D.C. 20515. If those filing written 
statements wish to have their statements distributed to the press and 
interested public at the hearing, they may deliver 200 additional 
copies for this purpose to the Subcommittee on Trade office, room 1104 
Longworth House Office Building, by close of business the day before 
the hearing.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect or 
MS Word format, typed in single space and may not exceed a total of 10 
pages including attachments. Witnesses are advised that the Committee 
will rely on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at ``http://waysandmeans.house.gov.''
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
***NOTICE--CHANGE IN DATE AND TIME***

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-6649
FOR IMMEDIATE RELEASE
September 6, 2000
No. TR-23-Revised

          Change in Date and Time for Subcommittee Hearing on
                       Trade in African Diamonds

                      Tuesday, September 12, 2000

    Congressman Philip M. Crane (R-IL), Chairman of the Subcommittee on 
Trade of the Committee on Ways and Means, today announced that the 
Subcommittee hearing on trade in African diamonds, previously scheduled 
for Tuesday, September 12, 2000, at 10:00 a.m., in the main Committee 
hearing room, 1100 Longworth House Office Building, will now be held on 
Wednesday, September 13, 2000, beginning at 9:30 a.m.
      
    All other details for the hearing remain the same. (See 
Subcommittee press release No. TR-23, dated August 10, 2000.)
      

                                


    Chairman Crane. Welcome to this important hearing on 
conflict diamonds. I especially want to thank the witnesses, 
many of whom had to reschedule their plans so that they could 
testify. Some of you have crossed oceans to get here and I know 
how important this issue is to everyone present here today.
    Africa is a continent of magnificent landscape, beautiful 
coastline, and abundant natural resources, including diamonds. 
Despite its abundance in natural wealth, Africa remains poor 
and war-torn. In order for Africa to move in the direction of 
economic prosperity, we must ensure that its natural wealth is 
not used to keep African countries fettered in rebel wars and 
poverty. This aim brings us to the subject of trade and 
conflict diamonds, which are diamonds controlled by rebel 
forces and traded to fuel their wars against civilians and 
governments, as is presently the case in Sierra Leone.
    Eighty-five percent of the world's rough diamonds pass 
through Antwerp, Belgium, and then to central selling offices 
in London and other places for sale to diamond cutters. Experts 
everywhere agree that once a diamond is cut and polished, it is 
almost impossible to tell the country where the diamond was 
mined. To effectively end trade in conflict diamonds, the 
countries exporting and importing rough stones in particular 
must work together to make sure that these diamonds do not have 
a market, so that conflict diamond peddlers cannot stay in 
business. I am pleased that the diamond industry based in 
Antwerp recognizes this and I applaud the industry for taking 
steps toward achieving this goal.
    Legitimate diamond trade is worth about $55 billion per 
year and estimates indicate that illegal diamond trade accounts 
for less than 4.5 percent of the rough diamond production 
worldwide. Trade in conflict diamonds is a portion of this 4.5 
percent. However, even this small percentage of conflict 
diamond trade is too much, but we must ensure that the steps we 
take do not undermine legitimate diamond trade through 
government bureaucracy and tightened price controls. If this 
happens, the losers are consumers and the African countries 
engaged in legitimate trade. The winners are the central 
selling offices of rough diamonds.
    Accordingly, I will be looking at all proposals with an eye 
to determining whether they are administrable, effective, and 
consistent with our WTO obligations. So let us work together so 
that we are all winners and send a clear signal that conflict 
diamonds are not forever.
    Mr. Levin. Thank you, Mr. Chairman. I appreciate this 
hearing and the opportunity to hear these distinguished 
witnesses. Thanks to those of you seated at the witness table, 
also human rights organizations and others, we have been made 
aware in recent years of the tragedy of conflict diamonds. 
Items that should be precious objects of beauty have become too 
often the currency that perpetuates unthinkable human strife.
    In Sierra Leone and Angola, rebel groups are appropriating 
rough diamonds, selling them, using the proceeds to acquire 
arms and otherwise continue violent internal conflicts. The 
practice of trafficking in conflict diamonds has serious 
implications both for U.S. foreign policy and U.S. consumer 
protection. This country strives to conduct a foreign policy 
that emphasizes humanitarian objectives. We take seriously the 
need to promote respect for human rights around the world. For 
this reason, we cannot turn a blind eye to this problem.
    Further, we have an obligation to protect American 
consumers from becoming unwitting supporters of gross human 
atrocities. Diamonds should enrich the lives of peoples in 
countries that are naturally endowed with them, but instead, 
peoples in Angola, Sierra Leone, and others are being brought 
pain and suffering.
    I am encouraged that the administration and the 
international community are taking steps to prevent rebel 
groups from financing their activities through illegal diamond 
sales. The two Security Council resolutions are welcome first 
steps. Likewise, I believe that the diamond industry's efforts 
to curtail trade in these diamonds are a positive development. 
So we look forward to listening to you, our colleagues, as well 
as witnesses from the Department of State, the private sector, 
human rights groups, and others.
    A short time ago, Congress passed and the President signed 
into law historic trade legislation making the nations of Sub-
Saharan Africa our partners in economic progress and 
prosperity. When fully implemented, that legislation should 
help to promote increased trade and boost the economic 
development of those nations.
    By contrast, the trade in conflict diamonds is actually a 
set-back to economic development. We must do our part to deter 
that trade. So I hope today the witnesses will offer helpful 
suggestions on how we might do just that, and I want to thank 
all of you in advance for joining us today and we look forward 
to your testimony.
    [The opening statement of Hon. Jim Ramstad follows:]

Opening Statement of the Hon. Jim Ramstad, a Representative in Congress 
from the State of Minnesota

    Thank you, Mr. Chairman, for holding this important hearing 
today. As a committed believer in international trade, I have 
consistently supported opening markets providing more access to 
goods from around the world.However, as civil war has ravaged 
some countries in Africa, rebel forces, like the Revolutionary 
United Front (RUF) in Sierra Leone, have captured diamond mines 
and used the income from those mines not to help the poor, but 
to enrich themselves and provide arms and munitions for war. 
They have also participated in horrific acts of brutality 
against their opponents and against innocent citizens who 
happened to be in the wrong place at the wrong time.
    To combat this growing problem, the United Nations on July 
5th of this year adopted a resolution calling for an 18-month 
embargo against diamonds from Sierra Leone unless the diamonds 
can be certified as coming from legitimate sources. Also, the 
World Diamond Congress has also adopted a proposal to track the 
source of diamonds.
    At this time, U.S. law does not require any information as 
to the origin of diamonds. I am extremely interested to hear my 
good friend Rep. Tony Hall's proposal to change that.
    While I have concerns about enforcement of the legislation, 
I am anxious to hear the reactions of the Administration and 
the industry. Rest assured I will give this important 
legislation the consideration it deserves and I look forward to 
today's testimony.
      

                                


    Chairman Crane. Thank you, Mr. Levin. Now I would like to 
tell our witnesses that if you can keep your oral testimony to 
in the neighborhood of five minutes, we would appreciate it. 
All written testimony, however, will be made a part of the 
permanent record.
    With that, we yield to our distinguished colleague from 
Ohio, Mr. Hall.

 STATEMENT OF HON. TONY P. HALL, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF OHIO

    Mr. Hall. Thank you, Mr. Chairman, Mr. Levin, members of 
the subcommittee. I appreciate the chance to testify on a very, 
very important issue. I appreciate also that my full testimony 
will be part of the record. I will read from parts of it and 
refer to parts of it. Thank you.
    My focus today is on the humanitarian cost, the human costs 
of the trade in conflict diamonds. We also call them blood 
diamonds, or trading of arms for diamonds. I have seen it in 
Angola. I am aware of it in Liberia and in the DRC. But it has 
never been more clear than in Sierra Leone, where Congressman 
Wolf and I had traveled last year. What I want to focus on is 
the role diamonds play in the butchery in some of the nations 
blessed with a resource that has become really a curse.
    1999 was a very good year for the diamond industry. 
DeBeers, the monopoly which controls 65 percent of the market, 
posted profits 86 percent higher than in 1998. As a rule, 30 
percent of those profits come from conflict diamonds, even 
though these stones make up between five and 15 percent of the 
total supply, because they tend to be large and 
disproportionately valuable stones. In Sierra Leone, diamonds 
average two carats in size.
    1999 was a bad year for the people of Sierra Leone and 
little better for many in Angola and the Democratic Republic of 
the Congo. The billion or so dollars brought in by these 
countries' diamonds last year was used to buy the machetes that 
severed the limbs, the weapons that have turned rag-tag gangs 
into their tormenters, and military forces for the 
international community to reckon with.
    When Frank and I were in Sierra Leone last year, we went to 
the amputee camps. We saw the results of what can happen when 
you take diamonds and you trade it for arms. We saw a rag-tag 
army go from 500 rebels to 25,000 strong. We saw the kind of 
games, or heard about the kind of games, that they played on 
the people of Sierra Leone. One of the games is, you stick your 
hand in a bag. You pull out a piece of paper. If it says 
``hand,'' they chop it off. If it says ``ear,'' the ear comes 
off. If it says ``foot,'' they hack it off with a hatchet.
    The year 2000 has not changed the equation much except in 
Sierra Leone. Now U.N. peacekeepers, whose deployment is 
costing $1.5 million per day, have joined on the misery side of 
the equation. Five hundred were kidnapped in May and held for 
more than a month. Today, 13,000 are reportedly holed up in 
fortified areas, unable to open the country's main road. The 
force's commander blames diamonds both for rebels' refusal to 
disarm, as they promised, and for infighting that has paralyzed 
his peacekeepers.
    Unfortunately, these wars have not stopped the diamond 
business. For other manufacturers, war threatens workers and 
factories and farmers. For oil companies, war jeopardizes 
pipelines and equipment. For a diamond trader, though, the 
economic incentives are backwards. War favors traders who can 
deliver weapons and supplies. It increases the supply of 
diamonds available. In fact, wars have been great for business.
    Consumer opinion should be an added incentive to do the 
right thing for most businesses, and it would seem to make the 
diamond industry particularly sensitive to any link between 
their product and the savage wars that might stain its image. I 
think what we see is that the worth of diamonds is pretty much 
what they symbolize, love and commitment. The image was created 
and is sustained by an advertising campaign worth hundreds of 
millions of dollars a year. But it is only an image. Fur, which 
is another luxury product with an image problem, does keep you 
warm. Diamonds' worth depends wholly on consumers' perceptions. 
So sometimes diamonds are not a girl's best friend.
    American consumers, who buy two-thirds of all the world's 
diamonds, have a very different understanding of diamonds than 
Sierra Leoneans or Angolans or Congolese people, and with the 
increase in media attention to the horrors of the diamond wars, 
reality is almost certain to make these conflicting images 
apparent. Americans are smart and they want action, and they 
are going to be outraged. I do not think they really know what 
has happened with conflict diamonds. They are going to be 
outraged if we do not do something about this.
    I was encouraged to see the diamond industry finally do 
something to end its assistance to this blood trade two months 
ago. Last year, Frank and I and Cynthia McKinney came up with a 
more traditional approach, giving consumers information to make 
their own decisions. We had urged the industry to either 
support it or counter it. I had hoped to introduce implementing 
legislation for their counter proposal, but the industry has 
not yet finalized its approach.
    To encourage this process, I have introduced the CARAT Act, 
H.R. 5147. Title III expresses the sense of Congress that our 
government should do all it can to put this proposal or 
something like it into effect. I believe it is critical that 
Congress express this now because key countries and segments of 
the industry are dragging their feet.
    The United States is the largest market for diamonds. We 
have a moral obligation to speak out and what we say will make 
a difference. Title II aims to add some encouragement to this 
process in the form of requiring diamonds' origin to be 
certified as soon as that is technologically feasible and cost 
effective. Title IV requires the administration to work more 
coherently on this problem. Under Ambassador Halperin's 
leadership, there has been more attention and focus.
    But much more effort is needed. Over the past decade, our 
government, has sent $3 billion in humanitarian aid to Angola, 
Liberia, the DRC, and Sierra Leone, while over the same period 
$10 billion in diamonds was smuggled out.
    Several months ago, 70 American human rights and 
humanitarian organizations led by Physicians for Human Rights 
formed a coalition to press for the industry to act on the 
problem of conflict diamonds. I was not surprised to see their 
enthusiasm for this work and pleased to learn that they are 
proceeding in a responsible manner. Launching a boycott of 
diamonds would be the easiest thing in the world to do on this 
issue, and this coalition has not done that. Instead, they are 
waiting to see whether the diamond industry will implement its 
proposal and what Congress is going to do. I do not expect this 
coalition to wait forever. Christmas is coming and with it a 
golden opportunity to educate consumers about where the money 
they spend on tokens of love goes.
    Mr. Chairman, we are running out of time. This has been 
going on for too long. We have little leverage over these 
countries in Africa. The threat of our taking away food aid or 
medicines is not enough leverage. We are not going to commit 
troops to countries in Africa. We have pretty much determined 
that. What leverage do we have? I think the only leverage we 
have in this particular case is to take the profit out of wars, 
by stopping the trade in blood diamonds. We have a chance to 
make a difference.
    I urge the committee to mark-up H.R. 5147. I would also 
request that you include the testimony of Mayer Herz, who is a 
member of the U.S. diamond industry who was not able to 
testify. Thank you.
    [The prepared statement and an attachment follow:]

Statement of Hon. Tony P. Hall, a Representative in Congress from the 
State of Ohio

    Mr. Chairman, Mr. Levin, and Members of the Subcommittee: I 
appreciate your focus today, and the opportunity to testify to 
you. My focus is on the human cost of the trade in conflict 
diamonds. I have seen it in Angola, in Liberia, and in the DRC 
but it has never been clearer or sadder than in Sierra Leone, 
where Congressman Wolf and I traveled last December.
    Frank Wolf speaks eloquently about the people who lost 
their arms, and ears, and lives to machetes wielded by rebels 
trying to overthrow this small country's democratic government, 
so I'll let him tell that story. And Cynthia McKinney can tell 
you what she and other members of the International Relations 
Committee are trying to do to stop the diamond wars and repair 
the damage they have caused.
    What I want to focus on is the role diamonds play in 
butchery of people whose nations are blessed with a resource 
that has become a grotesque curse.

Industry and People

    1999 was a very good year for the diamond industry. 
DeBeers, the monopoly which controls 65 percent of the market, 
posted profits nearly 90 percent higher than in 1998.
    As a rule, 30 percent of these profits come from conflict 
diamonds (even though these stones make up between 5 and 15 
percent of the total supply) because they tend to be large and 
disproportionately valuable stones. In Sierra Leone, diamonds 
average two carats in size.
    1999 was an unspeakably bad year for the people of Sierra 
Leone, and little better for many in Angola and the Democratic 
Republic of Congo. The billion-plus dollars brought in by these 
countries' diamonds last year was used to buy the 
machetés that severed their limbs, and the weapons that 
have turned rag-tag gangs into serious military forces their 
neighbors and international troops will reckon with for years 
to come.
    The year 2000 hasn't changed the equation much--except in 
Sierra Leone. Now UN peacekeepers, whose deployment is costing 
$1.5 million per day, have joined on the misery side of the 
equation. In May, 500 were kidnaped and held for weeks. Today, 
13,000 are virtually holed up in fortified areas--unable to 
open the country's main road, much less protect civilians. The 
force's commander blames diamond profiteering both for rebels' 
broken promise to disarm, and for in-fighting that has 
paralyzed his peacekeepers.

Incentives All Wrong

    Unfortunately, until very recently, the diamond industry 
hasn't considered any of this to be its problem. For most 
manufacturers, war threatens their workers and factories. For 
oil companies, war jeopardizes their pipelines and equipment. 
For the diamond industry, though, the economic incentives are 
backwards. War favors traders who can deliver weapons and 
supplies, and war increases the supply of diamonds available. 
In recent years, war has been great for the diamond business.
    The niceties of international law haven't been much of a 
deterrent to the diamond industry's participation in these wars 
either. For eight years, traders dealt gladly with rebels who 
tried to overthrow Sierra Leone's elected government, and 
briefly succeeded.
    The business partners of a generally respectable industry 
there were rebels who used the profits from their trade to turn 
children into their parents' murderers, and then into soldiers 
and sex slaves. . . rebels who spent their earnings on drugs to 
make their young fighters fearless, and to buy the weapons that 
make this one of history's uniquely brutal wars on civilians. 
Traders reported these as Liberian diamonds--six million carats 
a year worth, when they knew full well that Liberian mines can 
produce just 2 percent of that.
    There are similar stories in the Congo and in Angola, whose 
people are now beginning to starve and whose land has been 
turned into a minefield. In Angola, DeBeers bragged in a recent 
annual report about its prowess in being profitable enough to 
buy enough rebel diamonds to keep prices from collapsing.

Consumer Opinion

    So economic and legal incentives for peace failed. For most 
businesses, a third factor often is reason enough to do the 
right thing: customer opinion. The diamond industry would seem 
to be particularly sensitive to any link between its product 
and savage wars that might stain its glittering image. 
Industrial diamonds (most of which are man-made) have a real 
value--but diamond gemstones' worth is in what they symbolize: 
love and commitment. This image was created and is sustained by 
an advertising campaign worth hundreds of millions of dollars a 
year. . . but it is only an image. Fur, another luxury product 
with an image problem, does keep you warm. Diamonds have no 
intrinsic value: their worth depends wholly on consumer 
sentiment.
    American consumers--who buy two-thirds of all the world's 
diamonds--have a very different understanding of diamonds than 
Sierra Leonean, or Angolan, or Congolese people. And with the 
increase in media focus on the horrors of the diamond wars, 
reality is almost certain to reveal these conflicting views. As 
the situation now stands, though, there isn't much American 
consumers can do to cut off their support for the diamond wars. 
Most diamonds are mined in South Africa, Botswana, and other 
countries that--aided by a geological quirk of nature that 
makes it easier to control their diamonds--have used these 
resources for their people's benefit. And most diamonds are cut 
in India, a poor country with a long history of democracy, or 
Israel--two more places we would be loathe to hurt.
    The people of these countries should not have to pay for 
the diamond industry's greed, its arrogance, or its refusal to 
follow accepted norms of responsible behavior. But in fact, 
they probably will be the ones who will get burned once any 
spark ignites this tinderbox.
    Whether Congress likes it or not, American consumers simply 
will not be a party to this blood trade once the Benetton ads 
showing diamond bracelets on Sierra Leone amputees start to 
run. That is the challenge we face. That--and not the industry-
backed Antwerp plan, or other approaches--is the real threat. 
Just ask the fur industry.

Industry Response

    I was encouraged to see the diamond industry finally do 
something to end its assistance to this blood trade two months 
ago. Last year, when I came up with a more traditional 
approach--giving consumers information to make their own 
decisions--I urged the industry to either support my approach 
or counter with something better. I had hoped to introduce 
legislation implementing their counterproposal, but the 
industry has not yet finalized its approach.

The CARAT Act

    To encourage this process, I have joined Mr. Wolf and Ms. 
McKinney in introducing the CARAT Act, HR 5147. With your 
permission, I'm going to talk about it a little out of order.

Title III

    Title III expresses the Sense of the Congress that our 
government should do all it can to implement the industry's 
Antwerp proposal, or something like it. I believe it is 
critical that Congress weigh in on this early, because key 
countries and segments of the industry are dragging their feet. 
The United States is the largest market for diamonds; we have a 
moral obligation to speak out, and what we say will make a 
difference.
    It is my understanding that some Members of this 
Subcommittee question the wisdom of this approach, and have 
particular concerns about its compliance with the WTO. I have a 
few qualms of my own, but I've been persuaded that--until 
technology advances--we need the industry's cooperation to make 
any system work. This is what the industry's leaders have 
agreed to; unless we have a better idea, I think we should 
support it.

Title II

    Title II aims to add some encouragement to the Antwerp 
process, by requiring diamonds' origin be certified as soon as 
that is technologically feasible and cost-effective. It permits 
the Treasury Secretary to waive this if the system Title III 
envisions is up and running. I know the industry doesn't like 
Title II; I hope that including it will motivate them to be 
sure it's never needed. I also hope it will spur technologies 
that will let us determine the origin of a cut diamond because 
I sincerely believe that consumers have the right to know that. 
We know where our cars are from, and the parts in them; we know 
where are clothes and our cheese were made. Why can't we know 
where a diamond, which represents a significant investment of 
money, was mined?

Title IV

    Title IV requires the Administration to work more 
coherently on this problem. Under Ambassador Halperin's 
leadership, more attention has been paid to it, and Ambassador 
Holbrooke's focus probably has added momentum to this work. 
But, as your Subcommittee has learned, Mr. Chairman, there is 
apparently not the sustained commitment from senior 
Administration officials this issue merits.
    And much more effort is needed: over the past decade, our 
government has sent more than $3 billion in humanitarian aid to 
Angola, Liberia, the DRC, and Sierra Leone. Over the same 
period, $10 billion in diamonds was smuggled out of these 
countries, turned into weapons, and turned against their 
suffering civilians.
    As long as any criminal can capture diamond mines that 
generate that kind of money, we will be stuck in this vicious 
cycle. It is above all a human crisis; but it is a diplomatic 
and a financial one as well, and the Administration's attention 
needs to be sustained.

Title I

    Finally, Title I implements two United Nations embargoes, 
on Sierra Leone and Angolan rebels' diamonds, and expands them 
to countries involved in the transshipment of diamonds banned 
by the United Nations.Congressman Wolf has taken the lead on 
this provision, so I'll let him explain it fully.
    Because the United States imports very few rough diamonds, 
Title I's embargoes will only become as tough as they sound 
when the either Title II, or the system Title III encourages, 
is implemented. But we have an obligation as members of the 
United Nations to enact legislation to enforce these UN 
embargoes; doing so in the context of a system for targeting 
the roots of this problem signals our seriousness. And since 
more than ample waivers are included, this provision can remain 
current and fair.

Congress Needs to Act

    The CARAT Act does not bind the legitimate diamond 
industry, but it does send a strong message that is urgently 
needed. Hopefully, it also will spur the technology needed to 
empower consumers if the industry fails to control this blood 
trade.
    I am pleased this bill has won the support of the NGO 
community. I will look to the industry to demonstrate its 
sincerity by helping me to win your support for it. And I urge 
this Committee to mark it up in time for a vote by the House 
and Senate before we leave town. Time is short, but this is an 
unusual opportunity to make a difference. The media spotlight 
is on this problem; and human rights activists and the 
legitimate industry are on the same side--for now. We won't 
have this happy situation if we wait.

NGO Response

    Which brings me to the human rights community. Several 
months ago, more than 70 respected American organizations--led 
by Physicians for Human Rights--formed a coalition to press the 
industry to address the problem of conflict diamonds. I was not 
surprised to see activists' enthusiasm for this work: this 
would make great TV, and it is one of the few straightforward 
ways to connect American consumers to a problem in Africa.
    I am pleased to see that activists are proceeding in a 
responsible manner, though, and working out of the limelight 
for a lasting solution. Launching a boycott of diamonds would 
be the easiest thing in the world to do on this issue; this 
coalition has not done that. Instead, they are waiting to see 
whether the diamond industry will implement its ambitious 
proposal--which it promised to have in place later this month.
    I don't expect the coalition to wait forever, though. 
Christmas is coming, and with it a golden opportunity to 
educate consumers about where the money they spend on tokens of 
love goes. Before then, two networks are planning exposes of 
conflict diamonds that will be seen by tens of millions of 
Americans. It will be increasingly difficult for these 
thoughtful but powerful organizations to continue to wait for 
industry and Congressional action.

Congressional Response

    I appreciate that time for the 106th Congress to act is 
short; that is why I tried to make the CARAT Act as flexible as 
possible. If the industry fulfills its promise to devise a 
workable system, there will be time next year to come back to 
debate how to implement that without running afoul of the WTO 
or prudence.
    But this Committee and this Congress need to do something 
before we go home next month.
    I do not want to face constituents who've just seen 20/20 
or 60 Minutes if we haven't done something. I do not want to 
face my local jewelers, who may be trying to explain the human 
rights activists' pickets to their customers, with the excuse 
that we need to study the problem a little more.
    And I do not want to tell taxpayers that we would rather 
spend billions of dollars to treat the symptoms of the diamond 
wars, rather than try to get to the root of the problem.
    Thank you for your time, Mr. Chairman, and for your 
Committee's work on this issue. I particularly appreciate the 
efforts Savitri Singh has devoted to this matter, and want to 
commend you for her diligence.
    I would be happy to answer any questions.
      

                                


Statement of Mayer Herz, Vice President, Diamond Acquisitions, 
MONDERA.com, New York, New York, and Officer, Diamond Dealers Club, New 
York, New York

    A Positive Approach to Solving the Problems of Conflict Diamonds

    The world diamond industry created the Antwerp Proposals, a 
sound effort to stem the flow of conflict diamonds into 
legitimate channels. As I was involved in drafting these 
proposals, I would personally recommend that we try to make 
them WTO consistent so that rough diamonds can be traded like 
other commodities. This will eliminate the need to create a 
whole new bureaucracy to implement the Antwerp Proposals.
    The concept that I would like to discuss today is 
revolutionary in its approach to the solution of conflict 
diamonds. To resolve any conflict or problem one needs to deal 
with its root cause. The root cause of conflict in African 
diamond-producing countries is that, for decades now, traders, 
major buyers and corrupt government officials are illegally 
exporting the rough diamonds, robbing these countries of their 
wealth, thus leaving the people and legitimate governments with 
no sustaining revenues to build on. Corruption and bribes are 
the norm.
    Unscrupulous dealers become rich while legitimate 
governments and the general population remains destitute. In 
the best of cases, export duties and taxes are collected only 
on a fraction of the value of the diamonds taken out of the 
country. The governments are left with very little revenue to 
build the infrastructures of a nation that will benefit all the 
people. The miners and diggers usually don't get more than 20 
percent to 35 percent of what their product is worth on the 
world market. In this environment, the whole economic structure 
is derailed
    Rice is a daily staple, yet unethical traders exploit the 
need to feed the hungry. They are selling rice at highly 
inflated prices and making absurd profits. With these profits, 
the traders buy rough diamonds and smuggle them out of the 
country. As a result, both the country's natural resources and 
the traders'' ill-gotten financial gains are drained out of the 
country. The tragic consequence is that there are very few 
resources left to drive the local economy. The ordinary people 
of these countries resent their exploitation, but there is 
little they can do against these powerful forces. Conflict and 
war is what follows.
    The problem has been growing unchecked for too long. Now 
that the world is focusing on the problem of conflict diamonds, 
thanks to NGO's like Global Witness, I would like to ask 
Congress and the Administration to address the root cause of 
this problem. The State Department and its Agency for 
International Development and the Department of Commerce and 
the Office of the Trade Representative for Africa should help 
establish direct trade between the American diamond industry 
and legitimate diamond producers in Africa. The foundation of 
this relationship must be in educating these governments and 
their business people that unscrupulous deals and corruption in 
the long term is detrimental to a country's stability and its 
business infrastructure. We must start a process of dealing 
only through legitimate governments and we must make our 
dealings completely transparent, with total accountability on 
the part of all involved. We must make people understand that 
the only way that commerce in this trade will be stable is if 
it's done legitimately.
    The diamond resources of Africa are vital to the New York 
diamond industry. To its credit, the American diamond industry 
has not been involved in trading in rough diamonds that is not 
legitimate and transparent. We stand proud of our ethics and 
high standards; and have taken the lead in transforming this 
industry. While we strive to work ethically, others are abusing 
the existing system of exploitation. As a result, the New York 
diamond industry has suffered financially. Large quantities of 
rough diamonds from Africa change hands each day but these 
supplies are not destined to reach New York. It is ironic that 
the American diamond industry, which consumes more than 50 
percent of the world''s annual diamond production and is still 
growing, has lost more than 70 percent of its diamond cutters. 
By working closely with African governments we can import 
diamonds legally and at fair prices, and we can re-invigorate 
the American diamond cutting industry while at the same time 
giving the diamond producing nations the full benefit of their 
natural resources.
    I believe that we can create a new way of trading in 
diamond rough, where transparency, accountability and 
legitimacy are the way of life. Diamonds can become the 
commodity that will help to rebuild suffering African countries 
and that will enable those nations to raise the standard of 
living of their people, who are now victims of vicious wars 
fueled by diamonds.
    Blood diamonds, conflict diamonds, the trading of arms for 
diamonds--these can all be replaced with stability diamonds, 
and a fair exchange of diamonds for healthcare, food and the 
staples of life. It is possible to create a diamond trade that 
benefits everyone all around, if we are willing. Revolutionary 
ideas like these can help us do it.
    In closing, I would like to express my sincerest gratitude 
to Congressman Tony Hall and his staff for always giving me a 
helping hand. To Ambassador Howard Jetter, who was always 
willing to give advice, I wish him all the best in his new 
posting as US ambassador to Nigeria. To Sylvia Fletcher of AID, 
thanks for the superb study on the Sierra Leone diamond 
industry revival. And last, but not least, thanks to Rosa 
Whitaker, U.S. Trade Representative for Africa, for her 
constant encouragement.
    I am available at 212-981-0279 and e-mail:[email protected]
      

                                


    Chairman Crane. Thank you.
    Mr. Wolf.

 STATEMENT OF HON. FRANK R. WOLF, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF VIRGINIA

    Mr. Wolf. Thank you, Mr. Chairman. I want to thank you and 
your staff for organizing the hearings and I also want to 
acknowledge Ms. McKinney and Mr. Payne for their efforts and 
also my good friend Tony Hall, who has done more to bring this 
issue to the public's attention than anyone else.
    Mr. Chairman, millions of people have died in Africa 
because of the bloodshed surrounding conflict diamonds. Rebel 
groups and military forces, Sierra Leone, Angola, Democratic 
Republic of Congo, have committed horrible atrocities. At least 
$10 billion in diamonds have been smuggled from these countries 
in the past decade. In the Congo in the last 20-some months, 
1.7 million people have died, 35 percent under the age of five.
    Many in this room are familiar with the sad story of 
Angola, where the rebel movement UNITA paid for weapons and 
kills people in order to maintain the control of the diamonds.
    In Sierra Leone, aside from the shocking reality of live 
amputations and children soldiers, an estimated 75,000 people 
have died because of the rebels' vicious campaign to control 
the country's diamonds.
    Mr. Chairman, we speak many times in numbers and figures on 
the atrocities of Africa and the reality just does not sink in. 
The thought of a million deaths, it does not seem real. Rebel 
atrocities is a term that may not sink in until we actually see 
it. The picture behind me is of a two-year-old Sierra Leonean 
girl. She asks her mom whether her arm will grow back. She will 
likely never wear one of these diamond rings. To this little 
girl, diamonds have a very different meaning than we are used 
to. Can you imagine if this image were connected in the 
American consumer's mind to diamonds, the symbol of eternal 
love and commitment?
    Sierra Leone is a country that is blessed with diamonds and 
an abundance of other natural resources, a scenic coastline, 
and wonderful people, and yet today is cursed as to be one of 
the worst places in the world. The average lifespan is 25 
years. Everyone on the dais and everyone behind you would be 
dead if you lived in Sierra Leone.
    I like to focus on that country because that is where the 
scramble for diamonds and the link between diamonds and 
atrocity is the most direct. As Mr. Hall said, we visited there 
and saw firsthand these young children and older men with their 
arms and legs and ears and noses cut off.
    Certain countries around Sierra Leone play a major role in 
facilitating this. Many of these countries surrounding Sierra 
Leone have few diamonds to mine, yet countries like Liberia, 
Burkina Faso, Togo, and the Ivory Coast have exported millions 
of carats of diamonds--Sierra Leone diamonds--billions of 
dollars in value, to the diamond cutting centers in Antwerp, 
Israel, India, Holland, and New York. While officially denied 
by representatives of these governments, the U.S. intelligence 
community--and get the briefing from the CIA--and numerous 
other sources possess a wide array of evidence that documents 
this illicit diamond smuggling.
    As of now, certain leaders have direct financial gain to 
keep this rebellion going. Liberia and its President Charles 
Taylor supply weapons to the rebels in exchange for diamonds. 
In 1998, Liberia, whose natural resources would have allowed 
the exportation of approximately $10 million worth of diamonds, 
exported $297 million worth of diamonds. Other countries in the 
area have served as direct arms suppliers or transit points.
    The industry has long maintained the count of only four 
percent. If this were true, it is four percent too much, but 
there are others here today who will testify that the figure is 
likely higher. Whatever the figure, we believe that the 
industry has a responsibility to stop this revenue incentive 
for African atrocities.
    Also, the legitimate industry has a strong financial 
incentive, as Mr. Hall said, to remedy the situation. The U.S. 
consumes 65 percent of the world's diamonds. A U.S. consumer 
boycott similar to the fur industry would cripple the diamond 
industry. Legitimate diamond-producing countries, such as 
Botswana and South Africa, would seriously be destabilized and 
many of their citizens' livelihood jeopardized.
    I would ask you to mark up Mr. Hall's bill and put it on 
some omnibus bill. If you would give me the consideration, I 
would put it on the transportation appropriations bill if we 
had the approval of the leadership of both sides. We could use 
that as a vehicle to move this. The transportation bill will be 
signed by the President. It is relatively one of the non-
controversial ones. We could put it on that or some other. The 
time is urgent and failure to do anything, I think, will have 
disastrous consequences on all involved.
    One last comment, Mr. Chairman, in keeping with the time. 
The issue of conflict diamonds goes to a larger issue of 
Africa. The problems of Africa and the misery of Africa is our 
misery. We cannot in the year 2000 ignore the tragedies that go 
on there. For hundreds of years, this continent has been 
exploited and the people have suffered more than anyone has to 
suffer. Places like Sierra Leone and the Congo and others that 
I have not mentioned, like Sudan that Mr. Payne has done such a 
great job, seem distant from the confines of this room.
    I know the political realities of any large-scale U.S. 
involvement in Africa, but we should take at least this minimal 
step. As Mr. Hall said, we are not going to send troops and we 
ought not send troops. We are not going to cut off humanitarian 
supplies and we ought not do it. But Mr. Hall's bill is 
something that we could really make a difference.
    So in closing, Mr. Chairman, I thank you for the hearings. 
I thank your staff. I would also like to remind the 
subcommittee that on September 26 at 9:00 a.m., Mr. Royce will 
be sponsoring with Mr. Hall and others several children whose 
hands were amputated by the rebels. They will be in a briefing 
in Room 2172 and from there they are going to go to see doctors 
in New York who are going to help with prosthetic devices.
    Again, thanks for the hearing and thank you to your staff.
    [The prepared statement follows:]

Statement of Hon. Frank R. Wolf, a Representative in Congress from the 
State of Virginia

    Thank you Mr. Chairman. I would also like to thank the 
committee including the staff for organizing and conducting 
this hearing on this extremely important issue.
    First, I must acknowledge my fellow panel member and good 
friend Congressman Tony Hall for doing so much to bring 
attention this important global matter. He has been out front 
on this issue as long as anyone, and deserves the credit for 
moving the process forward to address this immediate problem.
    Mr. Chairman, millions of people have died in Africa 
because of the bloodshed surrounding conflict diamonds. Rebel 
groups and military forces in Sierra Leone, Angola, and the 
Democratic Republic of the Congo have committed horrible 
atrocities to gain control of and to profit from diamonds. At 
least $10 billion in diamonds have been smuggled from these 
countries over the past decade.
    In the Congo, some 1.7 million people have died because of 
the fight to control Congo's natural resources, primarily 
diamonds. Thirty-five percent of these deaths are to children 
under the age of 5. There are currently eight countries 
involved in this terrible conflict--many with a direct interest 
in the diamond trade.
    Many in this room are familiar with the sad story of 
Angola, where the rebel movement UNITA pays for weapons and 
kills people in order to maintain control of Angola's diamonds.
    In Sierra Leone, aside from the shocking reality of live 
amputations and children soldiers, an estimated 75, 000 people 
have died because of the rebels vicious campaign to control the 
country's diamonds.
    Mr. Chairman, sometimes we speak in numbers and figures on 
the atrocities of Africa and the reality just doesn't sink in. 
The thought of a million deaths--it doesn't seem real. Rebel 
atrocities is a term that may not sink in until we actually see 
it. The picture behind me is of a 2 year old Sierra Leonean 
girl. She asks her mom whether her arm will grow back. She will 
likely never wear a diamond ring. To this little girl, diamonds 
have a very different meaning than we are used to. Can you 
imagine if this image was connected in the American consumer's 
mind to diamonds--the symbols of eternal love and commitment?
    Sierra Leone is a country that is blessed with diamonds and 
an abundance of other natural resources, a scenic coastline and 
beautiful people, yet today it is cursed as one of the worst 
place in the world. The average life span is now about 25 
years, the citizens are terrified and as one periodical 
described, it is a place where angels fear to tread.
    I would like to focus on Sierra Leone and West Africa. . 
.where the scramble for diamonds and the link between diamonds 
and atrocities is the most direct.
    Mr. Hall and I visited Sierra Leone last December and met 
and talked with hundreds of people who had their arms, legs or 
hands cut off by Sierra Leonian rebels--all to scare and 
intimidate the local population so the rebels could gain 
control of Sierra Leone's diamond producing region.
    Certain countries surrounding Sierra Leone play a major 
role in facilitating this chaos. Many of these countries 
surrounding Sierra Leone have few to zero diamond mines. Yet 
countries such as Liberia, Burkina Faso, Togo, and the Ivory 
Coast have exported millions of carats of diamonds--Sierra 
Leone's diamonds--billions of dollars in value--to the diamond 
cutting centers in Antwerp, Israel, India, Holland, and New 
York.
    While officially denied by representatives of these 
governments, the U.S. Intelligence community and numerous other 
sources possess a wide array of evidence that documents this 
illicit diamond smuggling. As of now, certain leaders have a 
direct financial incentive to keep the ``rebellion'' in Sierra 
Leone going, to prevent peace and therefore sustain their 
access to Sierra Leone's precious stones.
    Liberia and its president, Charles Taylor, supply weapons 
to the rebels in exchange for diamonds. In 1998 Liberia, whose 
natural resources would allow the exportation of approximately 
$10 million worth of diamonds, exported $297 million worth of 
diamonds. Other countries in the area have either served as 
direct arms suppliers or transit points for diamonds and arms 
into and out of Sierra Leone. This incentive structure also 
existed for weapons exchanges between governments and diamond 
stealing rebel groups in the case of Angola and the Congo.
    The industry has long maintained that conflict diamonds 
account for only about 4 percent of the world trade. If this 
were true I still believe that this is 4 percent too much. 
There are others that will testify today that this figure is 
likely higher. Plain common sense tells us that these diamonds 
are going somewhere--someone is buying them and somehow the 
rebels are gaining access to arms and supplies.
    Whatever the figure, we believe that the industry has a 
responsibility to stop this revenue incentive for African 
atrocities. Also, the legitimate industry has a strong 
financial incentive to remedy this situation. The U.S. consumes 
over 65 percent of the world's diamonds. A U.S. consumer 
boycott, similar to the fur industry, would cripple diamonds. 
Legitimate diamond-producing countries such as Botswana and 
South Africa could become seriously destabilized and the many 
of their citizens' livelihoods jeopardized. I joined 
Congressman Tony Hall in introducing the Consumer Access to a 
Responsible Accounting and Trade Act of 2000. This legislation, 
which combines elements of Congressman Hall's earlier diamond 
certification legislation with language that was in the FY 2001 
Treasury/Postal Appropriations bill combines import 
restrictions from known conflict diamond areas in West Africa 
with a implementing a certification scheme for diamond origin, 
something the industry has already expressed an interest in 
achieving. This legislation also goes further than previous 
legislation by creating a permanent representative within the 
executive branch to deal with conflict diamonds.
    Mr. Chairman, this legislation is urgently necessary. It is 
flexible and takes into account the technical realities of 
tracing diamond origin. This panel will hear testimony today on 
some of the specific implementation issues that are involved 
and the feasibility of enforcing any import restriction. I am 
not hear to testify about the technology that could potentially 
be used for enforcement.
    However, I will say that a failure to do anything will have 
disastrous consequences for all involved. The status quo will 
mean more death, more suffering and more instability on a 
continent that has suffered too much.
    Mr. Chairman, in closing I would like to make one more 
comment. The issue of conflict diamonds goes to the larger 
issue of Africa. The problems of Africa, the misery of Africa, 
is our misery. We cannot in the year 2000 ignore the tragedies 
that go on there. For hundreds of years this continent has been 
exploited and the people have suffered more than anyone should 
have to suffer. This beautiful and vast continent has been 
cursed by its abundance.
    Places like Sierra Leone, the Congo and others I haven't 
mentioned like the Sudan seem distant from the confines of this 
room. I know the political realities of any large scale U.S. 
involvement in Africa, but shouldn't we at least take minimal 
steps to alleviate massive suffering? Addressing conflicts 
diamonds is one such step. Our affluence should not be someone 
else's nightmare.
    I want to again thank you, Mr. Chairman, and the committee 
for holding this hearing, and I look forward to helping in any 
way I can to keep the process moving to bring an end to this 
urgent problem.
      

                                


    Chairman Crane. Thank you, Mr. Wolf.
    Mr. Payne?

STATEMENT OF HON. DONALD M. PAYNE, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW JERSEY

    Mr. PAYNE. Thank you, Mr. Chairman, and thank you for 
allowing me to present my testimony here today. I would like to 
commend my colleagues Hall, Wolf, and McKinney for their 
longstanding support for the right thing to do.As the ranking 
member on the Subcommittee on Africa, the issue of conflict 
diamonds is one I have been concerned about in our committee 
for many years. The Subcommittee on Africa held a hearing 
entitled, ``Africa's Diamonds: Precious, Perilous, Too'' on May 
9 of this year. At that hearing, we heard from a number of 
witnesses, including Mr. Holoi, Special Advisor to the Minister 
for Minerals and Energy of the Republic of South Africa. We 
extended an invitation to the representatives from DeBeers, but 
they declined our offer to participate.
    I wanted to participate in this hearing for a couple of 
reasons, but mainly to bring attention to the issue of dirty or 
conflict diamonds. I am very concerned, however, that 
legitimate markets of Botswana, South Africa, and Namibia that 
depend almost exclusively on the diamond revenues to sustain 
their local economies do not experience backlash from the 
boycott of illegal diamonds of Sierra Leone, Angola, and the 
Democratic Republic of the Congo.
    As you already know, the RUF, a brutal rebel army, has 
committed egregious violations of human rights by maiming, 
injuring, and killing many of the innocent men, women, and 
children living in Sierra Leone. The RUF receives its revenues 
from neighboring countries, but the real commodity driving the 
war comes from diamonds inside the country. The rich diamond 
areas of the Kailahun, Kenema, and Bo are controlled by the RUF 
and the so-called West Side Boys. In Angola, UNITA, headed by 
Jonas Sivimbi, controls Lundi, Malange, and Bie.
    I am pleased, though, that the United Nations passed a 
resolution on July 5 banning the sale of and exportation of 
diamonds being bought from Angola's UNITA, Sierra Leone's RUF, 
and hopefully one will be introduced that condemns Zimbabwean 
soldiers' excavation in Mbuji Maya in the Democratic Republic 
of Congo.
    Let me say that I agree with the reports that getting 
control of the diamond mining areas only ends the conflict. We 
have to deal with several other issues, including sustainable 
poverty. We must deal with these tremendous issues that Africa 
is faced with and debt relief.
    Several African countries have made substantial changes to 
their mining laws to try to attract private sector investors. 
Botswana is one country that has done just that. On a recent 
visit in July to Gaborone, Botswana, I had an opportunity to 
tour the main operating diamond facility in the heart of 
downtown. At independence in 1966, this patch of the Kalahari 
Desert in Southern Africa was one of the world's poorest 
countries. Botswana, nearly as big as Texas, now is one of the 
few real democracies in Africa, richer than Russia in per 
capita income and boasting to have the second-fastest-growing 
economy in the world. Diamond mining was and still is a primary 
driver of its boom, and former President Masire and now 
President Mogae said at the visit recently that in order for 
Botswana to survive long term, though, they need to diversify.
    With the passage of the Growth and Opportunity Act this 
year, the United States will be importing and trading more with 
our African partners. The diamond regime needs a major overhaul 
so it does not affect our industry or the industries of those 
countries I previously mentioned, the countries that are 
dealing in this industry the way they should not, the conflict 
diamonds.
    At the subcommittee hearing, Eli Haas, president of the 
Diamond Dealers Club, said that ``while there is discussion of 
the development of a technology to come up with identifying 
marks or fingerprints to determine particular countries of 
origin of diamonds, no such technology is currently 
available.'' I find it hard to believe that the central selling 
organization of DeBeers, an organization that Botswana supplied 
over $2.05 billion to last year and whom South Africa supplies 
over $850 million, cannot develop the technology to mark the 
origin of diamonds.
    New diamond fingerprint technology is being developed in 
consultation with the Royal Canadian Mounted Police. The RCMP 
states that the potential difficulties in applying the 
technology are reduced, however, by the fact that the bulk of 
the rough diamonds trade is centralized in only two 
organizations and two locations, the HRD in Antwerp and 
DeBeers' CSO in London.
    In conclusion, I agree that there is a need to be sure that 
these rebel groups cannot continue to acquire diamonds and sell 
them to fuel home-grown wars. Also, we need to have the fact 
that proliferation in diamonds and other mercenary groups who 
are also benefitting, like Executive Outcomes and Sandline, who 
are mercenary groups who also get their pay from the diamond 
industry. This all must end.
    I would just propose, one, a permanent independent 
international standards commission should be created under the 
United Nations in order to establish and monitor codes to 
regulate the global diamond industry, and a more effective 
auditing system is desperately needed to control where the flow 
of these diamonds come from. Presently, the CSO audits itself. 
It needs to have external auditing.
    Thank you, Mr. Chairman. I appreciate this opportunity.
    [The prepared statement follows:]

Statement of Hon. Donald M. Payne, a Representative in Congress from 
the State of New Jersey

    Good morning. Thank you Mr. Chairman for allowing me to 
present my testimony today before this Committee. As the 
Ranking Member of the Subcommittee on Africa of the Committee 
on International Relations, the issue of conflict diamonds is 
one that I have been concerned with for many years now. The 
Subcommittee on Africa held a hearing entitled, ``Africa's 
Diamonds--Precious, Perilous Too?'' on May 9th of this year. At 
that hearing, we heard from a number of witnesses including Mr. 
Nchakna Moloi, Special Advisor to the Minister for Minerals and 
Energy of the Republic of South Africa, and Ms. Gooch, Director 
from Global Witness. We extended an invitation to the 
representative from De Beers but they declined our offer to 
participate.
    I wanted to participate in this hearing for a couple of 
reasons but mainly to bring attention to the issue of dirty or 
conflict diamonds. I am very concerned, however, that the 
legitimate markets of Botswana, South Africa, and Namibia that 
depend almost excessively on the diamond revenues to sustain 
their local economies, do not experience backlash from the 
boycott of illegitimate diamonds of Sierra Leone, Angola and 
the Democratic Republic of the Congo.
    As you already know, the Revolutionary United Front, a 
brutal rebel army, has committed egregious violations of human 
rights by maiming, injuring and killings many of the innocent 
men, women and children living in Sierra Leone. The RUF 
receives its revenues from neighboring countries but the 
commodity driving the war comes from diamonds within the 
country. The rich-diamond areas of Kailahun, Kenema and Bo are 
controlled by the RUF and the so-called West Side Boys. Similar 
to Angola, I am pleased that the United Nations passed a 
resolution [5 July 2000] banning the sale and exportation 
diamonds from being bought from Angola's UNITA's, Sierra 
Leone's RUF and hopefully one will be introduced that condemns 
Zimbabwean soldiers excavation into Mbuji Mayi. Let me say that 
I agree with the reports that getting control of diamond mining 
areas only ends the conflict; it is not a catalyst for real 
democratic change. That requires a great deal more.
    Mining is the most important economic sector in several 
African countries, and it is vital to the economies of many 
others. For example, the minerals sector accounted for 10 
percent of South Africa's gross domestic product and 51percent 
of its export earnings. Several African countries have made 
substantial changes to their mining laws to attract private-
sector investment. Botswana is one country that has done just 
that. On a recent visit in July to Gaborone, Botswana, I had an 
opportunity to tour the main operating diamond facility in the 
heart of downtown. At independence in 1966, this patch of the 
Kalahari Desert in Southern Africa was one of the world's 
poorest countries. Botswana, nearly as big as Texas, had 2 
paved roads, one public secondary school and life expectancy 
for its people of 40 years. Now it is one of the few real 
democracies in African--richer than Russia in per capita income 
and boasting to have the second-fastest economy in the world. 
Diamond mining was and still is the primary driver of its boom 
and former President Sir Ketumile Masire and now President 
Festes Mogae--told me during my visit--in order for Botswana to 
survive long term, we need to diversity our economy from being 
overly dependent on our mineral revenue. He said that he 
understood that nations in which a single mineral dominates 
production have proven especially vulnerable to cyclical drops 
in world prices.
    According to a recent survey by the Mineral commodity, 25 
percent of African cobalt, the main substance in diamonds, is 
imported to the United States. With the passage of the Growth 
and Opportunity Act this year, the U.S. will be importing and 
trading more with our African partners. The diamond regime 
needs a major overhaul so it does not effect our industry and 
the industry of the countries I previously mentioned. At the 
Subcommittee hearing Eli Haas, President of the Diamond Dealers 
Club, said that ``while there is discussion of the development 
of a technology to come up with identifying marks or 
fingerprints to determine particular countries of origin of 
diamonds, no such technology is currently available.'' I find 
it hard to believe that the Central Selling Organization (CSO) 
of De Beers, an organization that Botswana supplied over $2.05 
billion to last year and whom South Africa supplies over $850 
million can not develop the technology to mark the origins of 
the diamonds. New Diamond fingerprinting technology is being 
developed in consultation with the Royal Canadian Mounted 
Police (RCMP). The RCMP state that the potential difficulties 
in applying the technology are reduced, however, by the fact 
that the bulk of the rough diamond trade is centralized in only 
two organizations and two locations, the HRD in Antwerp and De 
Beer's CSO in London.
    In conclusion, I would like to submit for the record the 
testimony of Ian Smillie from Partnership Africa Canada. I 
agree that there needs to be oversight from rebel groups 
acquiring diamonds fields to fuel their home grown wars and 
also we need oversight from the proliferation of diamond 
revenues to pay international security firms such as Executive 
Outcomes and Sandline, mercenaries groups operating in Africa. 
This is short-term. In the long-term, the international 
community must establish:
     A permanent Independent International Standards 
Commission should be created under the United Nations in order 
to establish and monitor codes to regulate the global diamond 
industry and.
     A more effective auditing system is desperately 
needed. Presently, the CSO audits itself.
    Thank you once again Mr. Chairman for allowing me to 
testify before this Committee today.
      

                                


    Chairman Crane. Thank you, Mr. Payne.
    Ms. McKinney?

  STATEMENT OF HON. CYNTHIA A. McKINNEY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Ms. McKinney. Thank you, Mr. Chairman, Ranking Member 
Levin, other members of the committee. I want to thank you for 
scheduling this very important hearing on the role diamonds 
play in the conflicts of Sub-Saharan Africa. I would also like 
to thank Congressman Hall for his leadership, as well, in 
introducing the Consumer Access to a Responsible Accounting of 
Trade Act, or as many of us know it, the CARAT Act, or the 
Blood Diamond Bill.
    As the ranking member of the Human Rights Subcommittee on 
the International Relations Committee, I fully support the 
intentions to implement a coding system that would stop the 
illicit diamond trade. With this, the diamond's origin can be 
certified in order to sever the funding link that has allowed 
mercenary groups and so-called rebel groups in Sierra Leone, 
Angola, and elsewhere to enrich themselves and commit gross 
abuses against governments and unarmed people.
    The illicit diamond trade has assisted a few bad men to 
create anarchy and chaos on the African continent, but it has 
made all of us complicit in the crimes against humanity and the 
suffering that these men create. In order to break that 
complicity, we need a prompt review of U.S.-Africa policy. We 
need to pass Tony Hall's bill and we need to implement 
sanctions against countries and individuals who have already 
been named as diamond traffickers.
    I would also like to ask the committee to seriously 
consider action against diamonds that are certified as having 
come from Liberia, as well. While Liberia has not been the 
subject of any U.N. Security Council resolutions or reports, it 
is physically impossible for Liberia to produce the diamonds 
that it says it does. It is clear that Sierra Leone's diamonds 
are being laundered through Liberia and on to the legal market 
and then to our jewelry, most likely right here to the United 
States, since the U.S. consumes two-thirds of all the diamonds 
produced.
    In the Congo, forces allied with Uganda and Rwanda have 
occupied nearly half that nation, including the Congo River 
city of Kisangani, a major trading center for the diamonds 
pulled from the surrounding jungles. The battle is for Mbuji 
Mayi, the capital of the southeastern province of East Kasai 
and the center for Congo's diamond mining.
    In Angola, sanctions busting led to a report released by 
the United Nations panel on March 15 carefully documenting the 
ways in which UNITA has been able to circumvent the U.N. 
sanctions against its trade of diamonds extracted from UNITA-
controlled areas in Angola. We all know the objectives of 
UNITA, to foment chaos in Angola and render it ungovernable. 
They pretty much were able to do that due to their trade in 
illicit diamonds. They even went so far as to shoot down U.N. 
planes carrying individuals committed to making peace.
    The resultant Fowler Report of the United Nations Security 
Council, named after Robert Fowler of Canada who led the 
investigation team, took the bold step of naming names of 
individuals and countries that were sanctions busters. Some of 
the sanctions busters are our allies. If we were really serious 
about the diamond trade, our leadership could make a 
difference, and we should lead the effort to implement the 
Fowler recommendations, not to just study them. People are 
losing their homes and their lives while this administration 
studies. Ambassador Harold Jeter acknowledged support for the 
Fowler recommendations, yet to my knowledge, not much beyond 
that has been done to implement them.
    U.N. Secretary Robert Fowler's report recommends that 
anyone trading in illicit diamonds will be expelled from the 
industry and that any country knowingly involved in smuggling 
will lose its export accreditation. Under the proposal, all 
rough diamonds are to be exported in sealed packages certified 
by the authorities in exporting nations and verified by a new 
international diamond council, made up of governments, 
industry, and non-governmental organizations.
    At the World Diamond Congress, which took place in Antwerp, 
Belgium, in July, the International Diamond Manufacturers 
Association and the World Federation of Diamond Bourses agreed 
to establish a system of certificates of origin to identify the 
provenance of diamonds.
    The United States and Europe must also begin bilateral and 
multilateral discussions with Israel, a leading destination for 
the illicit diamonds. The U.S. must also show leadership and 
act more swiftly against other countries mentioned in the 
Fowler Report. Countries such as Burkina Faso, Togo, and Rwanda 
were named in Fowler's report as being involved in the illegal 
trading operations with Mr. Savimbi's forces.
    Also, another important move in the right direction that 
was thwarted was the British move to deny the State Controlled 
Corporate Entity in which the Democratic Republic of Congo and 
Zimbabwe attempted to form an autonomous, State-owned, joint 
venture to market independent of anyone else's control 
Democratic Republic of Congo's diamonds. I view this as an 
effort to further entrench the current State and non-State 
actors and to deny African governments the right to control 
their own diamonds.
    I would like to commend Namibia, a nation that is doing 
things right. The first thing they did was to deny the 
mercenary companies a foothold in their diamond industry, and 
as Congressman Hall has pointed out, we owe passage of this 
bill to those who depend on the legitimate trade in South 
Africa, Botswana, Namibia, and who will be hurt by a consumer 
backlash against the entire diamond industry.
    Why should we care that Africa is being ravaged by war as 
we speak? Because we bear a good deal of the responsibility for 
what is happening there. The diamonds that we wear to adorn our 
bodies and the oil that we pump into our SUVs has a direct 
bearing on the quality of life that someone in another part of 
the world in some far-away place. We do not need to hurt people 
or to allow our allies to hurt people to have diamonds or oil, 
but too often we do. I know we can do better and we must.
    Finally, I would like to call your attention to a very 
important book that details our Africa policy during the 
Clinton administration. It is explosive in its content and in 
its accuracy, from my point of view. I would commend it to all 
of you and hope that you would purchase it and read it 
personally and then move to change that which is wrong in our 
policy and save that which is right. The book is Genocide and 
Covert Operations in Africa from 1993 to 1999 by Wayne Madsen, 
just recently published.
    Diamond certification is an important step in the right 
direction to stem the tide so innocent Africans will not 
continue to die. Making this bill the law of our land is an 
important step in the right direction.
    Thank you very much.
    [The prepared statement follows:]

Statement of Hon. Cynthia A. McKinney, a Representative in Congress 
from the State of Georgia

    Mr. Chairman:
    Let me begin by thanking the leadership of the Ways and 
Means Trade Subcommittee for scheduling this important hearing 
on the role diamonds play in the conflicts of sub-Saharan 
Africa.
    I am pleased to give testimony today with this 
distinguished bipartisan panel who are imploring you to take 
decisive action to stem the entry into this country of illicit 
or ``blood diamonds.''
    I would also like to thank Congressman Hall for his 
leadership in introducing the Consumer Access to a Responsible 
Accounting of Trade Act, or as many know it, the CARAT Act; or 
the ``Blood Diamonds'' Bill.
    I fully support his intentions to implement a coding system 
the would stop the illicit diamond trade. With this 
legislation, a diamond's origin can be certified in order to 
sever the funding link that has allowed mercenary groups and 
so-called rebel groups in Sierra Leone, Angola, and elsewhere 
to enrich themselves and commit gross abuses against 
governments and unarmed people.
    The illicit diamond trade has assisted a few bad men to 
create anarchy and chaos on the African Continent. But it has 
made all of us who fail to act complicit in the crimes against 
humanity and the suffering that these men create. In order to 
break that complicity we need a prompt review of US Africa 
policy, we need to pass Tony Hall's bill, and we need to 
implement sanctions against countries and individuals who have 
already been named as diamond traffickers.
    I would also like to ask the Committee to seriously 
consider action against diamonds that are certificated as 
having come from Liberia as well. While Liberia has not been 
the subject of any UN Security Council Resolutions or reports, 
it is physically impossible for Liberia to produce the diamonds 
that it says it does: it is clear that Sierra Leone's diamonds 
are being laundered through Liberia and onto the legal market 
and then to our jewelry. Most likely, right here to the United 
States since the US consumes two-thirds of all the diamonds 
produced for jewelry.
    In Angola, sanctions-busting led to a report released by a 
United Nations panel on March 15th of this year carefully 
documenting the ways in which UNITA has been able to circumvent 
the U.N. sanctions against its trade of diamonds extracted from 
UNITA-controlled areas in Angola. We all know the objectives of 
UNITA: to foment chaos in Angola and render it ungovernable. 
They pretty much were able to do that due to their trade in 
illicit diamonds. They even
    went so far as to shoot down UN planes carrying individuals 
committed to making peace.
    The resultant Fowler Report of the United Nations Security 
Council, named after Robert Fowler of Canada who led the 
investigation team, took the bold step of naming names of 
individuals and countries that were sanctions busters.
    We should lead the effort to implement the Fowler 
recommendations, not just to study them. People are losing 
their homes and their lives while this Administration studies.
    U. N. Secretary Robert Fowler's report recommends that 
anyone trading in illicit diamonds be expelled from the 
industry and that any country knowingly involved in smuggling 
lose its export accreditation.
    Under the proposals, all rough diamonds are to be exported 
in sealed packages certified by the authorities in the 
exporting nations and verified by a new international diamond 
council, made up of governments, industry, and non-governmental 
organizations.
    Some of the sanctions-busters named by Ambassador Fowler 
are our allies. If we were really serious about the diamond 
trade our leadership could make a difference.
    The U. S. must show leadership and act more swiftly against 
all the countries mentioned in the Fowler Report including 
Burkina Faso, Togo, and Rwanda who were named in Fowler's 
Report as being involved in illegal trading operations with 
UNITA's Jonas Savimbi.
    In the Congo, Uganda and Rwanda have occupied nearly half 
of that nation including the Congo River City of Kisangani, a 
major trading center for the diamonds pulled from the 
surrounding jungles. The battle now rages for Mbuji-Mayi, the 
capital of the southeastern province of East Kasai and the 
center for Congo's diamond mining.
    Rwanda is ``running'' diamonds looted from Congo and Angola 
and wreaking havoc on the people of Eastern Congo in reckless 
pursuit of its own policies, encouraged by the United States 
and the international community, as we all stand and do 
nothing.
    At the World Diamond Congress, which took place in Antwerp, 
Belgium in July, the International Diamond Manufacturers' 
Association and the World Federation of Diamond Bourses agreed 
to establish a system of certificates of origin to identify the 
provenance of diamonds.
    I would encourage them to move swiftly or a boycott of all 
diamonds might occur. I note that DeBeers is already running 
ads to encourage Christmas diamond purchases.
    The United States and Europe must also begin bilateral and 
multilateral discussions with Israel a leading destination for 
the illicit diamonds. The sad fact is that diamonds from Africa 
have helped to build and enrich the cities of Antwerp, 
Brussels, Tel Aviv, and New York. Yet Africans remain 
hopelessly impoverished and are even going backward. Something 
is terribly wrong with this industry. And that should be 
addressed too.
    Africans should control their precious resources. But the 
West actively thwarts such efforts. For example, an important 
move in the right direction was recently halted when the 
British refused to list on their stock exchange a joint venture 
between Zimbabwe and Democratic Republic of Congo so that Congo 
could market its diamonds independent of anyone else's control.
    I view this blockage as a direct effort to further entrench 
the current State and non-State actors and to deny African 
governments the right to control their own diamonds
      

                                


    Chairman Crane. Thank you, Ms. McKinney.
    The Customs Service has stated that it is impossible to 
administer the CARAT Act, which requires a certificate of 
origin where the diamond was mined, given the amount of 
transshipment that occurs in Africa. Could you please comment 
on how country of mining can be traced so the requirement is 
enforceable, to one and all?
    Mr. Hall. I heard that argument about a year ago and I 
heard that argument mostly from diamond dealers and DeBeers 
themselves. They kept saying it the whole year. We cannot do 
this. We cannot do this. It is impossible. It is very 
interesting, at the Antwerp meeting of a few weeks ago of which 
I was at, they passed this global certification program which 
pretty much says that they can do it and they can do it through 
a process of once the legitimate diamonds leave the country, 
they are sealed, they are certified, they are entered, and they 
stay in this packet. I cannot explain every aspect of it, Mr. 
Chairman, but the fact is that they can do it. They denied it 
all year and said it cannot be done, but it is very 
interesting, they are all saying, or a lot of them are saying 
that they can do it, and that is what they passed in Antwerp. 
These are the diamond dealers of the world.
    So the fact is that it can be done and it should be done. I 
do not know why we cannot do it, especially on rough diamonds. 
If I looked at your shirt and the suit that you are wearing 
today, the cheese that you are going to eat, I know where that 
is coming from because it is marked. We can mark diamonds. 
Because we buy 65 percent of all the diamonds in the world here 
in this country, we ought to have a right to say, where did 
this diamond come from? We are not talking about every little 
diamond, because that is impossible. We are talking about the 
rough diamonds that are chopped up into pretty sizeable 
diamonds.
    Yes, I believe it can be done. I believe that technology is 
coming. And I know that diamond dealers believe this because 
they passed it in Antwerp.
    Chairman Crane. We will later, after you folks, have 
William Wood, who is the Principal Deputy Assistant Secretary 
of International Organization Affairs at the Department of 
State, testifying after you folks. Someone else here, Miles 
Harmon, is the supervisory attorney advisor with the U.S. 
Customs Office. So I would hope that you folks might, if you 
are not under tight time constraints, have a chance to at least 
talk to them on that issue to try and resolve it.
    Mr. Wolf. Mr. Chairman, on that, we have a paper, too, 
called ``Possibilities for the Identification, Certification, 
and Control of Diamonds,'' which we would like to submit for 
the record.
    Chairman Crane. Absolutely.
    [The attachment is being retained in the Committee files.]
    Mr. Wolf. And also, as I made the point, in 1998 in 
Liberia, whose natural resources would only allow the 
exportation of $10 million of diamonds, they exported $297 
million. So the people who bought the $287 million knew that 
they were buying conflict diamonds, but I will just submit this 
for the record, Mr. Chairman.
    Chairman Crane. Very well.
    Ms. McKinney. Mr. Chairman, I would also like to submit 
some additional paperwork for the record. Studies have been 
done by Global Witness that talk about bar coding, and also I 
would like to submit the Fowler Report with its recommendations 
to the record, as well.
    Chairman Crane. Without objection, so ordered.
    [The information was not received at the time of printing.]
    Mr. Payne. Mr. Chairman, the work that is being done by the 
Canadian Mounted Police, we are going to try to get the origin 
of that and have that submitted also for the record.
    Chairman Crane. Yes, indeed.
    [The information was not received at the time of printing.]
    Chairman Crane. Mr. Levin?
    Mr. Levin. Thank you, and thank you so much for your 
testimony. I think it would be helpful if in the next few days, 
as soon as we can get into this, with all the other work that 
is before us, if you would work with us to work out the issue 
that Mr. Crane has raised. As I understand the legislation, it 
would start a certification process before the Antwerp or other 
public/private proposal is complete. So I think we need to 
discuss the feasibility of that. You need to help us work 
through that. That is the first issue. If we can do that, it 
would be highly necessary and valuable.
    Secondly, I think it would be useful if you could work with 
some of us and USTR relating to the question of WTO 
consistency, because that has been raised at least indirectly 
relating to your bill. So let us work in the days ahead on 
those two key issues.
    I do not believe that anybody can challenge the need for 
action. I do not think anybody can challenge the descriptions 
that you have given so graphically and to others as to what is 
going on in Africa relating to this. I think that is 
unchallengeable. It simply lays down before us the task of 
determining what we can do quickly, feasibly, effectively. So 
let us work together on those issues as intensively and 
intensely as we can.
    Mr. Hall. Mr. Levin, I think all of us here at the table 
are very willing to sit down and work with all of you on this 
piece of legislation. Nothing is in concrete here. Actually, 
the bill, according to my opinion, has too many waivers in it. 
I think there are too many outs in it. I would make it much 
tighter than what it is if I thought we could pass it. This is 
a piece of legislation that has waivers for the President and 
the Secretary of Treasury and they have waivers to be able to 
overlook the certification problem if, in fact, the technology 
is not there.
    As far as the WTO, none of us here, especially me--I am not 
an expert relative to the WTO, how this affects it. I have to 
leave that up to the trade experts, yourself and people on this 
committee, others. But failure to act on this and failure to 
act and to implement the Antwerp agreement will be, I think, 
disastrous for the diamond industry. I really believe that 
because there will be a consumer boycott, in my opinion, if we 
do not act on this.
    So this bill has a lot of waivers. It has too many as far 
as I am concerned, but I am willing to go along with it to get 
something in the record to start to stop the flow of some of 
these conflict diamonds.
    Mr. Levin. Let us work on it. We are going to have a vote, 
I think, fairly soon, and then the marriage penalty, and we 
probably could not resolve these issues today, but I think your 
testimony makes it clear we have to confront them and as 
quickly and as effectively as we can.
    Mr. Payne?
    Mr. Payne. Yes, Mr. Chairman. Let me just reiterate what we 
have all said. They are the countries of South Africa, Botswana 
and Namibia, that depend on this industry that are doing the 
right thing. They are very, very concerned. As I indicated, I 
went to Botswana and the overriding discussion with the 
president was the fact that if there is a boycott on diamonds, 
already he is hit with an AIDS pandemic and trying to put 
resources in that, but he said if there is a boycott on 
diamonds, they are really right back down to where they were 40 
years ago.
    So we are not opposed to diamonds. They claim they are a 
girl's best friend. I do not bother with them. But the fact is 
that we have got to separate them. We saw what happened in the 
furs. We do not want that to happen. We owe it to the African 
countries that have this resource to be able to have a clean 
commodity.
    And secondly, it is the most controlled industry in the 
world. Diamond prices are controlled, as you know, because the 
number of diamonds that are allowed to come out on the market 
is controlled by just one or two or three organizations. That 
is why the price of diamonds never varies. It is not like OPEC. 
They do not go up and down. They stay the same. They determine 
how many they are going to put out, and if they are not 
selling, they simply do not put any more out. They just store 
them for decades until the time comes that they will buy them.
    So I believe that there is such an internal control that 
there can be something, and if we push this, then we see the 
industry tends to step forward and come up. They know best what 
can be done. I think this would be a catalyst to having them do 
the right thing.
    Mr. Levin. Thank you. Well said. Thank you very much.
    Mr. Ramstad. [presiding]--I believe I am next. I have been 
handed the gavel and I believe I am next in the line of 
questioning. I want to make a couple of comments and then ask 
one question before yielding to my friend from Louisiana.
    First of all, I want to state for the record my deep 
respect for all four of you. No members of Congress have done 
more to further the cause of human rights than the four of you 
sitting at this witness table today and I applaud you for that.
    The horrific acts of brutality that are occurring in Sierra 
Leone and other parts of Africa are unspeakable crimes against 
humanity, obviously against innocent people who happen to be in 
the wrong places at the wrong time and something that concerns 
or should concern not only every member of Congress but every 
citizen of this country and of the world.
    I was also, secondly, encouraged by the summary statement 
of Chairman Crane when he said conflict diamonds are not 
forever. I also share the concerns raised by the ranking 
member, my good friend Mr. Levin, and Chairman Crane as to 
the--which is the same concern of the administration--how we 
are to enforce this proposal.
    Let me just ask any of the members of the panel for my 
edification. I think there is an education job that needs to be 
done here. With respect to rough diamonds, Tony, you mentioned 
that there are means to identify and certify. Are there 
geological markers that differentiate diamonds mined in 
different parts of the world as far as rough diamonds are 
concerned? I really am ignorant as to whether there are 
geological markers or how exactly are they to be identified and 
certified.
    Mr. Hall. You should look at the Antwerp agreement where 
there would be a global certification, that once the diamonds 
came from a country and the government that we recognize that 
is legitimate, it is something that they will declare for their 
country. These would be sealed. I am not sure how they would 
seal it. They would seal it in an envelope or some kind of 
container where it could not be broken and it would be 
registered. These would be legitimate diamonds. As they find 
their way to either Antwerp or Israel, et cetera, then they 
would be cut up and the certificate would follow it.
    Once you cut and polish a diamond, there is no way you can 
tell where it came from. Some diamond dealers can tell you on 
the rough diamonds pretty much the area that these diamonds 
might have come from, but you cannot depend on that, not at 
all.
    Mr. Ramstad. Is this a process----
    Mr. Hall. They can be marked by lasers. There are people 
that are working on it in Canada, as I understand from Mr. 
Payne's testimony, from my own testimony, that they are working 
on technology to market. That technology is probably not there 
yet. But even before you market, it can be done. If it could 
not be done, they would not have passed that resolution, that 
plan of action in Antwerp a few weeks ago.
    Ms. McKinney. If I could add to that, we had testimony, I 
believe it was in the Africa Subcommittee, and Donald, you can 
help me on that, on this issue. There was testimony from South 
Africa, Charmian Gooch, I believe is the woman, from Global 
Witness who spoke specifically to the issue of the geological 
indications of the origin of a diamond. That is why I want to 
make all of their reports available to the committee, because 
it is my understanding that there are, indeed, ways with 
geological markings to determine whether or not a diamond is 
from South Africa or Namibia or Sierra Leone.
    Mr. Ramstad. This agreement that you are describing, is 
this the same proposal to track the source of diamonds that the 
World Diamond Congress adopted? Is that the same proposal?
    Mr. Hall. Yes.
    Mr. Ramstad. That is the Antwerp agreement?
    Mr. Hall. Yes.
    Mr. Ramstad. Okay. Mr. Payne?
    Mr. Payne. Also, about two years ago, on one of my trips to 
South Africa, I met with one DeBeers official, and although he 
indicated it was an informal meeting and discussion, he 
indicated that there are ways that they believe you can mark 
somehow the bulk of them. Like I said, there is new technology. 
They call it fingerprints. It is too technical for me, too. I 
am still on my AOL. But they claim they have really a lot of 
new possible developments.
    My point is this, as I indicated. It is a most controlled 
business. They have ways of being able to know exactly the 
weight of diamonds. I went to a diamond facility run by the 
government of Botswana. You had diamonds all over a bench that 
was almost as long as this. They weigh them when they come in 
and they weigh them when they go out and bells simply ring 
because the weight remains the same. It is just amazing. So 
they have evidently done a lot with diamonds that we do not 
know about and I think that this is the challenge to them. If 
they want to preserve this controlled economy that they have 
and has been good to them, then I think that they will come 
forth.
    Mr. Wolf. Mr. Ramstad, very briefly, there is a book, 
following up with what Ms. McKinney said, called The Genesis of 
Diamonds by Alpheus Williams. In it, the book gives a detailed 
analysis of diamonds from the production of different mines in 
South Africa and demonstrates the level of detailed information 
that can be gathered on surface features. Also, as Mr. Hall 
said, there is a waiver in the bill that if it is not 
available, there is a waiver.
    Mr. Ramstad. Speaking of bells ringing and going off, I 
want to get Mr. Jefferson's questions in so this panel can be 
excused before we go to vote.
    The enforceability issue and then the WTO question that Mr. 
Levin raised, I think those are the two issues, and you have 
gone a long way certainly in explaining the enforceability 
aspect of this legislation.
    Let me now yield to my friend from Louisiana, Mr. 
Jefferson, and then following Mr. Jefferson's line of 
questioning, we will dismiss this panel and recess to go vote.
    Mr. Jefferson. I thank you, Mr. Chairman. I want to ask my 
colleague, Don Payne, a question. All of us have seen the 
suffering that goes on because of these diamonds, which we call 
conflict or blood diamonds, whatever. The big issue is what to 
do about it. How can we really step in and provide an effective 
answer or an effective solution to it?
    One of the concerns is how does it affect the countries 
that have the clean diamonds? How does it affect Botswana and 
South Africa and so on? I want to know, in your talks with them 
on your recent visit, how do they feel about this legislation? 
Do they want us to go forward with this? Do they think it 
presents no risk for them or do they think it provides a remedy 
for their countries?
    Mr. Payne. Yes, that is a very good question. One of the 
purposes for our visiting and having discussions with the 
leaders of the country was to find out how do you really feel 
about this. Festes Mogae, who was elected last year, as you 
know, Botswana, the most stable government, they have had 
because of diamonds about a billion dollars in surplus almost 
over a decade. They have had a surplus each year because of 
that and they have been very frugal in the manner in which the 
government has been spending money in a planned way.He is 
extremely concerned about the fact that people are saying 
diamonds are rebels' best friends. Now, if you use a general 
statement like that, that simply means that all diamonds tend 
to be bad diamonds. So they, of course, are not aware of 
exactly what can be done, but they really want to see their 
diamonds continue to move forward and that there be some 
distinguishing way that their diamonds can be segregated from 
those blood diamonds.
    So I could speak very specifically about President Mogae, 
who once again last week at the millennium, I had an 
opportunity to talk to him about this issue, extremely 
concerned, probably the number two issue in his country because 
the AIDS pandemic, he says, is number one. But this is 
something that he definitely wants to see something happen. He 
does not have the answer, but he knows that his diamonds are 
clean, are good, it is helping his country along. He wants his 
diamonds to be separated from those Sierra Leonean, Democratic 
Republic of Congo, and Angola diamonds.
    Mr. Jefferson. Does he support the approach that the bill 
takes or supporters take or the U.N. takes or does he support 
the self-regulation that is going on with Antwerp?
    Mr. Payne. He simply supports the concept in general. I am 
not sure that he has the details of the legislation, and Tony 
may know better than that, but we may ensure that those 
embassies do get copies of the legislation.
    Mr. Jefferson. Mr. Hall?
    Mr. Hall. Let me just say that this piece of legislation 
really protects legitimate diamonds, diamonds coming from 
Botswana, South Africa. As a matter of fact, that is pretty 
much what the Antwerp agreement is, that legitimate diamonds 
coming into the various diamond centers, they will be 
protected. What they are trying to stop is the conflict 
diamonds.
    I want to reiterate again, if we do not pass something and 
if the diamond dealers do not implement the plan they just 
agreed on a few weeks ago in Antwerp, there will be a consumer 
boycott and people will ask the question, where is that diamond 
from? Countries like Botswana, South Africa, Namibia, 
legitimate diamond dealers in our own country, will be 
affected. These are legitimate businesses. They will be 
affected in a very adverse way.
    So I am saying that there are consumer groups, consumer 
boycott groups that are ready. We must pass something and we 
must implement that plan that they passed in Belgium or we will 
see a boycott, and we do not have to worry about whether this 
bill is technically correct or not because it is all over. I 
mean, it will be a disaster for the diamond business.
    Mr. Jefferson. Frank, I want to ask you a question, if I 
could, about the U.N. resolution. What is happening with that? 
The U.N. passed it. What are they doing to enforce it, because 
your bill calls for the Congress to pass the bill to pick up 
the U.N. legislation, the U.N. sanctions and so on. What is 
happening under that provision? How is it working?
    Mr. Wolf. I think unless the United States participates 
actively by passing something like Mr. Hall is talking about, 
for all practical purposes, it is just not going to work. Now, 
I have been supportive of the U.N. effort. I have been 
supportive of the U.N. effort with regard to the peacekeepers 
in Sierra Leone. Unfortunately, the Congress has not seen that. 
But the U.N. has been ineffective in even dealing with peace in 
Sierra Leone or getting arms cut off.
    So the resolution is interesting and it is helpful, but 
until the United States, which is 65 percent--two-thirds of 
every diamond sold in the world is sold right here in the 
United States--until we act, frankly, I think it will not be 
very, very effective.
    Ms. McKinney. Basically, the United Nations is studying, as 
is this administration, studying. But I would just like to add 
further to what my colleague Tony Hall has said, and that is 
that there are groups out there--we have been working with 
them--who are ready to do a boycott, and a boycott, I believe, 
is the last thing that any of the legitimate, the leaders of 
the legitimate diamond industry and countries want.
    Mr. Jefferson. And you believe that if we do not act this 
session on this bill, that this boycott will occur? That is 
what you are saying?
    Ms. McKinney. Absolutely. That is my opinion.
    Mr. Jefferson. Does this bill, Tony, does it have a 
companion in the Senate? Is it moving somewhere over there? 
Does this bill have a companion in the Senate? Is it moving in 
the Senate?
    Mr. Hall. Yes. I do not know if the bill has been 
introduced, but we do have a couple Senators very interested in 
it. Senator Gregg originally put together a much tougher piece 
of legislation that Frank and I favored, added it to the bill. 
That is when we had the debate on the floor with Mr. Crane, 
when he agreed to have the hearing. So this bill is not a 
perfect bill. To me, it has too many waivers. If I could, I 
would make it much stronger. But it will stop many conflict 
diamonds, not all, because this sets up a system for the first 
time.
    I am very unhappy with our State Department, the way they 
have handled this. Before, under Mr. Morrison, they had some 
people that were very out front on it. But I think they are 
being very soft and kind of neutral on this. Mr. Holbrooke has 
been great. He has been wonderful. Everybody can be neutral, 
but if we do not do something and the Antwerp agreement is not 
carried out, there will be a boycott and I think all of us will 
be very disappointed. I am not sure I will not be part of it.
    Ms. McKinney. I know I will be a part of it, but I would 
like to also just recommend once again to the panel the book by 
Wayne Madsen, Genocide and Covert Operations in Africa, 1993 to 
1999. There, it clearly spells out the role of our own 
government in this whole issue.
    Mr. Payne. I just could not reiterate it any more. I think 
it is essential that we do something. We have been, as a 
country, in the past decade standing on the side of too many 
issues that if we had acted--the genocide of Rwanda would not 
have occurred if we had moved in and given the green light for 
something to happen. We did nothing. We had hearings, four 
hearings. Genocide was not mentioned once in the Africa 
Subcommittee.
    So we have a responsibility, because from the Rwanda 
situation, the Congo situation was created, and you have 
spillovers that keep going. Sierra Leone actually should be a 
receivership. The U.N. should come in and actually run the 
country to put it back like it is trying to do in Cambodia or 
something. There is no government. The diamond people are 
stronger than the Nigerian forces that were there. We can win 
that battle if we have the proper resources, but we are not 
going to be able to dilly-dally and send untrained troops and 
inadequate numbers in order to secure peace in that country.
    Mr. Jefferson. One last thing. Short of this bill passing, 
given the time that we have to get this done, do you think some 
sort of a statement about this, some sort of, as Tony is 
talking about, expression by the State Department is helpful in 
this regard, and if so, what form should that take?
    Mr. Hall. Did you say, Mr. Jefferson, that some kind of a 
statement from the State Department would help?
    Mr. Jefferson. No, I was asking you that. I was saying, 
short of this bill passing, and there is a decided likelihood 
that it might not given the time we have to deal with it, would 
some expression from the State Department be helpful, and if 
so, what form should it take?
    Mr. Hall. I do not think it would be helpful at all. We 
have been making statements for a year and a half. I do not 
think it will do anything.
    Mr. Jefferson. You just criticized them for not doing the 
right thing, for not saying anything, not doing anything, and I 
am asking whether there is anything they can do or say that 
makes any difference.
    Mr. Hall. Unless you have some kind of certificate of 
origin, unless you have some kind of sense of Congress, unless 
you do embargoes on these countries that we know are dealing in 
conflict diamonds, there have been a lot of statements and the 
statements have not worked.
    Ms. McKinney. The Fowler Report, the report of the 
Secretary General on the sanctions busting with respect to 
UNITA and the illicit diamond trade that has funneled money and 
arms into UNITA, had specific recommendations. My 
recommendation to the State Department would be to not just 
study the Fowler recommendations but to implement them. The 
Fowler Report went farther than any other report. It named 
names. It named countries. So we know who is helping to launder 
these diamonds. Put them on a list and deny them entry into 
this country. We have not done that. Freeze their assets. We 
have not done that. So there are things that can be done. It is 
in the Fowler Report and it needs to be done. The State 
Department needs to do it and stop talking about it.
    Chairman Crane. [presiding]--I want to thank all of our 
panelists here for their presentations and we look forward to 
continuing working with you. With that, this panel can be 
excused.
    I would now like to ask William Wood, the Principal Deputy 
Assistant Secretary with our International Organization Affairs 
of the U.S. Department of State to come forward and testify. 
Mr. Wood, if you could, try and keep your oral testimony to in 
the neighborhood of five minutes. Any written testimony will be 
made a part of the permanent record and you may proceed.

   STATEMENT OF WILLIAM B. WOOD, PRINCIPAL DEPUTY ASSISTANT 
SECRETARY, INTERNATIONAL ORGANIZATION AFFAIRS, U. S. DEPARTMENT 
                            OF STATE

    Mr. Wood. I would like to express my thanks to the 
subcommittee for inviting the State Department to testify on 
this very important issue. It is an issue that is a growth 
industry, if I may say so, gathering both diplomatic momentum 
and practical expertise as nations, private sector, and non-
governmental organizations work together to develop an 
effective way to prevent some of nature's most beautiful 
objects from being used for some of mankind's most hideous 
purposes.
    My written testimony details the history since, in essence, 
1998 of U.S. efforts in this regard. The United States is proud 
to really have been a leader in both the theory and in the 
implementation of measures to block the illicit trade in 
diamonds and their use to support insurgencies against 
legitimate governments in Africa. We have mentioned here the 
resolutions in the Security Council. The United States 
supported those strongly. We have mentioned the Antwerp 
meeting. The United States supported that strongly. We have 
mentioned the Kimberley process. The United States supports 
that strongly and, indeed, will be attending the ministerial 
level meeting convening in South Africa next week, which is the 
next key step in this process.
    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, and 
destabilizing elements. We believe we have seen good 
cooperation. The diamond industry, both because of its desire 
to distance itself from the misuse of the product and to avoid 
being identified with that misuse, has actively participated. 
We believe that non-governmental organizations, several of 
which are going to be testifying later today, have provided 
both impetus and technical insight into the issue.
    We believe that the ministerial in South Africa next week, 
which will build on the proposals developed in Antwerp, will be 
an important step in laying the groundwork for an international 
regime creating certificates of origin that are reliable and 
that are effective in controlling the illicit trade in diamonds 
by insurgent movements.
    Mr. Chairman, my formal testimony started out by noting 
that the illicit trade in rough diamonds bears some resemblance 
to the illicit trade in narcotics. The most crucial similarity 
is that in both cases, the illicit trade destroys lives. This 
is a crucial and tragic situation.
    Unlike, unfortunately, the illicit trade in narcotics, the 
illicit trade in diamonds exists side by side with a large, 
flourishing, and important legitimate trade, and it is very 
important as we work through the techniques of restraining and 
rechanneling the illicit trade into licit channels that we not 
damage the legitimate trade, the legitimate trade which is 
important to countries like Botswana in Africa, Namibia, to 
countries like Israel in the Middle East and India in Asia, to 
allies like the Dutch and the Belgians in Europe, and to our 
own active legitimate diamond trading industry.
    I think I will cut it off there, Mr. Chairman, in the 
interest of getting to questions and answers, but the one last 
thought I want to leave you with is, the administration is 
proud of its efforts and creativity to advance this issue. We 
believe that diplomatic momentum and practical techniques are 
building and we continue to continue this effort as we did in 
the Security Council and we did in the G-8, both foreign 
ministers and summit meetings, as we did in the Security 
Council summit that occurred last week and as we will do in 
South Africa next week.
    Thank you very much, Mr. Chairman.
    [The prepared statement follows:]

Statement of William B. Wood, Principal Deputy Assistant Secretary, 
International Organization Affairs, U. S. Department of State

    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 focussed 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.
      

                                


    Chairman Crane. Thank you, Mr. Wood.
    Customs has stated that it would be impossible to enforce 
H.R. 5147, the revised CARAT Act, because of the difficulty 
relating to the certificate of origin requirement for the 
country where the diamonds were mined and that there is simply 
no practical means effectively to enforce this. Can you comment 
on this? Is H.R. 5147 consistent also with the WTO?
    Mr. Wood. A couple of points there, Mr. Chairman. First of 
all, we certainly applaud the dedication, commitment, and 
energy of Congressman Hall, Congressman McKinney, Congressman 
Payne, and Congressman Wolf in this regard and we have complete 
sympathy and support for the objectives that gave rise to the 
legislation you have referred to.
    We do, however, believe, as Mr. Levin indicated, that there 
are elements of that legislation that may be getting ahead of 
the international consensus that will be required to make any 
regime work. We do have concerns relating to the enforcement 
and the implementation provisions in that legislation, relating 
to creation of a certificate of origin, a regime that is not 
yet in place internationally, relating to certifications 
regarding transshipment, which is a certification that at 
present there is no technical way to make because there is no 
technical way to accumulate the information.
    We have interests in some of the countries that are 
mentioned in Title I. Just to mention one, Ukraine. Ukraine, of 
course, is on the Security Council and, indeed, supported the 
Security Council resolution banning non-certified diamonds 
produced in Sierra Leone. I think that this is a classic 
illustration of the kind of complexity within the international 
environment regarding this very difficult issue. We believe 
that we can work successfully with Ukraine as we worked on the 
Security Council to come up with a positive regime that will 
control illicit diamonds and rechannel them into legitimate 
channels.
    We are not immediately sure that creating a negative list 
is the best approach at this time. I do not want to rule it out 
at some time in the future. But right now, that is not the 
direction in which the international effort is moving. We will, 
again, know more following the ministerial in South Africa next 
week.
    Regarding the question on the WTO, we are still in the 
initial phase of developing a system, so it is difficult to be 
really precise. But we are working closely with our trading 
partners to devise an approach that will both effectively 
address the problem of illicit trade in diamonds and minimize 
any potential WTO concerns.
    For example, by focusing on rough diamonds, we are seeking 
to limit the complexity of the certification system to the 
extent possible and at the same time to limit the universe of 
countries that would be directly impacted by the regime. By 
focusing on a simple, transparent process of certification, we 
are attempting to ensure that the system will be non-
discriminatory and that it will impose relatively little burden 
on exporting and importing countries.The responsibility for 
enforcing the system will be vested in sovereign governments. 
That is identical with the system used by the United Nations in 
which the enforcement of sanctions is vested in sovereign 
governments acting individually or collectively. Governments 
will retain the ultimate responsibility for deciding what 
actions to take.
    I would like to go slightly further than that, though, and 
say the predominant characteristic of the international 
discussion on illicit trade in diamonds right now is one of 
growing consensus and commitment across sectors by national 
governments, by private industry, by non-governmental 
organizations.
    Mr. Chairman, I have some experience, indeed, too much 
experience in supporting sanctions regimes in the U.N. that 
looked terrific on paper but did not do the job. We think that 
a regime that genuinely has wide international backing, that is 
enforced by sovereign governments, implemented largely by the 
diamond industry, and that has governments, diamond industry, 
and non-governmental organizations as watchdogs can be an 
effective regime. But I think that we need to keep pace with 
the pace of international dialogue on this subject so that we 
can come to a regime that meets all of our criteria and 
fulfills all of our objectives. Thank you.
    Chairman Crane. Do you see establishing direct trade 
between the American diamond industry and legitimate diamond 
producers as a practical solution to the illicit diamond trade?
    Mr. Wood. Direct trade, sir?
    Chairman Crane. Direct trade between the American diamond 
industry and legitimate diamond producers.
    Mr. Wood. We certainly think that there should be full 
dialogue among both the American consumers and the legitimate 
producers. I am not sure that we are calling for a, if I 
understand your question, sir, a reorganization of the industry 
so to cut out, for instance, the diamond middlemen in our 
allied nations of Belgium or the Netherlands or the diamond 
cutting industry in India or something like that, if I 
understood your question, sir. I would be glad to take the 
question and get a fuller response back to you.
    Chairman Crane. Does the State Department intend to take 
action concerning the U.N. Security Council resolution 
requiring member States to prohibit rough diamond imports from 
Sierra Leone unless certified by the government?
    Mr. Wood. Absolutely. We are taking steps in two 
directions. One, we have got technical experts in Sierra Leone 
who are helping them to develop a diamond certification regime 
that is technically sound. Right now, there is no such 
certification regime so the prohibition on certified Sierra 
Leonean diamonds amounts to a boycott, a mandatory boycott of 
Sierra Leonean diamonds at the moment.We are trying to assist 
them to develop a certification regime and, of course, for our 
part, the administration will be putting forward implementing 
regulations to make sure that the United States adheres to the 
mandatory provisions of that resolution for which we voted and 
which we fully support.
    Chairman Crane. Mr. Jefferson?
    Mr. Jefferson. Mr. Wood, were you in the room a minute ago 
when we heard some complaints from members of Congress that the 
State Department has done, well, nothing in this area as far as 
they are concerned? You take issue with that, I take it, but in 
what respect and what has the State Department done in this 
area?
    Mr. Wood. Thank you for asking me that question. I do take 
issue a little bit with that perspective. The issue of 
controlling illicit trade in diamonds is a new area. The 
question of trying to find effective sanctions to contain 
conflict, to bolster legitimate governments, and to weaken the 
rebels and insurrectionists and the brutal elements that are 
conducting so much violence in Africa and elsewhere right now 
is one of the administration's highest, highest objectives. We 
believe that sanctions can be effective, as a way of putting 
pressure on the bad guys short of military means, which is both 
highest cost, highest risk, and also is likely to have the most 
collateral damage. So we think that sanctions are important.We 
think that creative ways to control the illicit trade in 
diamonds offers real potential to get at a resource that not 
only fuels but also motivates rebellion. It allows these 
movements to purchase weapons and it allows the leaders of 
these movements to amass a level of personal wealth that in 
many cases may well be their principal motivation for leading 
an insurrection. So we think that this is an important 
element.Starting in 1998 with the adoption of the prohibition 
on purchase of uncertified Angolan diamonds, the United States 
began to conduct with the United Kingdom a dialogue with 
interested national governments, the private sector, and non-
governmental organizations to see how we could make this more 
effective. The fact of the matter is, the certification regime 
in Angola has not worked all that successfully. It is being 
strengthened with our assistance. And the international 
controls over Angolan diamonds that may not have passed through 
that certification regime was not effective at all.So we began 
this dialogue. We broadened this dialogue, among other places, 
to the Group of Eight. The Group of Eight is fairly important 
because they represent a block of the principal consuming 
countries in the world and, therefore, exercise some influence 
over not only the industry but also the producing countries, 
and over a six-or eight-month period, we developed a major 
proposal within the Group of Eight which was formalized at the 
foreign minister's meeting in Osaka in July and endorsed at the 
head of State level in Okinawa that same month.Similarly--and 
that is sort of the formal government-to-government process, 
with the one addition of our strong support for a resolution 
also in July, if memory serves, banning or prohibiting the 
purchase of uncertified diamonds from Sierra Leone. I guess 
that was June.That is sort of the formal government process. At 
the same time, some of our policy planning people, some of our 
Africa experts, some of our economic experts have been engaged 
in parallel discussions of the kind that governments do not 
very often have in which you sort of say, look, we all know 
what the objective is. We all know that it is a complicated 
equation. Let us figure out how we can together, your country, 
my country, your industry, my private sector, your non-
governmental organizations, our non-governmental organizations, 
how we can all get together and put together a regime that is 
not rhetorical, that does not inflict high collateral damage on 
either an innocent legitimate diamond industry, innocent 
producers, or innocent countries, but at the same time can have 
a real impact on the illegitimate, illicit trading of diamonds 
to support brutal insurgent armed groups. That process is not 
complete.
    Mr. Jefferson. But it is an ongoing process?
    Mr. Wood. The ministerial meeting in South Africa next 
week, which is the culmination of the Kimberley process, which 
has been a process of working groups meeting over the last 
several months, will be another key step. We expect this issue, 
which was mentioned in the Secretary General of the U.N.'s 
report to the Millennium Summit, to be discussed in the General 
Assembly of the United Nations this fall. This is a live issue. 
It is one in which the momentum is growing.
    We, frankly, from the State Department's view, would 
welcome a sense of the Congress statement urging further 
progress or something like that. We are not sure that the 
specifics contained in draft legislation on the table right now 
is going to conform ultimately with the end result of the 
Kimberley process and the international dialogue. But as is so 
often the case, there is a genuine coincidence of objectives in 
this regard and it is important that we not allow differences 
of tactical nuance to undermine what is genuinely a common 
effort to achieve that goal.
    Mr. Jefferson. You are saying that the State Department 
would welcome urging by the Congress to complete the Kimberley 
process and complete the international dialogue between the 
various countries with respect to these issues?
    Mr. Wood. And to find effective measures to control the 
illicit trade of diamonds as it supports insurgent elements. 
But again, this would be a declaration of, if I may say so, a 
common objective rather than a more specific recipe of 
measures.
    Mr. Jefferson. Thank you, Mr. Chairman.
    Chairman Crane. Thank you. Mr. Wood, I want to apologize 
for our members not being here, but on the floor right now is 
being debated the effort to override the President's veto of 
the marriage penalty tax elimination and for that reason our 
colleagues are over there participating.
    With that, I want to thank you for your participation and 
we will be back in touch with you.
    Chairman Crane. With that, I would now like to convene our 
panel from the private sector, Matthew Runci, President and 
Chief Executive Officer, Jewelers of America, Inc.; Alex 
Yearsley, Campaigner, Global Witness, from London, England; 
Jeffrey Fischer, President, Diamond Manufacturers and Importers 
Association of America; Holly Burkhalter, Advocacy Director, 
Physicians for Human Rights; Jack Jolis, President, Rough 
Diamond Consultancy, Antwerp, Belgium; and William Boyajian, 
President, Gemological Institute of America. Please take seats.
    Folks, if you could please contain your oral presentations 
to five minutes or less, your written statements will all be 
made a part of the permanent record. With that, we will proceed 
with Mr. Runci.

   STATEMENT OF MATTHEW A. RUNCI, PH.D., PRESIDENT AND CHIEF 
  EXECUTIVE OFFICER, JEWELERS OF AMERICA, INC., NEW YORK, NEW 
            YORK, ON BEHALF OF WORLD DIAMOND COUNCIL

    Dr. Runci. Thank you, Mr. Chairman, members of the 
subcommittee. I am Matthew Runci, President and Chief Executive 
Officer of Jewelers of America, the national association of 
more than 12,000 professional retail jewelers in the United 
States. I appear before you today on behalf of the World 
Diamond Council, an international body formed in July to 
rapidly develop and implement a comprehensive plan to curtail 
trade in conflict diamonds. Membership of the council is 
comprised of all segments of the international diamond 
industry, producers, manufacturers, traders, and retailers, as 
well as financial institutions, governments, and relevant 
international and civil society organizations.
    The WDC is dedicated to the eradication of the trade in 
conflict diamonds, allowing the legitimate diamond industry, 
which handles 96 percent of world rough diamond production and 
gives employment to more than two million people, to continue 
the promotion and sale of diamonds as a symbol of love and as 
an agent for economic growth and prosperity. A framework for 
effectively curtailing conflict diamond trade without adversely 
impacting legitimate businesses and national economies must, in 
our opinion, adhere to six principles.
    First, while industry efforts already underway are making 
and will continue to make a difference, industry efforts alone 
will not be sufficient to end the trade in these products 
completely. Cooperative and coordinated initiatives between all 
stakeholders will greatly improve the prospects for ending this 
illicit trade.
    Second, the origin of individual diamonds cannot be 
reliably determined by non-destructive analytical means. 
Contrary to certain popular misunderstandings, it is not a 
matter of devising or perfecting a tool for diagnostic 
measurement. The necessary distinguishing properties are simply 
not present in the stone from nature to begin with.
    Third, certifying that the origin of a diamond is conflict-
free may only be achieved through the systematic tracking of 
shipments, beginning with controls in the country of rough 
extraction. Unless rough diamonds can first be certified as 
conflict-free at the time they are exported from the country of 
mining, there is no method by which to verify their origin as 
conflict-free afterward.
    Fourth, a system of tracking rough diamond shipments from 
mining sources through cutting centers is ambitious but 
feasible, because while the volume of stones produced annually 
is large, the number of export and import control points is 
small.
    From that point onward, however, the task of tracking 
polished diamonds is neither feasible nor necessary. Fossils of 
polished stones are routinely sorted, mixed, and repackaged at 
each level of the distribution chain as economics drives the 
selection and supply is continually adjusted to meet demand in 
a way that yields profit. Diamonds often pass through as many 
as a dozen hands before they ultimately reach the retail 
counter.
    Sixth, most diamonds are sold in an undifferentiated manner 
in the marketplace. The current trend toward identifying some 
polished diamonds by a brand name should not be confused with a 
system of market controls that would be required to establish a 
chain of assurance certifying that diamonds are conflict-free 
in origin. At this time, in fact, only one or two companies in 
the world possess the wherewithal to establish and maintain the 
requisite system of controls from the mining source onward, as 
well as the trade distribution network required to validate a 
chain of assurance through to the consumer.
    Statutory authority possibly will be required in the United 
States in the future to implement necessary controls. However, 
it is imperative that the provisions of U.S. legislation be 
fully consistent with a broad international framework of rough 
diamond controls. It is not possible to legislate a national 
solution to the conflict diamond problem without inflicting 
significant economic damage on the diamond and jewelry 
industries of the U.S., Israel, India, Belgium, Botswana, South 
Africa, Namibia, and Russia.
    Mr. Chairman, a transnational problem requires an 
international solution. For this reason, we respectfully 
request that Congress defer action on pending legislation until 
an assessment has been made of the outcome of the ministerial 
meeting on this topic scheduled in London in October. At the 
same time, however, we do propose an international system to 
control the flow of rough diamonds and there are four simple 
points in summation.
    First, all polished diamond imports entering the U.S. in 
commercial quantities would be required by law to originate in 
countries that have rough diamond controls in place.
    Rough diamond controls should be defined as, second, that 
all countries that export or import rough diamonds should have 
official import/export offices with data on shipments 
registered in an international diamond database. Rough diamonds 
would be sealed in standardized tamper-proof containers, 
accompanied by counterfeit-proof documentation.
    Third, all countries that import commercial quantities of 
polished diamonds should adopt legislation requiring 
certification that imports of commercial quantities of polished 
diamonds may only come from countries that have implemented 
rough controls.
    And finally, fourth, all countries should adopt legislation 
to authorize the criminal prosecution of those who are found to 
be knowingly dealing in conflict diamonds.
    Mr. Chairman, it is imperative that the U.S. coordinate its 
efforts with other stakeholders in order to ensure that our 
shared goal will be achieved. Preemptive U.S. legislation, 
however well intentioned, will not achieve the desired outcome 
and will instead adversely impact legitimate diamond economies 
all over the world and tens of thousands of small businesses 
throughout the United States, while perhaps benefitting only a 
few large diamond producers who possess the internal capacity 
to self-guarantee the origin of their products.
    Mr. Chairman, let us work together in solving this terrible 
problem. Thank you.
    [The prepared statement follows:]

Statement of Matthew A. Runci, Ph.D., President and Chief Executive 
Officer, Jewelers of America, Inc., New York, New York, on behalf of 
World Diamond Council

    The World Diamond Council (WDC) is the international body 
chartered in Antwerp in July by the World Federation of Diamond 
Bourses and the International Diamond Manufacturers 
Association, solely for the purpose of rapidly developing and 
implementing a comprehensive plan to curtail trade in conflict 
diamonds while minimizing impact on the legitimate diamond 
industry. Membership of the Council is comprised of all 
segments of the international diamond industry--producers, 
manufacturers, traders, and retailers--as well as financial 
institutions, governments and relevant international and civil 
society organizations.
    The World Diamond Council is dedicated to the eradication 
of the trade in conflict diamonds, allowing the legitimate 
diamond industry--which handles 96 percent of world rough 
diamond production and gives employment to over 2 million 
people--to continue the promotion and sale of diamonds as the 
ultimate symbol of love and as an agent for economic growth and 
prosperity in stable African democracies such as Botswana, 
Namibia, and South Africa.
    The Council held its inaugural meeting on Thursday, 
September 7, in Tel Aviv to begin implementation of its plan. 
The main features of the plan, detailed later in this 
testimony, include:
    1) Establishment of dedicated import/export offices for 
rough diamonds closely supervised by individual government 
authorities;
    2)Adoption of a uniform international certification system 
of sealing and authenticating each parcel of rough diamonds 
prior to export;
    3) Monitoring industry wide compliance with ethical codes 
of conduct that prohibit the trade in conflict diamonds;
    4) Obliging banks, insurance companies, shipping companies 
and other providers of auxiliary goods and services to cease 
business relations with any company or individual knowingly 
involved in dealing in conflict diamonds;
    5) The result of these steps will be to support a chain of 
assurance for traders of polished diamonds based on rough 
controls.
    The WDC calls upon the governments of those countries 
involved in the diamond trade to enact and enforce the measures 
described above. The WDC offers its expertise and assistance to 
governments in drafting appropriate legislation.
    In addition the WDC calls on all relevant governments, and 
the United Nations, to initiate with utmost urgency an 
international embargo on the trade in weapons that provides 
rebel forces in Africa with the means to wage war.The WDC 
invites the UN, governments and NGO's, in the pursuit of 
international peace and security, to examine the role of other 
natural resources and, most importantly, the arms trade, in 
perpetuating conflict in Africa.

Introduction

    Mr. Chairman and members of the subcommittee, I am Matthew 
Runci. the President & CEO of Jewelers of America (JA), the 
national association of professional retail jewelers in the 
United States. Our membership of more than 12,000 stores 
encompasses large national chains such as the Zale Corporation 
and Sterling Jewelers, luxury brands such as Tiffany and 
Cartier, and nearly ten thousand independent family-owned 
retail jewelry stores in all fifty States.
    I appear before you today on behalf of the newly formed 
World Diamond Council (WDC), an international body chartered in 
Antwerp in July, solely for the purpose of rapidly developing 
and implementing a comprehensive plan to curtail trade in 
conflict diamonds while minimizing impact on the legitimate 
diamond industry. Membership of the Council is comprised of all 
segments of the international diamond industry--producers, 
manufacturers, traders, and retailers--as well as financial 
institutions, governments and relevant international and civil 
society organizations.
    The World Diamond Council is dedicated to the eradication 
of the trade in conflict diamonds, allowing the legitimate 
diamond industry--which handles 96 percent of world rough 
diamond production and gives employment to over 2 million 
people--to continue the promotion and sale of diamonds as a 
symbol of love and as an agent for economic growth and 
prosperity in stable African democracies such as Botswana, 
Namibia, and South Africa.
    A list of Council members is appended to this statement as 
Attachment 1.
    The Council held its inaugural meeting on Thursday, 
September 7, in Tel Aviv to begin implementation of its plan. 
The main features of the plan, detailed later in this 
testimony, include:
    1) Establishment of dedicated import/export offices for 
rough diamonds closely supervised by individual government 
authorities;
    2) Adoption of a uniform international certification system 
of sealing and authenticating each parcel of rough diamonds 
prior to export;
    3) Monitoring industry-wide compliance with ethical codes 
of conduct that prohibit the trade in conflict diamonds;
    4) Obliging banks, insurance companies, shipping companies 
and other providers of auxiliary goods and services to cease 
business relations with any company or individual knowingly 
involved in dealing in conflict diamonds;
    5) The result of these steps will be to support a chain of 
assurance for traders of polished diamonds based on rough 
diamond controls.
    The WDC calls upon the governments of those countries 
involved in the diamond trade to enact and enforce the measures 
described above. The WDC offers its expertise and assistance to 
governments in drafting appropriate legislation.
    In addition the WDC calls on all relevant governments, and 
the United Nations, to initiate with utmost urgency an 
international embargo on the trade in weapons that provides 
rebel forces in Africa with the means to wage war.
    The WDC invites the UN, governments and NGO's, in the 
pursuit of international peace and security, to examine the 
role of other natural resources and, most importantly, the arms 
trade, in perpetuating conflict in Africa.

The Situation

    Legitimate and socially responsible businesses in the 
diamond and jewelry industries deplore the fact that even a 
very small portion of the world's annual rough diamond 
production is being used to fuel conflict in Sierra Leone, 
Angola, and Congo.
    Diamonds are a symbol of love and purity, and most 
definitely should not be exploited as a means to commit 
violence. Diamonds stand as timeless symbols of romance, 
mystery, eternity, beauty, prestige, tradition, purity and 
rarity. That diamonds have been exploited to enable the 
purchase of weapons that serve to brutally extend the suffering 
of people in parts of Africa is truly appalling to socially 
responsible business people in this industry.
    We must keep in mind that informed estimates today agree 
that 96 percent of the world's rough diamonds come from 
legitimate sources--that is from mines certified by local 
authorities. Conflict diamonds--that is rough diamonds 
illicitly seized and sold by representatives of rebel movements 
for the purpose of buying weapons--constitute an estimated 4 
percent of the world's annual gem production-a share believed 
to be still declining. See Attachment 2--Conflict Diamonds 
Estimate Against Total World Production, 1999.
    We must remember too that natural resources like diamonds 
are in fact morally neutral. Thus legitimate diamonds--that is 
96 percent 0f the world's annual diamond production--are an 
important source of economic vitality worldwide. Nowhere is 
this more apparent than in southern Africa, where in the 
economies of Botswana, Namibia and South Africa, diamonds have 
fueled economic growth and prosperity. Take Botswana, for 
example, a country that serves as a model not only for Africa 
but also for all developing countries. As reported in Time 
Magazine Europe (July 10, 2000), since the discovery of its 
diamond deposits, Botswana has achieved record economic growth. 
Last year it was again one of the fastest growing economies of 
the world with real GDP growth of 9 percent. Diamonds provide 
75 percent of foreign exchange earnings, 65 percent of 
government revenue, and 33 percent of GDP. Today Botswana 
stands as a model of the way mineral wealth, in this case 
diamonds, can be deployed for the benefit of a country as a 
whole.
    Similarly, in Namibia, where the organized diamond industry 
dates back to the beginning of the 20th century, diamonds today 
account for 40 percent of the country's foreign exchange 
earnings. In South Africa, the diamond industry as a whole 
gives employment to 30,000 people and is vitally important to 
the country as a whole.
    Clearly, a solution to curtailing world trade must not come 
at the expense of the remarkable positive achievements that 
diamonds have brought to this region. At a conference in 
Kimberley in May, Inge Zaamwani, a Namibian, spoke on behalf of 
all three southern African countries when she said:
    The linkage of civil strife with the diamonds industry 
threatens our economic livelihood in a very serious way. . 
.Realism demands that we put the conflict diamonds issue in 
perspective.
    Diamonds are not the principal source of all too numerous 
armed conflicts on this and other continents. The principal 
blame must lie with those who started the wars and the arms 
merchants who supplied them with the weapons. The manufacturers 
and suppliers of automatic weapons, landmines, missiles and 
other essentials of modern bush warfare are not Africans. 
Diamonds must not become the scapegoat for the world's failure 
to stop atrocities or rebellions or the arms that abet such 
rebellions. Long after the question of conflict diamonds has 
faded from political or press attention we on the ground in 
Africa will be left to grapple with the challenges of war and 
peace, justice and injustice, poverty and prosperity, and the 
complex role that resources of every kind should play in 
contributing to one or the other.

Current Industry Actions

    The world diamond industry is currently doing everything 
possible to address this problem in a timely, responsible and 
effective manner. Leading producers, such as DeBeers, have been 
working in close collaboration with the governments of southern 
Africa, the U.S. Department of State, the United Nations, and 
the British Foreign Office, as well as NGO's such as Global 
Witness, and diamond industry associations, to advance workable 
and practical solutions that could be applied immediately.
    Leading diamond industry associations, the International 
Diamond Manufacturers Association (IDMA) and the World 
Federation of Diamond Bourses (WFDB), representing all 
principal diamond manufacturing and trading centers of the 
world, adopted an historic joint resolution at the World 
Diamond Congress in Antwerp in July. This document, now known 
as the Antwerp Resolution, laid out a plan to curtail world 
trade in conflict diamonds and established a new permanent 
body, the World Diamond Council (WDC), comprised of producers, 
manufacturers, traders, retailers, banks, and relevant 
international and civil society organizations, to monitor 
compliance with the plan. See Attachment 3--The Antwerp 
Resolution.
    In the United States, which today accounts for 
approximately half of the $56 billion in diamond and diamond 
jewelry retail sales in the world annually, diamond and jewelry 
trade organizations formed a working group almost one year ago 
to share information and coordinate industry action in support 
of curtailing the trade in conflict diamonds.
    The Jewelers of America (JA) have prioritized this matter 
for the past year, issuing a continuing series of 
communications to the trade to inform and sensitize retail 
jewelers to the vital importance of this issue; developed and 
issued a guidance agreement for use by all retail jewelers with 
their diamond vendors; and established training programs for 
deployment in stores and for presentations to trade audiences 
at industry events. As signatories to a code of ethics as a 
requirement of membership in the association, all members of 
the Jewelers of America have pledged to their customers that 
they will not knowingly sell these illicit diamonds and will 
undertake reasonable measures to help prevent the sale of such 
diamonds in the U.S. Most importantly retail jewelers are 
requiring the explicit commitment of their diamond vendors 
(diamond wholesalers, diamond taders, and jewelry 
manufacturers) not to knowingly sell illicit diamonds and to 
undertake reasonable measures to help prevent the sale of such 
diamonds in the U.S. In turn, their vendors are requiring 
identical assurances from their suppliers as well.
    Demonstrated responsible behavior by ethical and socially 
responsible members of the U.S. retail jewelry community, 
together with the demonstrated commitments and actions of 
diamond producers, manufacturers and traders alike worldwide, 
have begun the process by which trade in conflict diamonds will 
be effectively curtailed.

The International Framework for Curtailing Trade in Conflict 
Diamonds

    Any effective framework intended to curtail conflict 
diamond trade without adversely impacting legitimate businesses 
must, in our view, adhere to six principles:
    1) While industry efforts already underway are making a 
difference, industry efforts alone will not be sufficient to 
end the trade in these products completely. Cooperative and 
coordinated initiatives between industry, governments, 
international organizations, and civil society organizations 
will greatly improve the prospects for curtailing the illicit 
trade.
    2) Scientific expertise tells us that origin of individual 
diamonds cannot be reliably determined by non-destructive 
analytical means. Diamonds do not present useful evidence for 
this diagnostic purpose. Contrary to misunderstandings that 
have been circulating, it is not a question of devising or 
perfecting a tool for diagnostic measurement. Scientists advise 
us that the necessary distinguishing properties are not present 
in the stone to begin with. This is critical because, when 
retail jewelers purchase diamonds--polished diamonds--from 
their trade vendors, neither they nor their vendors can 
determine through any type of examination from what source of 
mining or extraction those diamonds originated. Any attempt to 
impose upon the industry a requirement to identify the specific 
country of origin of a polished diamond at the retail counter 
is doomed to fail and will cause unnecessary hardship on an 
industry comprised almost entirely of small businesses.
    3) Certifying that an individual diamond's origin is 
conflict free may, therefore, only be determined through the 
systematic tracking of shipments with controls extending from 
the country of rough extraction forward through the diamond 
pipeline. Unless rough diamonds can first be certified as 
conflict-free in origin at the time they are exported from the 
country of mining or extraction, there is no method by which to 
verify their origin as conflict free afterward.
    4) A system of tracking rough diamond shipments from mining 
sources through cutting centers is a huge undertaking, but is 
at least feasible, because while the volume of stones produced 
annually is large, the number of export and import control 
points that would be required is limited. Gem quality diamonds 
are mined in twenty-two countries and the bulk of manufacturing 
(i.e., cutting and polishing) takes place in seven countries. 
This point is illustrated in the Table of Diamond Mine 
Production (Attachment 4) and diagram of The Diamond Pipeline 
(Attachment 5).
    5) From that point onward, however, the task of tracking is 
simply not feasible. Transactions involving commercial 
quantities of polished diamonds from the cutting centers onward 
do not routinely occur in a linear sequence from producers to 
manufacturers to traders to retailers. In fact the pattern is 
quite irregular, with manufacturers and traders routinely 
selling back up, across, as well as down, the pipeline. Parcels 
of stones are routinely sorted, mixed, and repackaged as 
economics drives selection and supply is adjusted to meet 
demand in a way that yields profit. Thus, diamonds often pass 
through as many as a dozen hands before they ultimately reach 
the retail counter. Given the characteristics of the pipeline 
as described above, it is easy to understand why most diamonds 
are sold in an undifferentiated manner in the marketplace.
    6) Formal branding of diamonds is a new phenomenon and 
represents only a small fraction of the market today. The 
current trend toward identifying diamonds by a brand name 
should not be confused with a system of market controls such as 
would be required to establish a chain of assurance certifying 
that diamonds are conflict-free in origin. At this time only 
one or two companies in the world possess the wherewithal to 
establish and maintain the requisite system of controls from 
the mining source onward, as well as the trade distribution 
network required to validate the chain of warrants through the 
pipeline, with marketing programs to support the product 
through to the consumer. Thus, any effort to impose 
requirements on the industry through legislation that cannot be 
achieved will not only fail to curtail conflict diamond trade, 
but will almost certainly bring considerable advantage to the 
one or two producers in the world who possess that capacity. In 
light of the above, the Council has proposed that an effective 
worldwide framework to control trade in rough diamonds must 
contain the following elements:
    1) All countries that export rough diamonds should have 
official dedicated import/export offices for rough and/or 
polished diamonds closely supervised by government authorities 
that register data on export shipments in an international 
diamond database (IDD). Furthermore, the diamonds are to be 
sealed in standardized tamperproof containers, which will 
include an officially signed document capturing all the 
information entered into the IDD and thereby certify the origin 
of the contents of the shipment.
    2) All countries that import rough diamonds should have 
official dedicated import/export offices for rough and/or 
polished diamonds closely supervised by government authorities 
that register import shipments in the IDD. No rough diamonds 
are to be imported unless they are in a standardized sealed 
tamperproof container from the country of export and the export 
shipment information in the international diamond database 
corresponds to the enclosed official documentation. The 
importing country will enter date and country of importation in 
the IDD.
    3) All countries that import commercial quantities of 
polished diamonds should adopt legislative programs requiring 
certification that imports of commercial quantities of polished 
diamonds may come only from countries that have implemented 
rough controls, as defined in #1 and #2 above, and allowing 
criminal prosecution of those who are found to be knowingly 
dealing in conflict diamonds.

The Need for U.S. Legislation

    Statutory authority possibly will be required in the United 
States to implement those controls that would be required to 
bring this market into compliance with an international 
framework such as the one proposed. We believe that a well-
timed and properly focused legislative initiative in the United 
States could influence positively the actions of other 
countries in connection with this matter and help drive 
worldwide compliance, and thereby further curtail the trade in 
conflict diamonds.
    However, it is imperative that if the US is to lead 
constructively in this process, the provisions of US 
legislation should be fully consistent with an international 
framework of rough diamond controls. On this point, we 
understand that ministers from more than thirty countries are 
scheduled to convene in London next month, consistent with the 
decision of the G-8 in July, to coordinate national legislative 
efforts. The agenda for this meeting includes:

     Planning legislative programs in each country, 
requiring certification of rough diamond imports and exports 
and enacting laws to allow seizure and/or criminal prosecution 
of those who are found to be dealing conflict diamonds;
     Establishing a regime to back such laws and 
regulations by monitoring the flow of rough diamonds and the 
documentation that goes with them;
     Getting key countries to agree to co-sponsor a UN 
resolution on conflict diamonds at the upcoming General 
Assembly session.

    We would therefore strongly urge those in Congress who 
currently advocate specific legislative proposals to address 
the conflict diamond situation to recognze that it is simply 
not possible to legislate a national solution to the conflict 
diamond problem in the US market alone, without inflicting 
significant economic damage on the diamond and jewelry 
industries of the US, Israel, India, Belgium, Botswana, South 
Africa Namibia and Russia. A transnational problem requires an 
international solution.
    For this reason we respectfully request that Congress defer 
action on pending legislation until the results of the upcoming 
London ministerial meeting have been assessed.
    At the same time we recommend that future US legislation, 
if required, be structured in accordance with the following 
points:
    1) All polished diamond imports entering the U.S. in 
commercial quantities would be required to originate in 
countries with rough diamond controls in place;
    2) Rough diamond controls to be defined in terms of strict 
adherence by each country to an international regime comprised 
of:

     All countries that export rough diamonds should 
have official dedicated import/export offices for rough and/or 
polished diamonds closely supervised by government authorities 
that register data on export shipments in an international 
diamond database (IDD). Furthermore, the diamonds are to be 
sealed in standardized tamperproof containers, which will 
include an officially signed document capturing all the 
information entered into the IDD and thereby certify the origin 
of the contents of the shipment;
     All countries that import rough diamonds should 
have official dedicated import/export offices for rough and/or 
polished diamonds closely supervised by government authorities 
that register import shipments in the IDD. No rough diamonds 
are to be imported unless they are in a standardized sealed 
tamperproof container from the country of export and the export 
shipment information in the international diamond database 
corresponds to the enclosed official documentation. The 
importing country will enter date and country of importation in 
the IDD;
     All countries that import commercial quantities of 
polished diamonds should adopt legislative programs requiring 
certification that imports of commercial quantities of polished 
diamonds may come only from countries that have implemented 
rough controls, as above, and allowing criminal prosecution of 
those who are found to be knowingly dealing in conflict 
diamonds.
     The Administration could certify annually 
compliance by countries with the provisions for rough diamond 
controls specified above, and upon the determination that all 
countries were in compliance, disband the controls once the 
trade in conflict diamonds has ceased (sunset provision).

    We applaud the efforts of those in Congress who have 
stepped forward in an effort to stop the trade in conflict 
diamonds. Because we too deplore the link between diamonds and 
acts of violence, we strongly urge those in Congress who 
currently advocate specific legislative proposals in an effort 
to curtail trade in conflict diamonds that, in taking the lead 
with legislation, it is imperative that the US coordinate its 
efforts with industry, the UN, NGO's and the ministries of 
other key governments around the world. This is the only way to 
ensure that our shared goal will be achieved. Premature or 
uncoordinated efforts will not achieve the desired outcome and 
may instead adversely impact legitimate diamond economies all 
over the world and tens of thousands of small businesses 
throughout the United States, while perhaps benefitting only 
one or two large diamond producers who possess the internal 
capacity to self-guarantee the origin of their products.
    Mr. Chairman, the planets are moving into alignment in a 
way that will enable all of us to accomplish our common goal--
to stop the terrible trade in conflict diamonds. The timing and 
coordination of our respective efforts are now critical to 
success in this mission.Let us work together. Thank you.

                      World Diamond Council Members
------------------------------------------------------------------------
                                        Title &
              Name                   Organization           Country
------------------------------------------------------------------------
Eli Izhakoff....................  Chairman--World     U.S.A.
                                   Diamond Council.
Sean Cohen......................  Vice Chairman--WDC  South Africa
                                   President--Intern
                                   ational Diamond
                                   Manufacturers
                                   Association.
Abraham Fischler................  Vice Chairman--WDC  Belgium
                                   President--World
                                   Federation of
                                   Diamond Bourses.
Sergei Oulin....................  Vice Chairman--     Russia
                                   WDCVice
                                   President--Alrosa.
Shmuel Schnitzer................  Vice Chairman--WDC  Israel
                                   President--Israel
                                   Diamond Exchange.
Matthew Runci...................  Secretary General-- U.S.A.
                                   WDCPresident &
                                   CEO--Jewelers of
                                   America.
Noa Balthazar...................  President--Ascorp.  Angola
Ernest Blom.....................  President--Diamond  South Africa
                                   Merchants
                                   Association of
                                   Southern Africa.
William Boyajian................  President--Gemolog  U.S.A.
                                   ical Institute of
                                   America.
Robert Bridel...................  Executive           U.S.A.
                                   Director--A.G.S..
Andrew Coxon....................  Director--DTC De    England
                                   Beers.
Frank Demeyere..................  Chief of Cabinet--  Belgium
                                   Ministry of
                                   Economic Affairs,
                                   Belgium.
Jeffrey Fischer.................  President--DMIA...  U.S.A.
Stephan Fischler................  Secretary General-- Belgium
                                   IDMA.
Sylvia Fletcher.................  Senior Advisor--    U.S.A.
                                   USAID Office of
                                   Transition
                                   Initiatives.
Cecelia Gardner.................  Executive           U.S.A.
                                   Director--Jeweler
                                   s Vigilance
                                   Committee.
Freddy Hager....................  President--London   England
                                   Diamond Bourse.
Gordon Gilchrist................  Managing Director-- Australia
                                   Argyle Diamonds.
Paul Goris......................  Chairman--Antwerp   Belgium
                                   Diamond Bank.
Peter Gross.....................  General Manager--   Belgium
                                   International
                                   Diamond Division,
                                   ABN Amro.
Terry Janes.....................  BHP Diamond Inc...  Canada
Sanjai Kothari..................  ..................  India
Michael Kowalsky................  President & CEO--   U.S.A.
                                   Tiffany & Co..
Lawrence Ma.....................  Chairman--Diamond   China
                                   Federation of
                                   Hong Kong.
Barbara Masekela................  De Beers--South     South Africa
                                   Africa.
Peter Meeus.....................  General Manager--   Belgium
                                   High Diamond
                                   Council.
Dianna Melrose..................  Foreign &           U.K.
                                   Commonwealth
                                   Office.
Nchaka Moloi....................  Advisor to          South Africa
                                   Minister of
                                   Minerals and
                                   Energy.
Louis Nchindo...................  Botswana Diamond    Botswana
                                   Company.
Benjamin Oshman.................  President & CEO--   Israel
                                   Union Bank,
                                   Israel.
Youri Rebrik....................  ..................  Russia
Martin Rapaport.................
Rapaport Corporation............  U.S.A.............
Shri Nilesh Shah................  Gem and Jewelry     India
                                   Export Promotion.
Udi Sheintal....................  Diamond             Israel
                                   Controller--Minis
                                   try of Trade and
                                   Commerce.
Abraham Traub...................  President--Kidum    Israel
                                   for the
                                   Advancement of
                                   the Diamond
                                   Industry.
Inge Zaamwani...................  Managing Director-- Namibia
                                   Namdeb Diamond
                                   Corporation.
------------------------------------------------------------------------

                                                      [GRAPHIC] [TIFF OMITTED] T8040.001
                                                      
Joint Resolution World Federation of Diamond Bourses (W.F.D.B.) and 
International Diamond Manufacturers Association (I.D.M.A.)

                         ANTWERP July 19, 2000

    WFDB and IDMA, representing all the principal diamond 
manufacturing and trading centers of the world, have 
consistently been aware of and been involved in combating the 
conflict diamonds problem. Particularly, they point to the 
numerous resolutions passed by themselves and their members.
    We believe that more can and should be done to limit, if 
not eliminate, this problem entirely. We believe that the 
solution to the conflict diamonds problem is a moral imperative 
above all others. However we do not believe that the solution 
necessarily entails damage or limitation to the 96+% of the 
world diamond trade which is legitimate. On the contrary, we 
believe that an enlightened and effective approach to the 
problem can lead to the improvement of the diamond market 
overall.
    It is our understanding that all concerned parties are 
aware of the positive benefits of diamonds as well as their 
potential role in providing prosperity, a key ingredient of 
peace, in countries currently experiencing strife. Over the 
past year, various solutions have been proposed. We have 
analyzed these proposals, some of which we have found to be 
ineffective, others more practical and some impractical. All 
the proposals have had elements that we believe are logical and 
should be incorporated into an effective solution.
    As diamond manufacturers and traders primarily responsible 
for the conversion of rough diamonds into polished and the 
marketing of those polished diamonds, we are proposing a number 
of concrete steps to be taken by all parties concerned which we 
believe will lead to a more effective and immediate resolution 
of the problem.
    While our proposal may be subject in the future to any 
number of improvements, we believe it is, in the first 
instance, practically implementable in the short term, and it 
does not preclude further steps being taken as and when the 
means and requirement arise.
    Specifically and most importantly, we are mindful that the 
next phase of solution must start sooner rather then later and 
that if this is to be done in a non-destructive manner, the 
most practically implementable steps must be taken first, in 
order that the process not be delayed with theoretical concepts 
and technologies.
    1. We recognize that rough diamonds individually are not 
sufficiently determinable as to source and origin. However, 
with the correct system, rough diamond parcels can be monitored 
within a net.
    2. There is not implementable means of tagging, tracking 
and identifying finished polished diamonds.
    3. All legitimate diamonds in their rough form can travel 
within an identifiable net.

Accordingly we propose:

    1. Each accredited rough diamond importing country, whether 
a producer, manufacturing or dealing center, enacts ``redline'' 
legislation. As such, no parcel of rough may be imported unless 
such parcel of rough has been sealed and registered in a 
universally standardized manner by an accredited export 
authority from the exporting country.
    2. Each exporting country, which can be either a producer 
country or accredited dealing/manufacturing center, will 
establish accredited export offices or diamond board which will 
seal parcels of rough diamonds to be exported and registered in 
an international database. If the country is a producer 
country, it will be accredited only if it has control 
mechanisms in place to determine the flow of rough and 
legitimate ownership of rough presented to the export 
authority.
    3. Polished diamond consuming countries will enact 
legislation forbidding importation of polished diamonds from 
any manufacturing/dealing country that does not have 
``redline'' legislation as regards the importation of rough.
    4. Each and every country, as part of the diamond net, be 
they rough exporters, importers, or polished consuming 
countries, enacts legislation bringing criminal penalties on 
any individual and/or company proven to be knowingly involved 
in illegal rough diamonds.
    5. Each and every diamond organization adopts an ethical 
code of conduct as regards conflict diamonds, labor practices 
and good business practices in general, the failure to adhere 
to which would lead to expulsion from WFDB, IDMA and all other 
relevant organizations.
    6. As a positive measure of compliance, all relevant and 
interested parties promote adherence to the code of conduct as 
a positive consumer choice in the marketplace.
    7. We enlist the support of the banks, insurance, shipping 
companies and other pertinent providers of goods and services 
to our industry to expose and cease-business relations with any 
entity that is found knowingly to violate these principles.
    8. That there is a continual analysis of relevant 
technologies and investment by the industry in developing them 
further for implementation leading to greater compliance.
    9. That compliance with the above be monitored and 
controlled by an International Diamond Council comprised of 
producers, manufacturers, traders, governments and relevant 
international organizations. that this process be fully 
verified and audited.
    A joint committee of both organizations has been formed in 
order to ensure rapid implementation of the above.
    As we envisage it, each time rough diamonds leave a 
producer or rough trading center, those rough diamonds would be 
sealed in a standardized manner by an authority accredited by 
the international diamond council. This is the only means by 
which those diamonds could be imported into the next country.
    We understand that it is the nature of the diamond business 
and directly related to the profitability of mines and the 
efficient manufacturing processes currently employed, that 
rough diamonds of various origins and qualities are mixed 
together into ``saleable'' parcels. Therefore, our system 
allows for the mixture of such parcels by requiring their 
further export and import from any mixing or dealing center to 
be subject once again to sealing and documentation.
    Key to the whole process is monitoring and keeping accounts 
of the data flows. In particular, it is essential to be able to 
verify and see that one country's exports to another are 
matched by the country's official imports from the exporting 
country. All accounts should, ultimately, balance. The 
establishment of the International Diamond Council is crucial 
to this process in that the International Diamond Council would 
be required to balance all imports and exports and accredit 
importing and exporting authorities in each country.
    Just as importantly, it is undoubtedly correct to assume 
that a certain degree of deliberate noncompliance may occur. 
The International Diamond Council would be required to remove 
export accreditation from producer countries where rough 
exports are known to exceed production capacity or verified 
official imports.
    By the same taken, the International Diamond Council would 
be able to remove the accreditation of countries to import 
diamonds if it was found that those countries were allowing the 
import of non-verifiable rough.
    We believe that funding for our proposals can be achieved 
through charging a minimal levy, both on the import and export 
of rough diamonds. Undoubtedly, effectiveness of the system can 
be improved over time. However, we believe that we will 
immediately close off all the legal loopholes by which conflict 
diamonds may currently be entering the trade. This will make 
the task of relevant customs and criminal authorities far 
easier in terms of identifying and prosecuting perpetrators. In 
particular, if all legitimate rough diamonds are knowingly 
``declared'', the four percent of conflict rough diamonds will 
be impossible for those few companies trading in them to hide.
    As a final note, we do not claim that this is an 
immediately perfect system or that improvements cannot be made. 
However, we believe that these are practically implementable 
measures, that they will be highly effective in terms of the 
current status quo and that they can be relatively rapidly 
implemented without precluding any further additions.
    Most significantly, we believe that our proposals will see 
immediate results and that they are non-destructive to the 
legitimate industry and producer countries. In fact they stand 
to enhance the legitimate trade. By adopting a code of conduct, 
consumer choice can be made into a positive enhancement of the 
diamond industry, without the necessity of negative imagery.
[GRAPHIC] [TIFF OMITTED] T8040.002

[GRAPHIC] [TIFF OMITTED] T8040.003

      

                                


    Chairman Crane. Thank you.
    Mr. Yearsley?

STATEMENT OF ALEX YEARSLEY, CAMPAIGNER, GLOBAL WITNESS, LONDON, 
                            ENGLAND

    Mr. Yearsley. Good morning, Chairman Crane and members of 
the committee that are still left here. My name is Alex 
Yearsley and I am a campaigner for Global Witness. I am pleased 
to appear at this meeting and I thank you for holding it. 
Global Witness are a British-based non-governmental 
organization that focuses on the links between environmental 
and human rights abuses, especially the impacts of natural 
resource exploitation upon countries and their people.
    In late 1996, Global Witness began to look at the role of 
diamonds in funding the tragic conflicts in Angola. In December 
1998, we published our first report on conflict diamonds 
called, ``A Rough Trade: The Role of Governments and Companies 
in the Angolan Conflict.'' In June of this year, we published 
our second report, simply entitled, ``Conflict Diamonds: 
Possibilities for the Identification, Certification, and 
Control of Diamonds.''
    Since late 1996, my colleague and I, Ms. Charmian Gooch, 
have traveled extensively to the diamond producing and 
marketing countries of Angola, Botswana, Belgium, Sierra Leone, 
South Africa, Namibia, Israel, India, and the United States in 
order to see whether a solution is possible to the curse of 
conflict diamonds. As a result of this work and due to the 
extensive contact we have had with many of the companies, trade 
associations, government officials, and individuals in the 
diamond industry, we believe that, indeed, a solution that is 
practical, implementable, WTO compatible, and that will not 
damage the legitimate trade but will protect it is entirely 
feasible.
    Four months ago, my colleague, Ms. Charmian Gooch, gave 
evidence at a Congressional hearing on the issue of conflict 
diamonds. Today, 127 days later, are we any closer to a 
solution? Whilst we wish that a system could have been imposed 
many years ago, I believe that we are looking at the possible 
solutions to this deadly trade. I think it is fair to say that 
we have come a long way in a very short time. This, I believe, 
is testimony to the gravity of the situation and some of the 
expert work carried out by government, industry, and civil 
society individuals.
    However, currently as I speak, the diamond trade as a 
unified whole has failed to put recognizable or verifiable 
controls or certification in place that can reliably attach 
conflict-free status to diamonds. However, since late 1998, 
there has been a shift in world opinion on the issue of 
conflict diamonds which in itself is a new term. No longer is 
the soaking up of open market goods from areas of conflict 
deemed to be an inevitable consequence of the need to stabilize 
the world price of diamonds. Governments have ceased to accept 
this as an argument for non-interference, as, and probably more 
importantly, have consumers.
    The majority of the proposals I am about to suggest are 
ideas that are consistent with the suggestions of the Kimberley 
Working Group, of which Global Witness is a member. The problem 
that these proposals aim to address is that of illicitly traded 
rough diamonds being used to finance weapons purchases and fuel 
wars in Africa. This problem can only be addressed by all the 
relevant stakeholders in the diamond producing, processing, and 
consuming nations and all segments of the diamond industry 
working together to curb the trade in conflict diamonds whilst 
avoiding harm to the legitimate trade.
    However, it is important to remember, though, that no 
system will be 100 percent watertight, and with a commodity as 
valuable and as fungible as diamonds, determined individuals 
will always manage to get through. However, what the system 
will do is prevent the horrors of the 1990s, when companies 
such as DeBeers were able to buy up several hundred million 
dollars worth of rough diamonds that originated from the 
diamond mines under the control of the UNITA rebels in Angola 
on the markets of Tel Aviv, Antwerp, London, and New York.
    Possible solutions: The only solution to have been so far 
identified that is currently both practical and implementable 
is the creation of an international certification system for 
all rough diamonds. There are, indeed, many potential 
technological solutions, such as laser marking. However, these 
are currently not financially viable or practical to implement. 
However, I would urge this committee to consider the funding of 
continued research in this field.
    Much thought and deliberation has gone into how this system 
could work, most notably by the Kimberley Working Group. The 
general consensus reached by the group regarding the creation 
and implementation of an international system has been 
explained. Information contained on the certificates would 
build upon existing national systems currently in place and 
should certainly not water down any existing national systems. 
However, as a basic international standard which needs to be 
agreed to under best principles, the certificate should contain 
a minimum of the following information relating to the diamond 
shipment: The total caratage of diamonds, the aggregate value 
of the diamonds, and the country of origin, country of origin 
meaning extraction.
    Global Witness believes that it is necessary to go several 
stages beyond the certification scheme and that more specific 
requirements are needed for countries where diamonds are mined, 
commercially traded, manufactured, and reexported.
    Whilst no one within Global Witness professes to be an 
expert in international trade law or the WTO, we have carried 
out some basic research into this important question. If, as is 
expected and hoped, the recommendations of the Pretoria 
ministerial meeting goes through United Nations General 
Assembly vote to ratification into a global treaty, then there 
should be no problems with WTO compatibility and, hence, will 
be free from any significant challenges.
    However, in conclusion, there are still some countries and 
individuals that believe a sledgehammer is being used to crack 
a nut. Nothing could be further from the truth. Those with 
personal vested interests argue that an international system 
will be restrictive of trade and will impact upon the small 
miner. Again, nothing could be further from the truth. All that 
will happen is that the great majority of illicit smugglers and 
those that benefit will be caught.
    Whilst not wanting to end on a pessimistic note, I think it 
would be folly not to raise this issue here. There are many in 
the press and the diamond trade who believe that a diamond 
boycott is fast approaching. Whilst I certainly agree with them 
regarding the devastating negative impact this will have on 
legitimate producers and my complete condemnation for such 
action, I can see it gaining ground if concerted action is not 
taken soon. Conflict diamonds have been in the public eye for 
nearly two years now, and in reality, the diamond trade, whilst 
publicly tackling the issue, practically have done as little as 
possible to prevent the entry of conflict diamonds into the 
global marketplace. Many find words have been offered, but what 
has actually changed? And if reports from the marketing centers 
of Antwerp and Tel Aviv are to be believed, I am afraid, very 
little.
    Consumers and the press are and will ask more questions. In 
America, jewelry retailers have begun to take action regarding 
education campaigns on the issue, and rightly so. The United 
States accounts for nearly 65 percent of the world's diamond 
jewelry sales per annum and all of those diamonds have to be 
imported from somewhere. Indeed, two of the major documentary 
series, ``60 Minutes'' and ``20/20'' both have programs planned 
for the fall on the issue of conflict diamonds. When the public 
and consumers see that the diamond trade as a collective whole 
have failed to live up to their extremely laudable goals, they 
will judge accordingly, rightly or wrongly. The result is not a 
position I would like us even to contemplate.
    As a result, I would urge the committee to support any 
initiative on the implementation of U.S. legislation, be it 
from the diamond trade, civil society, or your own legislators, 
that sought to introduce a system for rough controls that is 
similar to the Kimberley process, for if we put our trust and 
faith in the countries of the world to act with speed with one 
voice, it could have devastating consequences for millions of 
people in Africa. Thank you.
    [The prepared statement follows:]

Statement of Alex Yearsley, Campaigner, Global Witness, London, England

    Good morning Chairman Crane and Members of the Committee. 
My name is Alex Yearsley and I am a Campaigner for Global 
Witness. I am pleased to appear at this hearing and I thank you 
for holding it. Global Witness are a British based non 
governmental organisation that focuses on the links between 
environmental and human rights abuses, especially the impacts 
of natural resource exploitation upon countries and their 
people. In late 1996 Global Witness began to look at the role 
of diamonds in funding the tragic conflict in Angola. In 
December 1998 we published our first report on conflict 
diamonds called, `A Rough Trade: The role of governments and 
companies in the Angolan Conflict,' in June of this year we 
published our second report, which hopefully you will have in 
front of you and simply entitled, ' Conflict Diamonds, 
Possibilities for the Identification, Certification and Control 
of Diamonds.' Since late 1996 my colleague and I, Ms. Charmian 
Gooch, have travelled extensively to the diamond producing and 
marketing countries of Angola, Botswana, Belgium, Sierra Leone, 
South Africa, Namibia, Israel, India and the United States and 
also to transhipment countries such as Rwanda, Uganda and 
Zambia in order to see whether a solution is possible to the 
curse of conflict diamonds. As a result of this work and due to 
the extensive contact we have had with many of the companies, 
trade associations, government officials and individuals in the 
diamond industry we believe that indeed a solution that is 
practical, implementable, WTO compatible and that will not 
damage the legitimate trade, but will protect it is entirely 
feasible.
    Four months ago my colleague Ms.Charmian Gooch gave 
evidence at a Congressional hearing on the issue of conflict 
diamonds. Today, 127 days later are we any closer to a 
solution? Whilst we wish that a system could have been imposed 
many years ago I believe that we are looking at the possible 
solutions to this deadly trade--I think it is fair to say that 
we have come along way in a very short time. This I believe is 
testimony to the gravity of the situation and to some of the 
expert work carried out by government, industry and civil 
society individuals.
    Currently as I speak the diamond trade as a unified whole, 
has failed to put recognisable or verifiable controls or 
certification in place that can reliably attach `conflict free' 
status to diamonds. However since late 1998 there has been a 
shift in world opinion on the issue of conflict diamonds, which 
in itself is a new term. No longer is the `soaking up' of 'open 
market goods' from areas of conflict deemed to be an inevitable 
consequence of the need to stabilise the world price of 
diamonds.
    Governments have ceased to accept this as an argument for 
non-interference, as and probably more importantly, have 
consumers.It is vital that a long-term solution to this very 
complex problem be found, and that can only work if some of the 
underlying structures are addressed rather than the commercial 
sector of the industry dealing with each problem country on a 
case-by-case basis. This is no way to deal with the atrocities 
and horrors inflicted upon peoples of affected countries nor to 
protect the legitimate diamond economies. It is clear that 
there is a need to create a 'chain of custody' within the 
diamond trade--a verifiable trail from the mine to the consumer 
that can work with existing structures and patterns of trade.
    In response to the growing international concern over the 
problem of conflict diamonds, the Southern African Development 
Community (SADC) producer States (Botswana, Namibia and South 
Africa) initiated an African regional initiative to identify 
possible solutions. In May 2000, the South African Department 
of Minerals and Energy organised a Technical Forum in 
Kimberley, South Africa to address the problem of `conflict 
diamonds.' It is fair to say that the Kimberley meeting has set 
new standards in bringing together different stakeholders from 
government, industry and civil society.
    Participants were drawn from leading producing nations and 
the majority of importing, marketing, cutting and polishing 
centres. A working group made up of the relevant stakeholders 
was created and has met three times in Angola, Namibia and the 
UK. This working group will produce a report, which will be 
presented at a Ministerial meeting in Pretoria, South Africa on 
September 21st.
    The majority of the proposals that I am about to suggest 
are ideas that are consistent with the suggestions of this 
working group, of which Global Witness is a member. The 
problems that these proposals aim to address, is that of 
illicitly traded rough diamonds being used to finance weapons 
purchases and fuel wars in Africa. This problem can only be 
addressed by all the relevant stakeholders in the diamond 
producing, processing and consuming nations, and all segments 
of the diamond industry working together to curb the trade in 
conflict diamonds, whilst avoiding harm to the legitimate 
trade.
    At this point I would like to mention that some initiatives 
have already begun at the national level. However this has only 
been due to the intense pressure of international criticism 
from civil society, the UN and some governments. In Angola, one 
of the most affected countries by conflict diamonds, the 
Government has introduced a new administrative system for 
controlling diamond exports under agreement with the High 
Diamond Council (HRD) in Antwerp, Belgium. It is stated that an 
unforgeable Certificate of Origin for the export of all 
diamonds is in use. The Government of Angola has also stated 
that it is implementing measures to control artisanal mining 
and marketing, however, after many repeated requests the 
Government of Angola have failed to clarify what these measures 
are and how they are to be introduced. It is these measures 
that are crucial to the avoidance of conflict diamonds being 
sold into the legitimate trade and I urge the Government of 
Angola to publicly clarify their position. In Sierra Leone the 
government is also developing a new Certification Scheme in co-
operation with the governments of Belgium, the United State's 
and the United Kingdom. This system has only been in operation 
for a number of days so it is still too early to report on its 
success or failure.
    It is important to remember though that no system will be 
100 percent watertight and with a commodity as valuable and as 
fungible as diamonds determined individuals will always manage 
to get through. However what this system will do is prevent the 
horrors of the 1990s, when companies such as De Beers, were 
able to buy up several hundred million dollars worth of rough 
diamonds, that originated from the diamond mines under the 
control of the Unita rebels in Angola, on the markets of Tel 
Aviv, Antwerp, London and New York.
    Although conflict diamonds have been sold for nearly the 
last 15 years the term has only been in use for about a year 
and a half and a final definition still has to be reached. In 
Africa it is possible to be clear as to what constitutes 
conflict diamonds as being diamonds that originate from areas 
controlled by forces fighting the democratically elected and 
internationally recognised government of the relevant country. 
At this point I would like to emphasise that conflict diamonds 
are not an African problem, they are a problem that effects all 
those involved in the diamond trade--be they a high street 
retailer in New York or a diamond buyer in Sierra Leone.

                           Possible Solutions

    As mentioned in my opening statement the only solution to 
have been so far identified that is currently both practical 
and implementable is the creation of an international 
certification system for all rough diamonds. There are indeed 
many potential technological solutions, such as laser marking, 
however these are currently not financially viable or practical 
to implement. however I would urge this committee to consider 
the funding of continued research into this field.

How will an international certification system work?

    Much thought and deliberation has gone into how this system 
could work, most notably as mentioned earlier by the Kimberley 
Working Group. The general consensus reached by the group 
regarding the creation and implementation of an international 
system is as follows.
    `No country would permit the importation of any diamonds 
unless they are accompanied by a Certificate of Origin which is 
issued by an internationally accepted State or State accredited 
body in the exporting country for all diamonds lawfully mined, 
purchased or imported in that country by a person accredited by 
that authority and that they are exported in a tamper proof 
sealed parcel from a mutually notified exit site to a mutually 
notified import site that would issue a matching Certificate of 
Import after inspection of the diamonds and accompanying 
documentation.'
    Information contained on the certificates would build upon 
existing national systems currently in place and should 
certainly not water down any existing national systems. However 
as a basic international standard, which needs to be agreed to 
under best practice principles, the certificate should contain 
the minimum following information relating to the diamond 
shipment:
     The total caratage of diamonds;
     The aggregate value of the diamonds;
     The country of origin (extraction);
    Global Witness believes that it is necessary to go several 
stages beyond this certification scheme and that more specific 
requirements are needed for countries where diamonds are mined, 
commercially traded, manufactured and re-exported.
    All diamond producing and exporting countries should 
implement the following measures to ensure that conflict 
diamonds can no longer enter in the global market.
     route all diamonds through a government run 
diamond office;
     establish a licensing system for the extraction of 
any diamonds, whether the extraction is being carried out by a 
large company or an alluvial digger;
     establish a system of countercheck paperwork for 
extraction licences and applications for export;
     establish a registry for official diamond buyers 
and exporters;
     criminalise the handling of rough diamonds without 
an official licence;
     exclude the holders of government office, the 
military, and the police as well as the close family members of 
the aforementioned-from being registered to mine or trade in 
diamonds;
     publish publicly on a monthly basis diamond 
production and export figures.
    For countries involved in the trading and importing of 
diamonds in parallel with establishing the international 
certification system they should:
     amend importation legislation to insist on the 
country of extraction appearing on importation documents;
     insist on all diamond shipment documentation to be 
checked against forwarded documentation;
     enforce penalties such as the confiscation and the 
seizure of the diamonds if the appropriate paperwork is not or 
cannot be provided;
     physically inspect every parcel of rough diamonds 
entering their territory;
     ensure that customs officials have access to an 
international database of diamond shipments;
     publish on a monthly basis all figures for the 
import and export of diamonds.
     For all diamond traders, polishers, manufacturers 
and retailers they should:
     only trade in diamonds with a verifiably 
legitimate product trail;
     implement the measures agreed to at the World 
Diamond Council meeting in Antwerp in July 2000.

Will an international certification system be WTO compatible?

    Whilst no one within Global Witness professes to be an 
expert in international trade law or the WTO we have carried 
out some basic preliminary research into this very important 
question. If, as is expected and hoped, the recommendations of 
the Pretoria Ministerial meeting goes to a United Nations 
General Assembly vote for ratification into a global treaty 
then there should be no problems with WTO compatibility and 
hence will be free from any significant challenges.

How the certification scheme could work under WTO rules:

    The following are grounds under which the international 
certification scheme could be justified under WTO rules.
    If as just mentioned the international certification system 
is bought into being pursuant to a UN resolution then a WTO 
member could invoke an exception rule contained in Article 
XX1(c) of the GATT to justify its certification requirement. 
This provision allows a WTO member to take measures that would 
otherwise be in breach of its WTO obligations provided that it 
is acting in pursuance of its obligations under the United 
Nations Charter of the maintenance of international peace and 
security.
    Under WTO rules it could be possible for a WTO member to 
rely on either of the exceptions set down in Article XXI(b)(ii) 
or (iii) GATT. These relate respectively to measures taken by a 
WTO member which it considers necessary for the protection of 
its essential security interests in relating to the traffic in 
arms, ammunition and implements of war and to such traffic in 
other goods and materials as is carried on directly or 
indirectly for the purpose of supplying a military 
establishment. Hence in respect of Article XXI.b(ii) it would 
be possible for a WTO member to justify the certification 
requirement on the basis that non-certified diamonds from the 
countries concerned are being used to finance the purchase of 
weapons and are thus perpetuating wars in areas of the world 
which may effect its essential security interests.
    Similarly, in respect of the Article XXI. b(III) exception 
it could be argued that the situation in several key diamond 
producing countries gives rise to an emergency in international 
relations which justified the WTO member concerned introducing 
its certification requirement.
    In conclusion there are still some countries and 
individuals that believe a sledgehammer is being used to crack 
a nut. Nothing could be further from the truth. Those with 
personal vested interests argue that an international system 
will be restrictive of trade and will impact upon the small 
miner--again nothing could be further from the truth--all that 
will happen is that the great majority of 'illicit diamond' 
smugglers and those that benefit will be caught.
    Many people talk about the law of unintended consequences 
and indeed there will be many unintended consequences if this 
system is successfully applied for as a result, not only will 
conflict diamonds be taken out of the market place--but so will 
'illicit' diamonds which are diamonds that are stolen or 
smuggled from a country. This will have many implications as 
there are many respectable companies and individuals involved 
in the diamond trade that make a good deal of their profits 
from this 'illicit' trade and upsetting this particular apple-
cart may be too much to handle for some. However one thing is 
certain--if you have nothing to hide then you will have nothing 
to fear from this system--it will be interesting to watch who 
protests the most at the imposition of this system.
    Whilst not wanting to end on a pessimistic note I think it 
would be folly not to raise this issue here. There are many in 
the press and the diamond trade who believe that a diamond 
boycott is fast approaching. Whilst I certainly agree with them 
regarding the devastating negative impact this will have on 
legitimate producers and my complete condemnation for such 
action, I can see it gaining ground if concerted action is not 
taken soon. Conflict diamonds have been in the public eye for 
nearly 2 years now and in reality, the diamond trade, whilst 
publicly tackling the issue, practically have done as little as 
possible to prevent the entry of conflict diamonds into the 
global market place. Many fine words have been offered but what 
has actually changed, and if recent reports from the marketing 
centres of Antwerp and Tel Aviv are to be believed, I'm afraid 
very little. Consumers and the press are and will ask more 
questions. In America jewellery retailers have begun to take 
action regarding education campaigns on the issue and rightly 
so. The United States accounts for nearly 65 percent of the 
worlds diamond jewellery sales per annum and all of those 
diamonds are have to be imported from somewhere. Indeed two of 
the major documentary series, 60 minutes and 20/20 both have 
programmes planned for the Fall on the issue of conflict 
diamonds and when the public and consumers see that the diamond 
trade as a collective whole have failed to live up to their 
extremely laudable goals they will judge accordingly--rightly 
or wrongly. The result is not a position I would like us even 
to contemplate. As a result I would urge the Committee to 
support any initiative on the implementation of US legislation, 
be it from the diamond trade, civil society or your own 
legislators, that sought to introduce a system for rough 
controls that is similar to the one I have proposed in some 
detail earlier. For if we put our trust and faith in the 
countries of the world to act with speed with one voice it 
could have devastating consequences for millions of people in 
Africa.
      

                                


    Chairman Crane. Thank you.
    Mr. Fischer?

STATEMENT OF JEFFREY FISCHER, PRESIDENT, DIAMOND MANUFACTURERS 
    AND IMPORTERS ASSOCIATION OF AMERICA, NEW YORK, NEW YORK

    Mr. Fischer. Mr. Chairman and members of the subcommittee, 
my name is Jeffrey Fischer and I thank you for inviting me to 
address you today in my capacity as President of the Diamond 
Manufacturers Association of America. Our association includes 
virtually all of the major cutting firms in the United States. 
Our membership is unanimous in its revulsion of any connection 
between diamonds and human suffering and is dedicated to 
helping solve the problems which we address today.
    As Vice President of the International Diamond 
Manufacturers Association, I also serve on the steering 
committee of the World Diamond Council and have been actively 
involved in its creation.
    You have asked me to give you a brief overview of how 
diamonds flow from mine to consumer through the diamond 
pipeline. Please refer to the chart of the pipeline we have 
provided. A single diamond can be sold and resold numerous 
times before it ultimately adorns a retail consumer. Diamonds 
are frequently traded upstream and downstream between dealers 
in the normal course of business. As the diagram illustrates, 
even the consumer can eventually become the seller. After all, 
the diamond itself endures forever.
    What is most important to note from the diagram is the line 
drawn between rough and polished diamonds. Most of the dealing 
in polished diamonds, jewelry manufacturing and retailing is 
done by people who have had no more experience with rough 
diamonds than the typical member of Congress. All polished 
starts as rough, and once polished remains polished forever. 
That transformation is the only irreversible transaction in our 
pipeline.
    A single rough stone is commonly cut into two polished 
diamonds. Often, a piece of rough yields only one stone. 
Sometimes it yields multiple stones, or it may never be 
polished at all and may be sold for industrial purposes. As we 
proceed down the pipeline, the frequency of transactions and 
the number of small businesses involved increases dramatically, 
while the average size of a typical transaction diminishes in 
monetary terms. Throughout the pipeline, these diamonds are 
constantly assorted, mixed, and reassorted to meet different 
commercial requirements.
    To further complicate matters, already polished diamonds 
are frequently recut for improvement or repair, altering their 
characteristics to varying degrees. Further, polished diamonds 
are frequently unset and reset in different jewelry, sometimes 
alone, sometimes with other diamonds. Trying to track polished 
diamonds effectively would be a nightmare and would accomplish 
nothing.
    The place for effective, administrable import/export 
controls is at the rough level. We believe that the system of 
proposed controls adopted at the World Diamond Congress in July 
and now being brought forward by the World Diamond Council is 
the most practical and most effective means to filter out from 
the pipeline the less than four percent of worldwide rough 
production which is being misused to fund conflict. By 
effectively placing this filter at the rough level, all 
resulting polished will comply with conflict-free status and it 
will do it at no cost to American taxpayers.
    We are practical, realistic, ethical business people. We 
seek support from Congress to sever the link between diamonds 
and brutality without delay. We hope to actively participate in 
the creation of the best possible legislation, legislation that 
will not do serious damage to the legitimate Southern African 
economies so dependent on diamonds, that will not wreak havoc 
with U.S. customs procedures, and will not harm the livelihoods 
of millions of people worldwide directly employed by or 
benefitting from the diamond industry.
    It would be a shame if this precedent-setting constructive 
collaboration of government, the U.N., private industry, and 
the NGOs results in anything less than the best possible 
solution. We implore Congress to consider the World Diamond 
Council proposals before taking action. We reiterate our desire 
to contribute whatever assistance and expertise we can provide. 
Thank you.
    [The prepared statement follows:]

Statement of Jeffrey Fischer, President, Diamond Manufacturers and 
Importers Association of America, New York, New York

    Mr. Chairman and members of the subcommittee, my name is 
Jeffrey Fischer and I thank you for inviting me to address you 
today in my capacity as president of the Diamond Manufacturers 
and Importers Association of America. Our association includes 
within its membership virtually all of the United States' major 
diamond cutting firms. Our membership is unanimous in its 
revulsion of any connection between diamonds and human 
suffering, and is dedicated to helping solve the problems, 
which we address today. I also serve on the steering committee 
of the Would Diamond Council and have been actively involved in 
its creation.
    I have been invited to give a brief overview of how 
diamonds flow from mine to consumer through what we refer to as 
the Diamond Pipeline and how diamonds are merchandised along 
the way.
    Please refer to the chart we have provided titled 
``Simplified Schematic of Diamond Pipeline.''
    A single diamond can be sold and re-sold numerous times 
before it ultimately adorns a retail consumer. Diamonds are 
frequently traded ``upstream'' and ``downstream'' between 
dealers at marginal price differences in the normal course of 
business. As the diagram illustrates, while it is not a 
significant part of the picture, even the consumer can 
eventually become the seller--after all the diamond ``is 
forever.''
    From the outside, the diamond market may appear confusing, 
fragmented, perhaps even inefficient, but it exemplifies the 
free market ideals that our American economic system extols.
    What is most important to note from the diagram is the line 
drawn between rough and polished diamonds. Most of the polished 
dealing, jewelry manufacturing, and retailing is done by people 
who have had no more exposure to rough diamonds then the 
typical member of Congress. All polished starts as rough, and 
once polished, remains polished forever. That transformation is 
the only irreversible ``transaction'' in our pipeline.
    A single rough stone is commonly polished into two polished 
diamonds. Often, a piece of rough yields only one stone, 
sometimes it yields multiple stones, or it may never be 
polished and sold for industrial purposes.
    As we proceed down the pipeline, the frequency of 
transactions and the number of small businesses involved 
increases dramatically, while the average size of a typical 
transaction diminishes in monetary terms. Throughout the 
pipeline diamonds are constantly assorted, mixed and re-
assorted to fit differing commercial requirements.
    To complicate matters further, already polished diamonds 
are frequently ``re-cut'' for improvement or repair, altering 
their characteristics to varying degrees. Moreover, polished 
diamonds are frequently unset and re-set in different jewelry 
sometimes alone, sometimes with other diamonds.
    The place for effective administerable import/export 
controls is at the rough level. We believe that the system of 
proposed controls adopted at the World Diamond Congress in July 
and now being brought forward by the World Diamond Council is 
the most practical and most effective means to filter out from 
the pipeline the less than four percent of world-wide rough 
production which is being misused to fund conflict. By 
effectively placing this ``filter'' at the rough level, all 
resulting polished will comply with ``conflict-free'' status.
    We are practical, realistic, business people and as such 
are tackling the conflict diamond problem with idealism 
strengthened by realism.
    We do anticipate seeking assistance from Congress in 
severing the link between diamonds and brutality without 
delay--but not simply legislation--the best possible 
legislation. Legislation that will be most effective and 
enforceable, that will not do serious damage to the legitimate 
southern African economies so dependent on diamonds, that will 
not wreak havoc with US Customs procedures, and will not harm 
the livelihoods of millions of people world wide directly 
employed by or benefiting from the diamond industry. This 
legislation must be fully consistent with an international 
inter-governmental agreement backed by industry.
    It would be a shame if this precedent setting constructive 
collaboration of government, the United Nations, private 
industry, and the non-governmental organizations result in 
anything less than the best possible solution.We implore 
Congress to consider the World Diamond Council's proposal 
before taking action. We reiterate our desire to contribute 
whatever assistance and expertise we can provide.
    Thank you.
    [GRAPHIC] [TIFF OMITTED] T8040.004
    
      

                                


    Chairman Crane. Thank you, Mr. Fischer.
    Ms. Burkhalter?

 STATEMENT OF HOLLY BURKHALTER, ADVOCACY DIRECTOR, PHYSICIANS 
                        FOR HUMAN RIGHTS

    Ms. Burkhalter. Thank you, Chairman Crane. Physicians for 
Human Rights welcomes your interest in this issue and we 
welcome the diamond industry's remarkable action taken at 
Antwerp. We welcome the international process that my friend 
and colleague Alex has described to create an international 
system for legitimizing an industry. And we welcome Tony Hall's 
legislation. But I have a concern about all of these various 
developments. All of them are too slow to impact what is going 
on in Sierra Leone right now.
    Sierra Leone is controlled by the RUF, about half of its 
territory, including 90 percent of the diamond-producing areas. 
The presence of 16,000 U.N. troops has not made a difference in 
the RUF's ability to control and abuse the civilian population. 
Recently, I heard a report from the foremost human rights 
activist in Sierra Leone, a wonderful woman named Zainab 
Bangura, who had just received the word about the RUF's 
youngest rape victim, who was 12 months old. So long as the RUF 
is in place in Sierra Leone, it will continue to commit abuses 
like this, and the key to the RUF maintaining its power and 
authority and military supremacy in Sierra Leone is diamond 
revenues.
    Last year, Liberia, precisely the year that the region was 
under the closest international scrutiny and there were the 
most protestations about conflict diamonds including a host of 
international meetings, Liberia had a boom year for sales, 
exporting $290 million worth of stones. So any action that is 
taken has to happen very quickly to deprive the RUF by 
depriving Liberia and others who transship Sierra Leonean 
stones of resources and revenues with which they are buying 
weapons to abuse the civilian population.
    When you consider, for example, that the Swiss government 
released figures that the Liberian sales doubled last year to 
$30 million just to Switzerland, that buys a lot of rifles. The 
RUF is not buying aircraft carriers. They are not buying cruise 
missiles. They are buying guns, and with those guns, 
particularly when their adversaries tend to be about five years 
old, they can do a great deal of damage.
    Thus, I am concerned that the legislation you are 
considering right now has a two-year waiver. The RUF can be in 
place for two years without seeing a dent in the resources it 
gains through the illicit transfer of diamonds through Burkina 
Faso, Liberia, Togo, and other countries.
    Similarly, with the RUF controls regimen proposed in 
Antwerp, which we strongly support, even under the most 
optimistic scenario, a global regimen under U.N. auspices that 
requires a treaty, that requires every exporting and importing 
country in the world to take legislative action, that requires 
consistent packaging in every producing country, 
understandably, is going to take some months, if not years, to 
put in place, and in the meantime, Liberia and others continue 
to export diamonds in huge amounts.
    My own view is that the United States Congress should take 
action immediately to put in place an import regimen that says 
the U.S. will not import any cut and finished stones from any 
country that does not have an embargo in place on the 
importation of rough stones from Liberia.
    Basically, this is the kind of legislation that is going to 
be required once the Antwerp system is in place. I am simply 
urging you to put it in place early and put it in place now. It 
is not a substitute for the Antwerp system and it is not a 
substitute for the international regimen, but it would allow 
the United States to push very hard at the major importing 
nations of rough stones, that is to say Israel, India, and 
Belgium, that they must themselves throw up import restrictions 
on the importation of the principal countries that are 
transshipping Sierra Leonean gems.
    It does not do any good for Belgium to say solemnly, we are 
not importing any stones exported from Sierra Leone when 
everybody knows that Sierra Leone is not officially exporting 
any stones. Sierra Leonean stones are going almost exclusively 
through Liberia, through Burkina, through Togo, through Guinea, 
and through other countries. So saying you are not handling 
conflict stones while you are allowing a boom number of stones 
to come in from Liberia is simply disingenuous.
    So my view is that the United States cannot control the 
diamond industry. It cannot control the import and export 
policies of its allies and those that are the principal players 
in the diamond industry, but we can control what we are 
importing and we can put import controls in place tomorrow that 
would make it impossible for Belgium, India, and Israel to 
continue handling rough stones and expect to export the 
finished product here.
    I would allow you a six-month waiting period if you asked, 
because these things cannot be done overnight. But I think the 
two-year waiting period in the Hall bill and the ``however long 
it takes'' for the Antwerp system is simply too long given the 
urgency of the problem in Sierra Leone today. Thank you very 
much.
    [The prepared statement follows:]

Statement of Holly Burkhalter, Advocacy Director, Physicians for Human 
Rights

Introduction:

    Good morning, Chairman Crane and Members of the Committee. 
My name is Holly Burkhalter, and I am the advocacy director of 
Physicians for Human Rights. I am honored to appear at this 
hearing; thank you for conducting it. Physicians for Human 
Rights is a human rights organization that utilizes the skills 
of the medical and scientific professions to investigate and 
prevent human rights abuses around the world.
    My organization, which conducted an investigation of rape 
and sexual violence in Sierra Leone last March, has organized 
in collaboration with InterAction and the Africa Advocacy 
Network an informal coalition of some seventy U.S.-based human 
rights, humanitarian, and religious groups to promote 
protection of human rights in Sierra Leone. As a part of that 
effort, we have called upon the diamond industry to take 
specific action to deprive the Revolutionary United Front (RUF) 
of revenues from their control of Sierra Leone's diamond 
resources, as a way of denying them access to weapons and 
ending their control of and abuses against the civilian 
population. It goes without saying that if diamond revenues 
were not being used to purchase weapons that are used against 
the unarmed population, Physicians for Human Rights would not 
be concerned about the RUF's control of Sierra Leone's 
diamonds. For it is the link between diamonds, weapons, and 
abuses that is of concern, not diamonds in and of themselves. 
My remarks today focus on diamonds and violence in Sierra 
Leone, but the observations about the need for reforming the 
diamond industry apply to Angola as well, and to future 
conflicts that may arise in other diamond-producing countries.

Summary:

    Physicians for Human Rights is deeply concerned about the 
continued sale of diamonds by insurgent forces in Sierra Leone 
and Angola, and the flow of weapons to the combatants in 
return. We welcome the diamond industry's recent commitment to 
developing a global certification regimen that eventually will 
marginalize the trade in conflict diamonds, and we urge all 
governments to diplomatically support the initiative. In the 
meantime, however, it is vitally important that the world's 
principal importers of rough diamonds--Belgium, Israel, and 
India--immediately enact unilateral prohibitions on the import 
of rough diamonds laundered through Liberia, Burkina Faso, and 
Togo, and enact a quota on imports of diamonds from the Ivory 
Coast and Guinea that is commensurate with their indigenous 
diamond producing capacity. We respectfully urge this Committee 
to enact legislation this year that prohibits American imports 
of diamonds from countries that have not erected meaningful 
trade barriers against diamonds arriving from countries known 
to launder Sierra Leonean and Angolan gems, or that permit the 
diamond industry within its borders to handle stones from such 
sources.

Background:

    The Committee is familiar with the role that diamonds have 
played in funding and fueling appalling human rights abuses in 
Sierra Leone; indeed, that is why you have called this hearing. 
The misappropriation of Sierra Leone's diamond resources by 
insurgents and renegade army officers and soldiers dates back 
to the early 1990's, and official corruption and theft of 
Sierra Leone's diamond resources is a decades-long problem. But 
the linkage between diamonds and conflict only recently riveted 
the world's attention because of the RUF's extraordinarily 
cruel violence against unarmed men, women, and children. The 
insurgents' signature violations include mass rape of women and 
children of all ages; widespread amputation of limbs; and 
extensive forcible recruitment, deployment, and abuse of child 
soldiers.
    Physicians for Human Rights' preliminary medical 
investigation of human rights abuses conducted last spring 
revealed that in areas under RUF control (approximately half of 
Sierra Leone) almost every Sierra Leonean institution, town, 
village, and family has been weakened, scarred, maimed or 
destroyed by the insurgents' reign of terror.\1\ PHR 
researchers have been informed by local human rights activists 
that in some communities almost every woman and girl has been 
raped. Thousands of women and children were abducted by RUF 
insurgents to serve as sexual slaves or child combatants and 
hundreds are still in their custody.
---------------------------------------------------------------------------
    \1\ The RUF is the principal violator of human rights in the 
conflict of the past decade, but Sierra Leonean army forces and militia 
members (the so-called Karmajors) have also engaged in gross violations 
of human rights, including capture and use of child soldiers. PHR is 
particularly concerned about abuses attributable to forces under the 
authority of Johnny Paul Koromo, who is now allied with the government 
of Sierra Leone.
---------------------------------------------------------------------------
    The ubiquitous practice of rape is particularly appalling. 
This is a crime that carries great shame and stigma for the 
victims, and many rape victims who have escaped from the RUF 
(often pregnant or with new babies) have been rejected by their 
families and communities. These innocent victims, many of whom 
survived other gross crimes, such as amputation and mutilation 
and many of whom are HIV-positive as a result of rape, need 
extensive mental and physical health services as well as job 
training and humanitarian assistance. But such services are all 
but nonexistent outside of Freetown because of the security 
threat that humanitarian organizations face in working in areas 
under the RUF's control, and the paucity of such services 
generally.
    The RUF's violence (as well as war crimes by other parties 
to the conflict) has resulted in upwards of a million 
noncombatants fleeing the country altogether and another 
million being displaced from their homes inside the country.\2\ 
But it was not until the rebel force attacked U.N. peacekeepers 
attempting to disarm and demobilize RUF combatants in the 
diamond-mining areas, killing several and taking five hundred 
hostage in May, that the international community at last was 
moved to outrage and action. That action has included, 
appropriately, demands that the RUF be deprived of the revenues 
from diamond smuggling that have been crucial to its military 
campaign that nearly destroyed Sierra Leone and its people.
---------------------------------------------------------------------------
    \2\ These numbers amount to half the population of Sierra Leone 
being displaced from their homes.
---------------------------------------------------------------------------
    The Revolutionary United Front insurgency appears to have 
grown and developed largely because of its access to diamond 
resources, with which the rebel force transformed itself into a 
formidable fighting force of some 15,000 fighters, well-armed 
and well-equipped with everything that money can buy. As 
Ambassador Richard Holbrooke stated in his July 31 testimony 
before the Security Council, ``A year ago, the RUF were drug-
crazed, machete-wielding thugs. They are now acquiring machine 
guns, shoulder-fired surface-to-air missiles and the means to 
shoot down aircraft.'' In a region where an AK-47 can be 
purchased for $5, millions of dollars in diamond revenues have 
permitted the RUF to exert enormous control over the civilian 
population of the country.
    The RUF does not appear to have an ideological basis for 
its war against its own people, nor do ethnic or tribal 
divisions offer an explanation for its struggle. Rather, the 
insurgents' seizure of territory appears to be based 
exclusively on their quest for diamonds, money, and power. 
Without its access to Sierra Leone's vast diamond wealth and 
the assistance of a powerful patron in neighboring Liberia, 
Charles Taylor, the RUF would never have become the military 
force that it is today.
    Although Liberian officials have taken great umbrage at 
denunciations by the Clinton Administration and British 
officials at its role in laundering the RUF's illicit diamond 
wealth, export statistics are a damning indictment. Official 
exports of diamonds from Sierra Leone in recent years have only 
averaged 8,500 carats annually, but historically Sierra Leone's 
annual production has totalled 530,000 carats. Where are the 
missing diamonds? The RUF controls 90 percent of Sierra Leone's 
diamond-producing areas and diamonds are most assuredly being 
mined and exported. They are entering the world market through 
a number of other countries, most notably Liberia.
    Liberia's average annual mining capacity is 100,000-150,000 
carats, but the official Diamond High Council in Antwerp 
recorded Liberian imports into Belgium of more than 31 million 
carats over the past five years; an average of 6 million carats 
a year. U.S. Government officials estimate that the RUF has 
accrued $30--$50 million and perhaps as much as $125 million a 
year from the illicit sale of diamonds.\3\
---------------------------------------------------------------------------
    \3\ Statement of Ambassador Richard Holbrooke, Exploratory Hearing 
on Sierra Leone Diamonds, Security Council, July 31, 2000.
---------------------------------------------------------------------------
    The role of neighboring countries in transshipping diamonds 
mined elsewhere can be seen in statistical records from the 
past decade in Belgium: Guinea exported 2.8 times more than it 
produced; Ivory Coast exported eight times more than it 
produced; and Liberia exported 40 times more than it 
produced.\4\ The Canadian non-governmental organization, 
Partnership Africa Canada, which has investigated the issue of 
conflict diamonds extensively, has identified the active 
involvement of Liberian officials in serving as a fencing 
operation for diamonds smuggled from other nations, including 
Angola and Sierra Leone.
---------------------------------------------------------------------------
    \4\ Notes for UN Security Council Committee on Sierra Leone 
Sanctions, Partnership Africa Canada, July 31, 2000.
---------------------------------------------------------------------------
    In a report this year, Partnership Africa Canada detailed 
the links between diamonds and weapons in Sierra Leone: 
``British newspaper accounts in January 1999 reported that late 
the previous year the RUF had contracted two British companies 
operating 'aging' Boeing aircraft to transport AK47 rifles and 
60 mm. portable mortars to rebel-held territory in eastern 
Sierra Leone. The 40-ton consignment of arms, from Brataslava 
in Slovakia, was undoubtedly acquired with diamond resources. 
The arms were crucial in the RUF's successful and highly 
destructive attack on Freetown in January 1999.'' \5\
---------------------------------------------------------------------------
    \5\ ``The Heart of the Matter, Diamonds and Human Security,'' 
Partnership Africa Canada, 2000.
---------------------------------------------------------------------------
    Other nations, notably Burkina Faso, Guinea,\6\ the Ivory 
Coast, and Togo are also implicated in diamond smuggling from 
Sierra Leone, according to United Nations experts. Burkina 
Faso's president, Blaise Campoare, is intimately involved with 
the RUF and a key advisor on its military stratgies. According 
to British Foreign Ministry official Stephen Pattison, Campoare 
and Charles Taylor regularly meet with RUF military commanders 
to discuss strategy. The meetings are chaired either by Taylor 
or Campoare. Pattison offered a detailed description of recent 
meetings between the RUF, Campoare, and Taylor, describing how 
three rebels, one carrying diamonds to pay for `material' from 
Burkina Faso, traveled with Charles Taylor to a June 5 meeting 
in Ouagadougou; five days later, the rebel commander flew to 
Monrovia to meet Taylor, carrying more diamonds to buy 
equipment.\7\
---------------------------------------------------------------------------
    \6\ Guina, which is said to be a transshipment point for a 
significant quantity of insurgent-controlled stones is in a different 
category than Liberia and Burkina Faso. There is no evidence of 
official Guinean government complicity in the smuggling, and the 
authorities have appealed for international assistance in stopping it.
    \7\ ``African Nations Threatened with Sanctions,'' The Washington 
Post, July 31, 2000.
---------------------------------------------------------------------------
    International attention to the role of diamonds in the 
ongoing destruction of Sierra Leone because of the U.N. hostage 
crisis and fear of possible consumer boycott of diamonds 
persuaded the diamond industry in May of this year to undertake 
comprehensive reforms. At a meeting of diamond-producing 
nations and the industry in Kimberly, South Africa, a plan for 
developing a global certification regimen for legitimate 
diamonds was developed and a follow-up meeting was held in 
Luanda in May. The most significant development was in mid-July 
at Antwerp, where the World Diamond Congress (the industry 
trade association) formally announced a comprehensive, global 
certification plan for assuring that the industry does not 
trade in conflict diamonds. A preliminary diplomatic meeting of 
key diamond producers and importers was held last week in 
Windhoek, Namibia, and ministerial meetings are scheduled for 
Pretoria in two weeks to finalize the agreement.
    Put overly simply, the industry's proposed global 
certification scheme, known as ``rough controls,'' would work 
as follows. Rather than attempting to identify and exclude all 
conflict stones from the international diamond trade, the 
global certification scheme instead creates a certification and 
delivery system for legitimate exports and bars all others from 
certified cutting and finishing centers. No country is 
permitted to import rough diamonds unless packets of these 
uncut diamonds have forgery-proof certificates of origin 
granted by governments and are in tamper-proof packaging. The 
rough exports are logged in an international computer database 
when they leave a country and when they enter, so that 
discrepancies between exports and imports from any country 
would immediately be apparent. An international monitoring 
authority, the proposed International Diamond Council, would 
conduct oversight of the entire system, and violators would be 
prosecuted and banned from the trade.
    It is important to note that once rough packets have been 
accepted into legitimate, certified cutting and finishing 
centers (largely based in Belgium, India, and Israel) the 
packets of rough diamonds would be broken up and the country-
of-origin certification would be lost. The industry insists 
that it is absolutely impossible to retain such documents for 
individual stones once they are cut, polished, traded, 
exported, and sold. (And, it is only fair to note that the 
diamond industry's most prominent critics, Global Witness and 
Partnership Africa Canada, agree with that assessment.) If the 
global certification regimen is in place and operating 
properly, the industry maintains that it is not necessary to 
know the country of origin of stones coming out of its cutting 
centers because all stones in legitimate cutting centers will 
themselves be legitimate. Countries importing cut and polished 
diamonds will not be required to source them to country of 
mined origin,\8\ but rather to impose strict prohibitions on 
the entry of stones from any country where diamonds are 
finished that does not itself have rough controls in place.\9\
---------------------------------------------------------------------------
    \8\ At this time the technology does not exist to source the mined 
origin of a cut and polished diamond. Experts are often able to 
ascertain the source of a run of diamonds in the rough. But once the 
alluvial material and other distinctive geological features are removed 
in cutting and polishing, it is said to be impossible to identify the 
gem's mined origin.
    \9\ The United States does not import rough diamonds. Almost all 
the diamonds that enter the U.S. are cut and finished elsewhere. Thus 
the U.S. is not itself in a position to impose import restrictions on 
rough stones.

---------------------------------------------------------------------------
Weakness in the Proposed Plan of Rough Controls:

    Mr. Chairman, the diamond industry can justly be praised 
for moving quickly in recent months to create a global system 
to squeeze out the trade in conflict diamonds in a far-
reaching, comprehensive way. Nonetheless, Physicians for Human 
Rights is deeply concerned about what appears to be a 
significant weakness in the industry's proposal: transshipment 
and export by other countries of rough stones mined in rebel-
controlled Angola and Sierra Leone. The industry's proposed 
global certification scheme requires tamper-proof packaging and 
double-entry booking in a computer registry. But what is to 
prevent a country from officially packaging and sealing 
diamonds smuggled from Sierra Leone or Angola as their own, and 
exporting them openly and transparently through designated, 
monitored exit points? Only in cases where exports grossly 
exceed the transshipping State's own capacity (which in the 
case of Liberia was so negligible that the country's role in 
laundering others' diamonds was immediately apparent) would the 
counterfeit be obvious.
    The diamond industry has pledged not to deal in conflict 
stones, and we welcome that pledge. On August 7, for example, 
Indian government officials announced that they will require 
Indian traders who import uncut diamonds to declare that they 
do not originate from Sierra Leone, Angola, or the Democratic 
Republic of Congo. This is an important statement, given that 
India is reportedly responsible for finishing over 55 percent 
of the world's cut diamonds. But to my knowledge, neither the 
key countries that import rough diamonds for cutting and 
finishing nor the diamond industry itself has taken action to 
bar the importation of rough diamonds from Liberia, Burkina 
Faso, or Togo. Since virtually all of Sierra Leone's diamonds 
are coming from those countries, not from Sierra Leone itself, 
commitments not to import from Sierra Leone are not especially 
useful in actually stopping the trade in blood diamonds and the 
flow of money and weapons to the RUF.
    One measure to deal with this issue has been proposed by 
Ian Smillie, the leading non-governmental expert on conflict 
diamonds who is now a member of the U.N. Security Council's 
expert panel to review the effectiveness of the Sierra Leone 
diamond embargo. Mr. Smillie has called for an immediate cap or 
exclusion from world markets of those exports of diamonds that 
significantly exceed a country's known resource base.\10\ This 
provision is included in the working document to be considered 
at the upcoming ministerial conference. But the diamond 
industry as well as the key importers of rough stones, Israel, 
Belgium, and India, should not wait for the establishment of a 
global regimen to be completed, which may take years, before 
announcing and implementing such a policy today.
---------------------------------------------------------------------------
    \10\ A difficulty with this proposal is the inexact nature of 
assessing a country's mining capacity. Huge exports from a country with 
almost no capacity, like Liberia, are easy to spot. But in countries 
like Russia, with virtually unknown but presumably vast resources, 
determining mining capacity precisely will be impossible, thus allowing 
the possibility that such a country could serve as a transshipment base 
for diamonds from anywhere else in the world.
---------------------------------------------------------------------------
    In July of this year, some seventy American non-
governmental organizations released a letter calling upon the 
World Diamond Congress to immediately announce that no packets 
of rough diamonds would be accepted into its cutting centers 
from Liberia, Togo, Burkina Faso, the Ivory Coast, or the 
Democratic Republic of Congo. This action would not be a 
substitute for the comprehensive, global system of rough 
controls needed that, indeed, the diamond industry has agreed 
to. It is, rather, a vital step urgently required now while the 
global certification regimen is settling into place.
    It is my understanding that the organized diamond industry 
firmly opposes taking this action because there is no 
international sanctions regimen in place against those 
countries transshipping conflict diamonds, only against rebel-
controlled Angola and Sierra Leone. This is a disappointing 
response. The role of Sierra Leone's neighbors, particularly 
Liberia and Burkina Faso, in laundering Sierra Leonean diamonds 
in exchange for weapons is well known. It should not require a 
United Nations embargo to persuade the diamond industry to 
actually carry out what it has pledged to do: cease handling 
rough stones from Angola and Sierra Leone. Making good on that 
oft-stated promise obliges the three major importers and the 
industry to immediately prohibit all contact with those 
countries that launder conflict diamonds. To date, I have not 
seen evidence that that step has been taken. Moreover, the 
bountiful exports of diamonds within the last year from non-
producing Liberia make it inescapably clear that Sierra Leonean 
diamonds are entering the industry's cutting centers and are 
being traded and sold in the international market.
    The United Nations Sanctions Committee's expert commission 
on the Sierra Leonean diamond embargo has been tasked to make 
its report on October 31. At that time, the United Nations may 
enlarge the Sierra Leonean diamond embargo to include Liberia 
and perhaps other countries. Let us hope that the three major 
importing countries and the diamond industry will then do what 
it should have done years ago: publicly announce that it is 
closing the doors of its cutting centers to all diamonds 
emanating from Liberia and other countries known to transship 
Sierra Leonean gems. Those centers concerned with their 
international reputation would do well to immediately develop 
and publicize a protocol for identifying and excluding such 
stones and invite the U.N.'s investigative body to regularly 
inspect its surveillance and vetting operations.
    Physicians for Human Rights strongly supports the 
industry's proposed global certification regimen of rough 
controls adopted in Antwerp. But even under the most optimistic 
timeline for the plan's adoption by the international 
community, it seems unlikely that the program can be put in 
place in less than a year or two. Accordingly, it will be a 
very long time before these reforms choke off the RUF and 
UNITA's trade in diamonds and their ability to purchase weapons 
with the proceeds.
    American officials have reported that Liberia exported $290 
million in smuggled diamonds last year alone. A Swiss customs 
official reported on August 9 of this year that diamond imports 
from Liberia have soared in the past year, and estimate that 
many are coming from rebel-held areas of Sierra Leone. Swiss 
diamond imports from Liberia have totaled almost $30 million 
this year, compared with $15 million last year, and the quality 
of the stones make it clear that they did not come from 
Liberia.\11\
---------------------------------------------------------------------------
    \11\ ``Liberian Exports Flood Into Switzerland,'' Associated Press, 
August 9, 2000.

---------------------------------------------------------------------------
Legislation:

    Physicians for Human Rights and our partners in the non-
governmental community applaud Representative Tony Hall and his 
cosponsors for highlighting the link between diamonds and human 
rights violations, and for proposing to take action to limit 
their importation into the United States. We have endorsed the 
original CARAT Act, and urged our physician members to 
encourage their own representatives in Congress to co-sponsor 
it.
    t is my understanding that Congressman Hall's revised CARAT 
Act requires that diamonds entering the United States be 
accompanied by a certificate of mined origin, which can be 
waived if the rough controls regimen is in place and is 
effective in stopping the trade in conflict diamonds. The Act's 
import restrictions would not go into effect until two years 
after enactment.
    We would welcome action on the Hall-Wolf bill this session. 
It presses the diamond industry to implement what it has 
pledged to do, and it holds out the possibility of imposing a 
more rigorous import regimen--country-of-origin certification--
if it does not. Nonetheless, I still have concerns that neither 
the CARAT Act nor the global certification scheme of rough 
controls will have any impact in the short run on the trade in 
RUF and UNITA-controlled diamonds, and will do little to 
deprive those forces of their diamond revenue and thus their 
means of waging war.
    Without meaning in any way to undermine either the CARAT 
Act or the global certification regimen, I would like to 
suggest that the Committee consider revising the legislation. 
The bill should include a prohibition on U.S. importation of 
any finished diamonds from countries, specifically including 
Belgium, India, and Israel, which have not erected effective 
national embargoes on the importation of rough diamonds from 
Liberia, Togo, Burkina Faso, and the DRC, and which have not 
prohibited the cutting centers that operate within their 
national boundaries from handling such stones if they are 
smuggled in. The U.S. could also prohibit the entry of finished 
diamonds from countries that have not set a quota on the volume 
of diamonds that may be imported that is commensurate with the 
exporting country's own mining capacity. Thus the Ivory Coast 
and Guinea, which have their own diamond production, could 
export, but they could not export amounts disproportionate to 
their own production, that is, launder diamonds for others.
    The United States is not in a position to regulate the 
diamond industry, nor can it force any other government to take 
the actions that are required for the global certification 
program to become a reality. The only thing that the U.S. can 
do is control its own imports. By conditioning American imports 
of finished diamonds on the actions of the world's largest 
importers of rough stones--Belgium, Israel, and India--the U.S. 
would encourage those governments to take meaningful action in 
the short run that could help stem the flow of revenues to the 
RUF and UNITA almost immediately. Such an action is not a 
substitute for the global system that the diamond industry has 
agreed to, and which I believe is vitally needed. But it does 
encourage in a meaningful way very rapid action on the part of 
both the diamond industry and the world's leading importers of 
rough stones to cease importing conflict stones exported by 
Liberia, Burkina Faso, and others.

Conclusion:

    Mr. Chairman, I would not want to suggest by my testimony 
that diamonds alone are the problem or the answer to the 
heartbreaking human rights crisis in Sierra Leone. It is 
crucial, for example, that the United Nations and its strongest 
members take immediate and forceful steps to implement the 
international weapons embargo on the RUF, in place since 1997 
and the arms embargo against Liberia, which was imposed in 
1992. The United Nations Security Council must put some teeth 
into these measures by establishing responsible monitoring 
bodies and publicly report and condemn violations. Moreover, 
competent troops should be posted at the Sierra Leonean-
Liberian border, at airfields, and other delivery points to 
seize shipments of weapons to the RUF. U.N. forces should take 
immediate action to disrupt the RUF's weapons supply lines, 
including on roads and waterways, airports and airfields.\12\
---------------------------------------------------------------------------
    \12\ For detailed information on arms flows to the RUF, see 
``Neglected Arms Embargo on Sierra Leone Rebels,'' a Human Rights Watch 
briefing paper dated May 15, 2000.
---------------------------------------------------------------------------
    What is needed most of all, in my opinion, is for the 
United Nations, generously supported by the U.S. and its 
allies, to implement a forceful military strategy to dislodge 
the RUF from the areas that it controls (including the diamond-
producing regions) and defeat, demilitarize and demobilize the 
insurgents. International peacekeeping forces should establish 
security and protection for all civilians throughout Sierra 
Leone so that they may rebuild their shattered lives and 
country. Extensive humanitarian and development assistance 
should be provided once security is established so that Sierra 
Leonean refugees in Guinea can return home. Those implicated in 
human rights abuses, particularly those in command positions, 
should be apprehended and turned over to the Sierra Leonean 
authorities, and, eventually, to the international tribunal 
that the United Nations is establishing to prosecute war crimes 
in Sierra Leone for investigation and prosecution.
    Most of the members of the non-governmental coalition that 
Physicians for Human Rights has helped organize to work on 
conflict diamonds have been equally outspoken about the need 
for protection of the civilian population and enforcement of 
international human rights standards in Sierra Leone. We are 
very grateful for the attention that Representatives Hall and 
Wolf have given to the issue of human rights in Sierra Leone 
and the role that diamonds have played in the country's 
destruction, and appreciate the Chairman and members of this 
Committee highlighting our concerns so prominently at this 
important hearing.
    Thank you.
      

                                


    Chairman Crane. Thank you.
    Mr. Jolis?

  STATEMENT OF J.F. ``JACK'' JOLIS, PRESIDENT, ROUGH DIAMOND 
                 CONSULTANCY, ANTWERP, BELGIUM

    Mr. Jolis. Thank you, Mr. Chairman. I am an American 
diamond dealer/consultant and have worked for 30 years in every 
part of the globe where diamonds are mined, bought, sold, and 
cut. Having for the past year or so read and heard so much 
about how the relatively small diamond business is responsible 
for funding the maniacal carnage we witness pretty much 
throughout Africa, I feel compelled to reply.
    Let us take a look at Africa and its suddenly infamous 
diamond producing countries. Sierra Leone--even if not a single 
diamond existed there, not a man, woman, or child would escape 
being amputated or beheaded by a rusty machete. Let us not 
waste valuable time talking about peacekeeping or mercenary 
forces in Sierra. Peacekeepers? They consist mostly of Nigerian 
gangsters assisted by some Guinea gangsters who are not only 
better armed but even more intent on killing anyone who gets in 
their way of putting their hands on the diamonds.
    And in Sierra, there is a lovely bunch of drugged-up thugs 
called the KAMAJORS, who, while professing to support the 
current government, find themselves fighting their allies, 
enemies, even themselves, not for diamonds but because they are 
drugged and all they know what to do is fight. You think they 
would know how to sell an uncut diamond?
    Do diamonds pay for this mayhem? I doubt it, not when you 
are offered, as I was recently in Kinshasa, a fully-loaded AK-
47 for U.S. $10. To top it all, the Leonean government hires a 
bunch of quaintly named South African mercenaries called 
Executive Outcomes who are not only paid by the government with 
diamonds but are even given diamond fields to exploit, and this 
by a government supported by the U.N. that is bleating about 
their rebellion being financed by diamonds.
    Angola--sure, for the time being, most of the diamond 
fields lie in UNITA hands, but these areas change hands 
according to the fortunes of war. In any case, the MPLA also 
have diamond fields of their own and I happen to know at first 
hand of many of the MPLA's generals who sell their diamonds to 
UNITA. The MPLA have infinitely more money, in any case, from 
oil to buy weapons than UNITA has diamonds, not to mention the 
fact that UNITA diamonds, which are mostly on the western bank 
of the Cuango River, are in no way distinguishable from the 
same diamonds found on the Congo side of the river.
    There is a lot of uniformed talk of some sort of invisible 
infrared internal marking scheme for polished stones, which, 
even were it possible, which it is not, would immediately wipe 
out the entire category of D-flawless polished stones.
    And then there is a theory about branding rough diamonds. 
Eh? First of all, branding a rough diamond makes about as much 
sense as branding a cow and then trying to determine where the 
resulting steak came from. And as for the notion of branding a 
cut diamond along its border with, say, something like 
``DeBeers 2001X,'' any half-clever diamond cutter could do the 
same using the same number he might have come across a similar-
sized DeBeers stone.
    So there is a lot of uninformed chatter about identifying 
the providence of diamonds, whether cut or uncut. No can do, 
certainly not in any court of law. Any expert will be countered 
by an opposing expert.
    Which brings me back to what is currently known as D.R. 
Congo, a country with at least three different areas producing 
distinctly different diamonds, some rebel, some government. Mix 
them together in a single parcel and the job of determining 
which are the clean stones becomes even more impossible.
    Angola stones? Take some from UNITA-held zones, mix them 
with stones from the MPLA, add some stones from Ivory Coast, 
some others from Guinea, the Central African Republic, and what 
have you got? A big load of nothing that is remotely 
identifiable by anyone reputable.
    If diamonds were the proximate cause of African tribal 
butchery, how can one explain the Congolese civil war of 1960? 
Pro-Western Moise Tschombe tried to establish independence for 
his copper-rich and diamond-rich province today known as 
Kolwezi. He was foiled by the U.N.-sponsored Kasavubu, who in 
turn was overthrown by the equally U.N.-sponsored Mobutu, whose 
people killed the communist Lumumba. But the point of all this 
ancient history is that at the time, nobody even uttered the 
word ``diamond.'' It was all ``copper.''
    And do you remember the civil war in Nigeria between the 
breakaway Biafra and the then-Federal Government? What did 
diamonds have to do with that butchery? Right, exactly nothing.
    Of the five civil wars in the Tchad, over diamonds? Sorry, 
nary a one. Or even the 40-plus-year civil war in the Sudan, 
over diamonds? The only diamond you might find in the Sudan 
would be lodged between the Mahdi's cadaver's two front teeth.
    And the unspeakable mangle-shambles that used to be 
Somalia, any diamonds involved in that particular charnel 
house? I do not think so. And finally, in the worst killing 
fields since Cambodia is the incredibly barbaric Hutu-Tutsi 
mutual genocide. Is it in any way financed by diamonds of the 
blood kind or any other kind? No.
    That Africa is in a dreadful and perhaps even terminal mess 
is undeniable, but to fob off this horrible internecine 
catastrophe on the fact that diamonds, along with a heck of a 
lot of other stuff, abound there is to utterly lose any claim 
to a perspective on the problem. As I said earlier, you could 
take away every diamond that exists under the soil in Africa 
and not a single human being who is currently being killed, 
tortured, or maimed would be spared.
    An interesting case in point is the Central African 
Republic, where the two major tribes, the Bayas and the Bandas, 
have been both at each other's throats since time immemorial, 
and yet diamonds are found in profusion in both these tribes' 
areas. They are manifestly not killing each other over 
diamonds.
    There are really only two possible solutions to the 
problem. First, and this is not really much of a solution at 
all, is to let them chop each other up until the last man is 
standing.
    Second would be to send in the only men who are competent 
and incorruptible enough to do the job properly, the British 
SAS and their Parachute Regiment, the French Foreign Legion and 
their Régiments Etranger Parachutés, and the U.S. 
Special Forces and our Delta Force. Neo-colonialism? You 
betcha, and 99 percent of the people of the embattled Africa 
would kiss your feet for it.
    But ban blood or any other diamonds? First of all, such a 
plan would not succeed. Diamonds are like fine art. They are 
non-fungible and by definition are not controllable. And even 
in the unlikely event that such an anti-diamond scheme did have 
a measure of success, the only people it would hurt would be 
the already dirt-poor, hard working, artisan/digger poor devils 
digging away in the third world, certainly not diamond dealers 
who have stocks like Uncle Scrooge had a swimming pool 
overflowing with golden spondulics.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]

Statement of J.F. ``Jack'' Jolis, President, Rough Diamond Consultancy, 
Antwerp, Belgium

                    DIAMONDS: AND AFRICAN CONFLICTS

    I am an American diamond dealer/consultant and have worked 
for thirty years in every part of the globe where diamonds are 
mined, bought, sold and cut. Having for the past year or so 
read and heard so much about how the relatively small diamond 
business is responsible for ``funding'' the maniacal carnage we 
witness pretty much throughout Africa, I feel compelled to 
reply.
    Let's take a look at Africa and its suddenly infamous 
diamond producing countries:
    Sierra Leone: Even if not a single diamond existed there, 
not a man, woman or child would escape being amputated or 
beheaded by a rusty machete.
    Let us not waste valuable time talking about ``peace-
keeping'' or ``mercenary'' forces in Sierra. ``Peacekeepers''? 
They consist mostly of Nigerian gangsters, assisted by some 
Guinean gangsters, who are not only better armed, but even more 
intent on killing anyone who gets in their way of putting their 
hands on ``the diamonds.'' And in Sierra, there is a lovely 
bunch of drugged-up thugs called the KAMAJORS, who, while 
professing to support the current government find themselves 
fighting their allies, enemies, even themselves--not for 
diamonds, but because they're drugged and all they know what to 
do is fight. You think they would know how to sell an uncut 
diamond?
    Do diamonds pay for this mayhem? I doubt it, not when you 
are offered, as I was recently in Kinshasa, a fully-loaded AK-
47 for $10. To top it all , the Leonian government hires a 
bunch of quaintly named South African mercenaries called 
``Executive Outcomes'' who are not only paid by the 'government 
with diamonds, but are even given diamond ``fields'' to 
exploit. And this by a government, supported by the UN, that is 
bleating about their ``rebellion'' being financed by diamonds.
    Angola. Sure, for the time being most of the ``diamond 
fields'' lie in UNITA hands, but these areas change hands 
according to the fortunes of war. In ANY case, the MPLA ALSO 
have diamond fields of their own and, I happen to know at first 
hand of many of the MPLA's ``generals'' who sell THEIR diamonds 
to UNITA. The MPLA have infinitely more money from oil to buy 
weapons than UNITA has diamonds. Not to mention the fact that 
the UNITA diamonds which are mostly on the western bank of the 
Cuango River are, IN NO WAY distinguishable from the same 
diamonds found on the Congo side of the river. So?
    There is a lot of uninformed talk of some sort of 
``invisible infra-red internal marking'' scheme for polished 
stones, which, even were it possible, which it isn't, would 
immediately wipe out the entire category of ``D-Flawless'' 
polished stones. And then there is a theory about ``branding'' 
rough diamonds. Eh? First of all, ``branding'' a rough diamond 
makes about as much sense as branding a cow and then 
determining where the resulting steak came from. And, as for 
the notion of ``branding'' a cut diamond along its border 
(with, say, something like ``DeBeers 2001 X) ``, any half-
clever diamond cutter could do the same, using the same number 
he might have come across a similar-sized DeBeers stone.
    So there is a lot of uninformed chatter about ``identifying 
the provenance of diamonds,'' whether cut or un-cut. No can do. 
Certainly not in any court of law--any ``expert'' will be 
countered by an opposing ``expert.''
    Which brings me back to what is currently known as the D.R. 
Congo, a country with at least 3 different areas producing 
distinctly different diamonds. Some ``rebel.'' Some 
``government.'' Mix them together into a single parcel, and the 
job of determining which are the ``clean'' stones becomes even 
more impossible Angola stones? Take some from UNITA-held zones, 
mix them with stones from the MPLA, add some stones from Ivory 
Coast, and some others from Guinea and the Central African 
Republic, and you've got what? A big load of nothing that is 
remotely identifiable by anyone reputable.
    If diamonds were the proximate cause of African tribal 
butchery, how can one explain the Congolese civil war of 1960? 
Pro-Western Moise Tschombe tried to establish independence for 
his copper-rich (and diamond-rich) province today known as 
Kolwezi. He was foiled by the UN-sponsored Kasavubu, who in 
turn was overthrown by the equally UN-sponsored Mobutu, whose 
people killed the communist Lumumba--but the point of all this 
ancient history is that at the time nobody even uttered the 
word ``diamond''--it was all COPPER!
    And do you remember the civil war in Nigeria, between the 
breakaway Biafra and the then-"Federal'' Government? What did 
diamonds have to do with that butchery? Right. Exactly nothing.
    Or the 5 civil wars in the Tchad? Over diamonds. Sorry. 
Nary a one.
    Or, even the 40+-year civil war in the Sudan. Over 
diamonds? The only diamond you might find in the Sudan would be 
lodged between the Mahdi's cadaver's 2 front teeth.
    And the unspeakable mangle-shambles that used to be 
Somalia. Any diamonds involved in that particular charnel 
house? I don't think so.
    And finally, in the worst killing fields since Cambodia is 
the incredibly barbaric HutuTutsi mutual genocide in any way 
financed by diamonds? Of the ``blood'' kind or any other? No.
    That Africa is in a dreadful and perhaps even terminal mess 
is undeniable. But to fob off this horrible internecine 
catastrophe on the fact that diamonds--along with a heck of a 
lot of other stuff--abound there is to utterly lose any claim 
to a perspective on the problem. As I said earlier, you could 
take away every diamond that exists under the soil there and 
not a single human being who is currently being killed tortured 
or maimed would be spared.
    (An interesting case in point is the Central African 
Republic, where the two major tribes, the Bayas and the Bandas, 
have been at each others' throats since time immemorial. And 
yet diamonds are found in profusion in BOTH these tribes' 
areas. They are manifestly not killing each other for 
diamonds.)
    There are really only two possible solutions to the 
problem:
    First, and this is not really much of a solution at all, is 
to let them chop each other up until The Last Man Is Standing.
    Second would be to send in the only men who are competent 
and incorruptible enough to do the Job properly: The British 
SAS and their Parachute Regiment; The French Foreign Legion and 
their Regiments Etranger Parachutes; and the US Special Forces 
and our Delta Force. Neo-colonialism? You betcha. And 99 
percent of the people of embattled Africa would kiss your feet 
for it.
    But ban ``blood''--or any other--diamonds? First of all, 
such a plan would not succeed . Diamonds, like fine art, are 
non-fungible, and by definition, are not ``controllable.'' And, 
even in the unlikely event that such an anti-diamond scheme DID 
have a measure of success, the only people it would hurt would 
be the already dirt-poor hard-working artisan/digger poor 
devils, digging away in the Third World--certainly not diamond 
dealers who have stocks like Unca Scrooge had a swimming pool 
overflowing with golden spondulics.
      

                                


    Chairman Crane. Thank you, Mr. Jolis.
    Mr. Boyajian?

   STATEMENT OF WILLIAM E. BOYAJIAN, PRESIDENT, GEMOLOGICAL 
INSTITUTE OF AMERICA, CARLSBAD, CALIFORNIA, ON BEHALF OF WORLD 
                        DIAMOND COUNCIL

    Mr. Boyajian. Mr. Chairman, I am Bill Boyajian, President 
of the Gemological Institute of America, GIA. GIA is a 
nonprofit 501(c)(3) public benefit corporation. As a nonprofit 
education and research institution, we ensure the public trust 
in diamonds and gemstones by educating and serving the gem and 
jewelry industry worldwide. GIA is headquartered on a sprawling 
18-acre campus in Carlsbad, California, and has a significant 
office and laboratory in New York City. We employ some 700 
professionals and have campus facilities in eight countries on 
three continents.
    Everyone concerned believes that it is in the long-term 
best interest of the trade and the public that the exploitation 
of diamond resources to fuel war and conflict in African 
countries be halted immediately. Over the past year, the 
Gemological Institute of America has been asked to research, 
review, and comment on the feasibility of identification of 
country of origin of rough and polished gem diamonds. I will 
speak very briefly today on GIA's view of those possibilities 
and limitations as they currently exist.
    From the outset, let me state that based upon all of our 
current knowledge and that which we have been able to glean 
from the literature and other noted experts, there is no known 
scientific and practical means for determining the country of 
origin of rough and polished gem diamonds. And while some have 
suggested that visual means alone will distinguish rough 
diamond origin, we would view this as highly problematic and 
overly subjective, at best.
    We believe that if steps must be taken now to curtail the 
flow of so-called conflict diamonds into the trade, and we 
believe this to be so, such steps must entail the tracking of 
diamonds in the rough, from mine through manufacturer, in order 
to assure the retail community and ultimately the consumer that 
diamonds entering the marketplace are conflict-free. To 
succeed, such a tracking system will require the increased 
cooperation of all organizations in the diamond industry and 
all governments of countries involved in the mining, 
exportation, importation, manufacturing, and/or distribution of 
rough gem diamonds.
    Of the 100-plus millions of carats of diamonds mined 
annually, only a few percent actually originate in countries of 
known civil conflict. In this regard, it should be understood 
that country of origin means the country where diamonds are 
mined or extracted and not necessarily the places where they 
were deposited in the earth's crust. Diamonds originally 
emplaced in several primary deposits in one or more countries 
could be weathered out of their original host rock, transported 
by rivers, and become concentrated in a secondary deposit in 
another country. I might add that many of the diamond deposits 
in the countries of conflict in Africa are those of secondary 
deposits. That is, they have been carried there through the 
transport of rivers and weathered from their original host.
    If identifying characteristics existed for the diamonds 
from a particular primary deposit, these features may or may 
not be retained during the weathering and transport of the 
diamonds. Moreover, from a single secondary deposit in a 
conflict country, one could potentially find diamonds with 
characteristics distinctive of several primary deposits in one 
or more countries. Therefore, these characteristics would 
provide no information on where the diamonds were mined but 
only where they were first brought to the surface, possibly in 
a neighboring non-conflict country that depends on diamond 
exports to maintain economic and social stability.
    Even if a high proportion of rough diamonds from a 
particular geographic area does not have some distinctive 
physical characteristics, many such characteristics are lost 
during the manufacturing process. This means that even fewer 
characteristics exist for determining the geographic source of 
polished diamonds.
    Analogous to studying the country of origin of diamonds is 
that of the country of origin of various colored stones--ruby, 
sapphire, emerald in particular. Because GIA has long felt that 
the best research data and expertise has not resulted in a 
standard of consistency and scientific backing acceptable to 
our institution, we have never entered the arena of providing 
origin reports on colored gemstones and continue to hold this 
fundamental view.
    Likewise, except and until the advent of so-called conflict 
diamonds, GIA as a world authority on polished diamonds has 
never seriously been asked or even contemplated the prospects 
of attempting to determine the country of origin of rough 
diamonds.
    In summary, based upon current knowledge, there is no known 
scientific way to determine the country of origin of rough or 
polished gem diamonds, nor do we foresee practical ways being 
developed in the near future. Likewise, we would be highly 
suspect of those who might characterize visual observation 
alone as a means of rough diamond identification. Such claims, 
in our view, are fraught with danger.
    Therefore, a chain of warranties or a system of 
certification to track diamonds from their country of origin 
through the manufacturing process and ultimately to the 
retailer and the consumer would provide a better alternative at 
this time to the goal of preventing the sale of conflict 
diamonds. As a nonprofit public benefit institution, GIA is 
committed to assisting the trade, governments, and non-
governmental organizations in whatever way possible to curtail 
the mining and flow of conflict diamonds.
    Chairman Crane, as President of the Gemological Institute 
of America, I have also been asked to serve on the World 
Diamond Council and have been asked to chair the technical 
committee of that council and our goal would be to implement 
the Antwerp resolution as it was currently passed. Thank you.
    [The prepared statement follows:]

Statement of William E. Boyajian, President, Gemological Institute of 
America, Carlsbad, California, on behalf of World Diamond Council

                              Introduction

    Mr. Chairman and members of the subcommittee, I am William 
E. Boyajian, President of the Gemological Institute of America 
(GIA). Founded in 1931, GIA is the largest educational and 
research institution in the world, with some 700 employees on 
campuses in eight countries on three continents. Incorporated 
as a 501(c) 3 public benefit corporation, GIA's mission is to 
educate and serve the gem and jewelry industry, creating 
standards of professionalism to benefit the trade and, 
therefore, uphold the public trust in diamonds and other 
gemstones. We educate some 15,000 people each year in 
gemological training programs and conduct state-of-the-art 
gemological research to ensure the integrity of gems. Our Gem 
Trade Laboratory grades most of the major polished diamonds 
that are bought and sold around the world each year, estimated 
at a value of some $3 billion at the wholesale level. We also 
design and manufacture fine gemological testing equipment to 
assist jewelers in identifying and grading diamonds and other 
gemstones.
    Over the past 18 months, interest has been expressed by 
certain governmental and non-governmental organizations in 
establishing a mechanism to determine the ``country of origin'' 
of gem diamonds. These organizations suggest that if such a 
determination could be made, the diamonds being mined in 
particular conflict countries could be identified and banned 
from international commerce. This action would deprive the 
combatants involved of an important source of revenue for their 
activities.
    Of the hundred-plus millions of carats of diamonds produced 
annually, only a few percent originate in conflict countries. 
Despite this fact, public pressure is being placed on the 
jewelry trade to quickly develop a mechanism to segregate those 
diamonds that are illicit. GIA has therefore been asked to 
research, review and comment on the feasibility of 
identification of country of origin of rough and polished gem 
diamonds. This report sets forth the position of GIA as to 
whether the country of origin for gem diamonds can be 
determined.
    There are two different parts to the problem of determining 
the country of origin--identifying the geographic source of 
rough or polished diamonds, and tracking diamonds from their 
source through the diamond ``pipeline.'' Can an analytical 
means be developed to determine the geographic source of rough 
and polished diamonds whose origins are uncertain? Can a 
procedure be organized for tracking particular diamonds from 
the mine through manufacturing and retailing to the consumer, 
to prevent diamonds originating in certain countries from being 
sold? This report will address these questions.
    Based upon current knowledge, no practical means exist 
today for determining the country of origin of rough or 
polished diamonds, although means may be developed to make such 
a determination for some percentage of rough diamonds. We 
believe that steps can be taken to track diamonds from the mine 
through to the manufacturer and retailer. To succeed, such a 
tracking system would require increased cooperation among all 
organizations of the diamond industry.
    This report will focus on discussing the technical 
considerations involved in determining the country of origin 
for rough and polished diamonds, and will conclude with a few 
remarks about a diamond tracking system. Before discussing 
these issues, it is first necessary to make a few preliminary 
comments as background information.

General Comments Relevant to Determining Country of Origin

    Diamond Formation. Diamonds crystallize deep in the earth's 
mantle, and are brought to the surface through magmatic 
activity. At the surface, the diamonds occur in certain kinds 
of volcanic rocks (kimberlites and lamproites). From the 
primary deposits in these rocks, some diamonds are released 
during rock weathering and can become concentrated in secondary 
alluvial deposits formed along rivers, or in the marine 
deposits under the ocean along the western coast of southern 
Africa.
    Like other minerals and rocks, diamond crystals contain 
within themselves a record of their geologic history in terms 
of their morphology, detailed chemical composition, growth and 
etching features, and inclusions. Interpreting this record is a 
current focus of geological research to better understand the 
physical conditions and processes that take place where 
diamonds crystallize in the mantle. For scientists, diamonds 
are particularly valued for this purpose because they, and 
their mineral inclusions, undergo so little alteration after 
the diamonds are emplaced in the crust. Thus, this record 
provides much information on the conditions of growth of 
diamonds, and some information on their post-growth conditions, 
in the mantle. However, the record provides little or no 
information on the geographic source of diamonds in the earth's 
crust where they are found and mined. Thus, the features of 
diamonds may provide no indication of their country of origin.
    Meaning of ``country of origin.'' In discussions on the 
subject of determining geographic source, it should be 
understood that country of origin means the country where the 
diamonds are mined or extracted, and not necessarily the places 
where they were deposited in the earth's crust. Diamonds 
originally emplaced in several primary deposits (in one or more 
countries) could be weathered out of their original host rock, 
be transported by rivers, and become concentrated in a 
secondary deposit in another country. If identifying 
characteristics existed for the diamonds from a particular 
primary deposit, these features may or may not be retained 
during the weathering and transport of the diamonds to 
secondary deposits. Moreover, from a single secondary deposit 
in a conflict country, one could potentially find diamonds with 
characteristics distinctive of several primary deposits in one 
or more other countries. Therefore, these characteristics would 
provide no information on where the diamonds were mined (i.e., 
in a conflict country), but only where they were deposited, 
possibly in a neighboring non-conflict country that depends on 
diamond exports to maintain economic and social stability.
    Distance from the source. As diamonds travel further from 
their geographic source through the diamond ``pipeline,'' the 
likelihood of recognizing their source decreases. In most cases 
today, a manufacturer purchases an assortment of rough 
diamonds, possibly from a number of different geographic 
sources that are not all fully known to them, to polish as 
gemstones. The contents of this assortment are often determined 
based upon the particular needs and capabilities of the 
manufacturer. Mixing diamonds from several sources also 
provides for a more equitable distribution of diamonds among 
manufacturers. These factors all contribute to an uncertainty 
about geographic source as the diamonds are bought and sold in 
the trade.
    Loss of features during manufacturing. Even if a high 
proportion of rough diamonds from a geographic area does have 
some distinctive physical characteristics, many such 
characteristics are lost during the manufacturing process to 
produce polished gemstones. This means that even fewer 
characteristics exist for determining the geographic source of 
polished diamonds.
    Acceptable proof of a country of origin. Among the 
organizations advocating that the jewelry trade takes steps to 
identify diamonds from conflict countries, there has yet to be 
much discussion on what would be considered acceptable proof 
that the features of particular diamonds establish that they do 
or do not come from a conflict country.

Unique Characteristics of a Diamond

    Determination of the country of origin depends upon the 
existence of characteristics that are unique to diamonds from a 
particular geographic source. Possible distinctive 
characteristics include visual features of the rough or 
polished diamonds, gemological properties, spectrum bands, and 
chemical composition data. To the extent that the diamond 
crystals in a deposit have a common geologic history, they may 
have such similar characteristics that are unique to that 
deposit. Documenting these characteristics may then allow the 
determination of a country of origin. Such unique 
characteristics would need to be established on the basis of 
statistical studies of numerous diamonds from an area, with the 
resulting information being compiled into a database. Many 
diamonds from all similar sources would have to be investigated 
to check claims of uniqueness.
    Characteristics of diamonds that are potentially diagnostic 
of geographic source fall into several categories:
    1) Visual features of rough diamonds--size, crystal 
morphology, surface features (resulting from growth, etching, 
abrasion, and radiation exposure), color, and inclusions.
    2) Visual features of polished diamonds--size, color, 
clarity, transparency, fluorescence, inclusions, and quality of 
polish.
    3) Physical properties--visible, infrared, luminescence, 
and Raman spectra, anomalous birefringence patterns, and 
measurements of other physical property.
    4) Detailed chemical composition analysis--trace elements, 
trace element ratios, and isotopic data.
    Determining unique characteristics. Geologic studies have 
shown that in some primary deposits, all the diamond crystals 
have a common geologic history. In other deposits, the diamonds 
have differing histories (that is, they originated from 
different areas in the mantle). Secondary alluvial deposits 
contain diamond crystals from all primary deposits sampled by 
the waters that transported the crystals to the alluvial 
deposit; in some cases, this transport can extend over great 
distances. At present, there exist scattered scientific studies 
of diamonds from several deposits, limited mining records, and 
anecdotal evidence which suggest that, on average, diamond 
crystals from some deposits do have some identifying 
characteristics (such as shape, surface features, and color). 
However, the existing data are too limited and too sketchy to 
identify the place of origin of any given random diamond 
crystal with a high degree of certainty.
    In order to determine if certain characteristics are 
typical of diamonds from a geographic source, one would need to 
gather many kinds of analytical data. These data would be 
required from a sufficient number of diamonds known to be from 
a particular area, to find both the average characteristics and 
the unusual ones, in order to have a statistical degree of 
confidence in this information.
    To further determine whether these average characteristics 
are diagnostic of diamonds from a particular deposit, one would 
need the same large quantity of data, from a similarly large 
number of diamonds, from each of the other commercial diamond-
producing areas around the world. Collection of these data 
could be more easily accomplished for primary deposits that 
occur in well-defined areas, and under the control of major 
mining companies. Collection of data on diamonds from secondary 
alluvial deposits would be much more difficult to achieve both 
because there is less control over mining activities 
(undertaken by numerous groups or individuals on a legal or 
illegal basis), and because the productive areas may be 
geographically very large. For both primary and secondary 
deposits, a determination would need to be made about what 
would constitute a truly representative sample of diamonds from 
an area. Statistical studies would then need to be carried out 
to analyze the characteristics of the diamonds from each 
deposit, to determine if such characteristics are unique to the 
diamonds from that deposit.
    Results of these statistical studies would need to be 
compiled into a database, against which the features of 
diamonds of unknown source could be compared. At this time, 
such a database does not exist. Gathering sets of diamonds from 
known deposits would be a first step toward building this 
database. An appropriate procedure to document the 
characteristics of these sets of diamonds would need to be 
agreed upon and implemented. Creation of this kind of 
information database is a large research undertaking, and would 
likely take a several years (and millions of dollars) to 
complete. Even then, one cannot rule out the possibility that 
diamonds from some deposits will not have features diagnostic 
of their geographic source, and that some atypical diamonds 
will exhibit characteristics suggestive of deposits other than 
the one from which they were mined.
    Source determination for rough versus polished diamonds. 
Various features have been suggested as being potentially 
characteristic of rough diamonds from a particular country. 
These include crystal morphology, surface features, inclusions 
and internal structure, shape or surface profiling, and trace 
element chemistry. While diamonds from some deposits seem to 
have similar characteristics, no studies have been published 
which indicate that mixed parcels from multiple sources could 
be separated on the basis of such characteristics. Many of the 
surface and shape features present on rough diamonds are lost 
during the manufacturing process, leaving even fewer 
characteristics of polished diamonds that are related to their 
geographic source.
    Over the past 50 years, millions of polished diamonds have 
been examined, and their gemological properties carefully 
documented, in gemological laboratories during the production 
of quality grading reports. During this extensive opportunity 
to examine numerous polished diamonds, no observations have 
been reported which indicate that polished diamonds from a 
particular geographic source could be recognized during the 
grading procedure. Distinctive light reflection patterns 
arising from the arrangement of facets, and the use of logos or 
other identifying marks, have each been proposed for 
distinguishing polished diamonds. Except for a few isolated 
studies, no extensive research work has been undertaken to 
establish if any of these features will allow the recognition 
of particular polished diamonds originating from conflict 
countries. On the contrary, past observations suggest that the 
features of polished diamonds are not distinctive of geographic 
origin.
    Documentation of spectra or other physical properties. 
Features of the spectra of diamonds, or measurements of other 
physical properties, vary greatly within the diamonds from the 
deposits that have been studied. Such features result from the 
conditions of growth or post-growth to which the diamonds were 
subjected to in the mantle. While some generalizations can be 
made (for example, many diamonds from the Premier mine in South 
Africa display strong blue ultraviolet fluorescence), no data 
have been published which propose that spectral features or 
other physical properties are unique to diamonds from a 
deposit, or to claim that all diamonds from a deposit exhibit 
given features.
    Documentation of chemical composition. Compared to most 
other minerals, diamond is chemically quite pure. Nitrogen may 
occur at concentrations up to 0.5 percent. Other trace elements 
can occur at very low concentrations (levels of parts per 
million or parts per billion).
    Detection of trace elements at these very low levels in 
diamonds requires sophisticated and sensitive analytical 
techniques, such as neutron activation analysis or laser 
ablation mass spectrometry. Such techniques are expensive and 
time-consuming, taking hours per sample to complete an 
analysis. The former technique requires the diamond to be 
irradiated in a nuclear reactor, and then the radioactive decay 
of each of the various trace elements present in the diamond to 
be counted using gamma spectroscopy methods. The latter 
technique, also referred to as LA-ICPMS, is a destructive 
method of chemical analysis, although on a small scale. A few 
cubic micrometers of the diamond are vaporized by a laser beam 
(and a tiny hole is produced), and the resulting components in 
the vapor are then analyzed with a plasma mass spectrometer. 
The small area chosen for analysis would need to be 
representative of the chemistry of the entire diamond. 
Achieving a representative area may be quite difficult, because 
past studies have shown that diamonds can be chemically quite 
inhomogeneous in terms of their trace elements. This could 
require multiple analyzes be made of an individual diamond. A 
third method might be to chemically analyze the isotopes of 
carbon or the trace elements in a diamond, which would also be 
destructive to the sample. Although quite sensitive, all three 
techniques are impractical in terms of cost and time for 
analyzing a large number of diamonds. For each of these 
methods, the analyzed areas would need to be cleaned of surface 
contaminants, whose presence could prevent or render inaccurate 
the detection of trace elements at very low concentration 
levels. Data obtained from these analytical techniques would 
need to be compiled in a computer database, and analyzed by 
statistical methods.
    Even if trace element data existed for diamonds from all 
major deposits, little or no results have been published to 
suggest that polished diamonds from a particular geographic 
source could be recognized on the basis of such information. 
Like mineral inclusions, the trace element composition of 
diamonds reflects their environment of crystallization in the 
mantle, and so it may vary among the crystals within a given 
deposit, especially an alluvial one.

Country of Origin of Colored Stones

    Analogous to studying the country of origin of diamonds is 
that of the country of origin of various colored stones: ruby, 
sapphire and emerald, in particular. Several respectable 
laboratories have sought to compile databases on the country of 
origin of these stones to meet market interests by producing 
gemological reports on the origin of country of such gemstones.
    Even with decades of independent research and the 
collection and analysis of comprehensive data, country of 
origin of colored stones is not an exact science and can more 
reasonably be characterized as professional opinions based on 
the best evidence available to date and to that lab. Such 
interpretations or conclusions can and do vary from laboratory 
to laboratory. Because of this and for other reasons, 
laboratories offering origin reports often state that it is 
their ``opinion'' of origin or that a stone has characteristics 
similar to that of certain countries.
    As you can probably surmise, country of origin 
determinations are a hotly debated subject in the colored stone 
world. Because GIA has long felt that the best research data 
and expertise has not resulted in a standard of consistency and 
scientific backing acceptable to our institution, we have never 
entered the arena of providing origin reports on colored 
gemstones, and continue to hold this fundamental view. 
Likewise, except and until the advent of so-called conflict 
diamonds, GIA has never seriously been asked or even 
contemplated the prospects of attempting to determine country 
of origin in diamonds.

Conclusion

    Based upon current knowledge, we do not know of any 
scientific way to determine the country of origin of rough or 
polished gem diamonds, nor do we foresee practical ways being 
developed in the near future. Determination of geographic 
source might be made for some percentage of rough diamonds, 
because of the additional identifying characteristics they may 
exhibit. However, considerable research work would be needed 
before one could estimate how large that percentage might be. 
Even in the best-case scenario, it is to be expected that a 
significant number of rough diamonds would not show sufficient 
distinctive characteristics for their country of origin to be 
determined.
    Therefore, a chain of warranties or a system of 
certification to track diamonds from their country of origin 
through the manufacturing process to the retailer and the 
consumer would provide a better alternative at this time to the 
goal of preventing the sale of illicit diamonds. Useful 
discussions have already begun within the trade on how such a 
tracking system could operate. Some of the organizational 
structure for cooperation among trade groups to implement a 
tracking system for legitimate diamonds already exists. Such a 
system could be initiated rather quickly if it should become a 
legal requirement. This will oblige dealers to declare the true 
origin of their diamonds, and will in turn act as a guarantee 
that parcels of diamonds sold under such a system would not 
contain so-called conflict diamonds. Initiation of a tracking 
system would be an important step toward preventing illicit 
diamonds from passing along the diamond ``pipeline'' to the 
consumer, and the funds from the sale of these illicit diamonds 
being used by conflict combatants.
    As a nonprofit public benefit institution, GIA remains 
committed to assisting the trade, governments and 
nongovernmental organizations in whatever way possible, to 
curtail the mining and flow of so-called conflict diamonds.
      

                                


    Chairman Crane. Thank you, Mr. Boyajian.
    I apologize to all of you for the absence of our 
colleagues, but as I indicated earlier, we have the debate 
going on over on the floor to try and override the President's 
veto of the marriage penalty tax, and that marriage penalty tax 
in my district alone affects approximately over 140,000 of my 
constituents that are taking the hit because of that absurdity 
in our tax code. If we did not punish people for getting 
married with our tax code, that would translate into almost 
$100 million a year more to those individuals affected in my 
district. I suspect they would be buying more diamonds for 
their wives if we did not have that obscene code in place.
    At any rate, we are going to be wrapping up after your 
panel, but I would like to ask just a few questions of you, if 
I may, before you depart.
    Ms. Burkhalter, can you comment on whether the NGOs have 
any efforts underway to boycott diamonds?
    Ms. Burkhalter. The 70 humanitarian, human rights, and 
religious organizations that joined with Physicians for Human 
Rights in calling on the diamond industry to take action 
against specifically transshipment countries, as well as to 
implement the global scheme that they did, indeed, agree to, 
have never announced a boycott on diamonds, in large part 
because of our concern about the legitimate diamond producers 
that have been mentioned more than once in today's hearing.
    I will say, however, that there is enough concern within 
this community, that without speaking for every group, if by, 
oh, I do not know, Valentine's Day there is no sign that either 
the Antwerp regimen is in place and moving or the producing 
countries, particularly those that are dragging their feet, 
such as Russia, are committed to moving very smartly forward, 
and if we are not seeing a diminution in the exports from known 
transshipping countries that have no productive capacity of 
their own, namely Liberia, I think there would be an interest 
in an education campaign. That campaign might urge the many 
hundreds of thousands of members of our many groups, 
particularly in the faith community, to educate our membership 
about the role of conflict diamonds in the situation in 
particularly Sierra Leone. We would probably be eager to urge 
consumers and certainly our own membership to start asking 
questions at the retail level about whether this diamond can 
be--whether the diamond people are looking to purchase can be 
assuredly a conflict-free stone, or more specifically, whether 
the retailer can promise that this diamond did not transship 
through Liberia.
    Now, of course, the retailer will not be able to do so, and 
whether that then translates into a boycott or a consumer's 
decision not to buy, I cannot say. I do not want to leave you 
with the impression that we are announcing a boycott, but I 
will leave you with the impression that the groups that have 
joined with my organization in pressing on the diamond industry 
are plenty agitated about this and only very fast action is 
going to, I think, relieve their anxieties about it.
    Chairman Crane. Mr. Fischer and Mr. Runci, if you would 
both comment, I understand that the largest selling company of 
rough stones has begun to market its diamonds as clean diamonds 
and that some U.S. retail stores have begun to advertise their 
diamonds as clean diamonds and are charging premium prices. 
Some people see this as a confirmation that legislation to 
control the flow of diamonds will result in tightened price 
controls, for the largest diamond dealers shut out smaller 
dealers and the consumers will end up paying higher prices for 
diamonds.
    Would you please comment on this and whether you foresee 
higher diamond prices if legislation is enacted to control the 
flow of diamonds, and Mr. Fischer, you might go first and then 
Mr. Runci.
    Mr. Fischer. Thank you. DeBeers has, in fact, started 
labeling the boxes of rough diamonds that it sells as conflict-
free. They have stopped buying diamonds on the markets, on the 
open markets in Africa, to assure that they are not buying 
conflict diamonds. They have made a kind of a unilateral 
decision to be careful that there is not an issue about 
transshipping and things like that during these times.
    Ultimately, the issue about whether a market would be 
divided up into clean diamonds and non-clean diamonds certainly 
has several concerns. One is that we share a concern that 
controls be put into place that are effective so that when 
diamonds are labeled clean, and hopefully all diamonds under 
our system will be labeled clean, these labels will not be 
superficial but they will be real, that they will have reality 
behind them.
    Regarding two different pricing systems, it is somewhat 
speculative how a market might develop, but if there were a 
system of clean and unclean diamonds, you can go ahead and do 
intellectual gyrations that the public would put more value on 
those that were labeled as conflict-free. The issue is that 
without a comprehensive program, that there will be clear 
labeling of the conflict-free diamonds versus other diamonds 
that are not labeled so, but there will not be in reality a 
clear distinction. That is why we want to put this safety net 
up as high as we can in the system where it can be filtered, 
where as difficult a challenge as it is, we believe that it is 
achievable. Anywhere lower down in the system where it is done 
closer to the consumer and the retail jeweler, it is just not 
workable. It is not going to accomplish what we all want.
    Chairman Crane. Mr. Runci?
    Dr. Runci. Speaking from the position of retailers, Mr. 
Chairman, there is no way in the current regime for a retail 
jeweler to directly and absolutely certify that any diamond 
that he or she sells to a consumer is conflict-free. The most 
that retailers can do today and, in fact, the majority of 
retailers are doing today, is to assure consumers that they 
have made every effort in working with their diamond suppliers, 
be they jewelry manufacturers or dealers or traders in polished 
diamonds, which are the only kinds of diamonds that retailers 
buy, to require that they, in turn, have made every effort to 
ensure that the purchases they make from their suppliers are 
assured as being conflict-free. In other words, a chain of 
assurance as opposed to a chain of warrants. In order to 
institute a true chain of warrants to ensure that no conflict 
diamonds are being sold, as I said in my testimony, we would 
require controls in place first in the countries of extraction.
    As to the presence of claims by some jewelers that their 
stones are conflict-free, I believe those claims are now being 
made by some jewelers based on the assurances they have 
received from their suppliers. The irony here is that everyone, 
to my knowledge, in the industry in the United States is acting 
in good faith out of their, not only a desire to preserve their 
businesses, but out of true abhorrence to the connection that 
has, in fact, been established between four percent of the 
world's production of rough diamonds and these atrocities. 
Everyone wants that to end.
    But the reality is that the retail jeweler, and the 
majority of retailer jewelers in this country, are small 
family-owned businesses. The retail jeweler is powerless to 
provide 100 percent assurance today. But they are making their 
best-faith effort. They are requiring similar assurances from 
their suppliers, and I am happy to say that the supply side of 
the industry in the United States has moved swiftly to offer 
those assurances and, in turn, to pass those requirements on up 
to their suppliers overseas. I believe the process is in 
motion.
    Chairman Crane. Mr. Runci, the retailers are at the far end 
of the diamond pipeline and they have little control, if any, 
over the diamonds they import and they have to rely on what 
rough diamond dealers tell them is the source of their diamond 
imports. What steps can retailers take to accurately ascertain 
the mining source of imported diamonds?
    Dr. Runci. Retailers typically purchase their diamonds, Mr. 
Chairman, from traders or diamond wholesalers here in the 
United States. Large retailers may purchase their diamonds from 
diamond traders or wholesalers outside the United States. 
Retailers have been enlightened on this issue for the past year 
as a result of a continuing series of information bulletins 
that we have issued because this was an issue, quite frankly, 
that, with all due respect to the civil society community, they 
were on top of much earlier than the jewelry industry here in 
the United States. Jewelers have no conception, nor have they 
ever had to be concerned with the ultimate origin in terms of 
extraction of the diamonds that they buy and that they sell to 
consumers.
    The very last thing that a jeweler wants is for a consumer 
to say, ``how can you assure to me that this stone is not 
tainted?'' No such absolute assurance could be given. The chain 
of assurances that has been put in place for the past nine 
months through our repeated communications to our members and 
their use of those communications with their vendors, the so-
called Vendor Guidance Agreement that the Jewelers of America 
developed, seems to be working in terms of elevating the level 
of awareness up within the trade and increasing the level of 
assurance that any retailer can, in fact, offer their consumer.
    We look forward to the day when simple international 
controls have been put in place, starting in the countries of 
extraction. That ultimately ensures that the flow of diamonds 
forward is, in fact, untainted and that if, sadly, there are 
still conflict diamonds, they are, in fact, being diverted to 
those markets that have not instituted those controls.
    I think the United States and Congress can play an 
important leadership role in this effort, but hopefully it will 
be in concert with the international community, through leading 
the international community, but not with a gun to the retail 
jeweler's head that he simply cannot accept without his 
business being on the line. Thank you.
    Chairman Crane. Mr. Boyajian, do you foresee the 
possibility of practical technology in the near future to 
determine the country of mining of a cut and polished diamond?
    Mr. Boyajian. I do not. As I mentioned in my testimony, we 
have never been asked, nor have we even contemplated the idea 
of origin of country of polished diamonds. We ourselves are not 
experts in rough. We are experts in polished. We grade most of 
the major diamonds that are bought and sold around the world, 
especially the larger, more important diamonds. We put quality 
analyses on them with color grade and clarity grade and cut.
    But I just do not see the technology developing to be able 
to implement a system of being able to identify country of 
origin, and again, as I mentioned in my testimony, in my 
written testimony and also my oral testimony, it is 
extraordinarily difficult to know where the diamond has 
actually come from. Where it was mined from may not be where it 
originated.
    The sources that have been identified in previous reports 
that have been submitted perhaps to this group, perhaps to your 
committee, have identified sources of scientific data back to 
the beginning part of the 20th century. It is important to 
remember that when goods were only coming from South Africa, 
for example, it was much easier to study one mine's production 
and be able to determine certain chemical or physical 
characteristics of diamonds that might lead you to be able to 
determine origin. Such cases have been cited many times in 
these reports.
    My concern is that diamonds are found all over the world 
today. Russia is a major producer of diamonds, as is Australia 
and now Canada, all of Southern Africa. It is extraordinarily 
difficult to distinguish between primary and secondary sources. 
I just do not see the technical feasibility. I would not know, 
sir, where to start.
    Chairman Crane. I want to express appreciation to all of 
you for your testimony this morning. Again, I apologize for the 
absence of my colleagues, but your written testimony and your 
response to questions will be made a part of the record and so 
they will have access to what you said.
    I would appreciate it if you would stay in touch with us, 
though, on an ongoing basis. This is an issue obviously of 
concern and concern to some of our colleagues who have already 
attempted to approach it legislatively. I am not sure exactly 
yet what the answer is, but we appreciate all the help we can 
get from you.
    With that, the committee stands adjourned.
    [Whereupon, at 11:54 a.m., the hearing was adjourned.]
    [Submissions for the record follow:]

Statement of Elly Rosen, Founder and President, Appraisal Information 
Services, on behalf of Gems and Jewelry Reference, and Appraiser's 
Information Network

    Mr. Chairman and members of the subcommittee, my name is 
Elly Rosen and I am founder of Appraisal Information Services 
(AIS), an online reference resource and networking forum for 
members of the gems and jewelry and other personal property 
trades, as well as for practitioners in the personal property 
appraisal profession.
    I would first like to commend this subcommittee and the 
various members of congress who have been working towards 
finding a solution to the problems inherent in the sale of 
African diamonds whose proceeds are used to fuel the fires of 
war. I also commend you for providing this opportunity for 
trade leaders to present the perspective of an industry whose 
members are generally honest hard working merchants who should 
not become further innocent victims of these terrible 
conflicts. America and its citizenry have a moral obligation to 
enter into the international dialogue being conducted on this 
issue and we all owe a debt of gratitude to those members of 
Congress who are trying to assure such entry at an early stage.
    For context of your considering my brief comment, I should 
add that sections within our site include the Appraisers' 
Information NetWork (AIN), the Gems & Jewelry Reference (GJR), 
the Guide for Personalty Expert Witnesses & Trial Consultants, 
and the Appraisal Information ClientCenter (AIC). Our 
membership includes appraisers from the most recognized 
professional personal property appraisal organizations and 
practitioners from all segments of the gems and jewelry trade, 
including wholesale suppliers, retail jewelers, artisans, 
gemologists,labs, and appraisers. Our forums and reference 
areas are currently accessed in 5 countries on 4 continents and 
in 31 U.S. States.
    I appreciate the opportunity to submit this statement for 
the record of your most important subcommittee hearings on 
``Trade in African Diamonds'' and I am submitting it to urge 
you to support current efforts by the international diamond and 
jewelry communities to develop meaningful procedures and 
safeguards as might be needed to resolve the problem of that 
small portion of mined diamonds being usedto finance African 
conflicts. Other respected leaders of the gemstone and jewelry 
industry have appeared before you who can best speak to such 
efforts currently under way by the World Diamond Council as 
well as to the subject of gemological realities related to 
identifying the country of origin of rough and polished 
diamonds. I will be addressing just a few points related to the 
realities of manufacturers, retailers, gemologists and 
appraisers, and how congressional activity might impact daily 
efforts to conduct their businesses.
    The World Diamond Council, established by the Antwerp 
Resolution,appears to be making a concerted effort to lay out 
and put into affect plans to deal with this problem at the 
source; the only place where it can be dealt with most 
efficiently and in a manner which would avoid needless and 
unjustified harm to this important industry. We all owe a debt 
of gratitude to the sponsors of the C.A.R.A.T Act of 2000 as it 
made clear that the United States will be a leader in resolving 
this world problem. However, the CARAT Act can not be 
administered from a practical standpoint and would present an 
unjustified burden on all segments of the trade. Unfortunately 
the well intentioned proposals in the Act would also make it a 
meaningless burden as it would be close to impossible for many 
trade segments to comply.
    Once rough diamonds leave their country of origin they are 
then bought and sold, and resold, in varying configurations and 
parcels, in diamond centers all over the world. Once polished 
it gets even more complex and efforts to track and label every 
polished diamond (above some relatively low dollar base) would 
cause total chaos--if it could be done at all. It should not be 
difficult to envision how polished diamonds move from importer 
to finished jewelry. They are sorted by shapes, sizes and 
quality grades as well as in melange (mixed) parcels.
    Manufacturers and diamond suppliers then do their own 
sorting based on the needs of their customer base and their in 
house quality control procedures. Customs laws would have to 
changed to have country of origin labeling reflect the place of 
mining, rather than the current designation requirement that it 
be the country of processing, or polishing. But that is where 
the problems would only begin. If each diamond had to be 
labeled based on country of origin, diamond suppliers would 
have to separate all their current categories of diamonds by as 
many subcategories as there are diamond producing countries. 
For jewelry manufacturers and small manufacturing retail 
jewelers it would be even more complex.
    Such smaller manufacturers go through numerous parcels to 
mix and match qualities and sizes for a particular item. In 
addition, many retailers buy ``semi-mounts'' which are jewelry 
items containing the smaller stones and then separately buy 
center stones or maintain an inventory selection of such 
stones. If such a manufacturer, or manufacturing retailer could 
somehow manage to keep track of each individual stone, 
compliance with the CARAT Act could result in one small ring 
having five designations on it for the countries of origin of 
each diamond. Even that might have to then be changed if a 
small diamond broke in setting and had to be replaced. This is 
just one example of the chaos that could ensue when good and 
honest folks make a sincere effort at CARAT Act compliance.
    Small gemologist and appraisal practitioners will not be 
able to avoid being dragged into the fray either. Once this 
snowball starts to roll there will invariably be consumers 
asking us to confirm that their diamonds are from the country 
represented at point of sale. We will not have the ability to 
do so and confusion will reign supreme as fodder for media 
expose sensationalists always on the hunt for a good story or 
some free publicity.
    It seems to make much more sense, and seems more practical 
and efficient to nip the whole thing in the bud at the source. 
If current industry proposals can succeed in sealing and 
certifying rough diamonds before leaving their country of 
origin then we could all know from that point on that those 
diamonds, the overwhelming majority of diamonds mined, are OK 
wherever they then go. We urge Congress to avoid precipitous 
action and allow the international trade leadership reasonable 
time to develop, foster and implement such procedures.
    For the Gems & Jewelry Reference and the Appraisers' 
Information
    NetWork, thanks for taking the time to consider our 
comments.
      

                                


                         Embassy of the Republic of Liberia
                                             Washington, DC
                                                 September 12, 2000

The Honorable Philip Crane
Chairman, Subcommittee on Trade
House Ways and Means Committee
1104 Longworth House Office Building
Washington, D.C. 20515

Dear Mr. Chairman:
    I have the honor to first thank the Subcommittee for the 
opportunity to submit a statement on behalf of the Government of 
Liberia on the issue of conflict diamonds. The issue is critical to our 
neighbor, Sierra Leone, but it is also of vital importance to my 
country, also a diamond producer.
    I am attaching to my statement a copy of a letter written on August 
28, 2000 to United Nations Secretary General, Mr. Kofi Annan, by the 
President of Liberia, Dr. Charles Ghankay Taylor. A similar letter was 
also sent to President William Jefferson Clinton. In both letters, 
President Taylor re-affirms Liberia's unreserved support for Security 
Council resolution 1300 (2000) which calls, inter alia, for an end to 
the smuggling of diamonds from Sierra Leone. In addition to our support 
for the UN resolution, Liberia recently undertook several new 
initiatives to assist in the international battle against conflict 
diamonds and the dangerous purposes for which they are traded-namely, 
arms to fuel civil conflicts in Africa.
    We have enacted a statute criminalizing the export of undocumented 
or uncertified diamonds. We have undertaken the enforcement of 
legislation requiring the Central Bank of Liberia to issue certificates 
or origin for Liberian diamonds. We have asked the International 
Monetary Fund and the World Bank to provide experts who would assist in 
the development of a transparent certification process. Further, we 
have called for assistance from the international community to urgently 
convene a meeting of international experts to focus on the trade and 
certification process in the Mano River Union Countries (Liberia, 
Sierra Leone and Guinea).
    Liberia has taken these steps not only out of concern for the peace 
and stability of the region, but also to ensure our territorial 
integrity as well as the security of our citizens. Liberians are no 
less impacted by the illegal diamond trade than our neighbors and have 
the same interests in seeing it halted as the rest of the international 
community.
    Mr. Chairman, I appreciate the opportunity to provide this 
information that I trust will assist your committee in its 
deliberations. If I can answer any questions regarding Liberia's views, 
please do not hesitate to contact me.
    Please accept, Mr. Chairman, the renewed assurances of my highest 
consideration.
            Sincerely,

                                          William V.S. Bull
                             Ambassador to the United States of the
                                                Republic of Liberia

Attachment:

Letter from the President of Liberia to the United Nations Secretary 
General contained in UN Security Council

    I extend compliments on behalf of the people of Liberia and 
in my own name to you on the occasion of the convocation of the 
Millennium Summit, where leaders of the world would be expected 
to define problems besetting our global family and determine 
solutions the alleviation of those problems, engendering hope 
in the future of our one world and carving new aspirations for 
the United Nations. Against this background, I am pleased to 
acquaint you with the current status of Liberia's engagement in 
Sierra Leone, a troubled portion of our global village.
    You may recall the commitment of the Government of Liberia 
to remain constructively engaged in the resolution of the 
crisis in the sisterly country of Sierra Leone. Recently, our 
involvement, among other things, culminated in the release of 
over 500 United Nations peacekeepers who were unfortunately 
held against their will by the Revolutionary United Front 
(RUF). Our Government will continue to be steadfastly bound to 
an immediate, peaceful and diplomatic solution to the crisis in 
the subregion, and will continue to offer public and practical 
expressions to these endeavours.
    However, the apparent silence of the international 
community to the repeated violations of our territorial 
integrity by armed insurgents from the area of the Guinea-
Sierra Leone borders, including a third and most recent attack 
emanating from the Republic of Guinea, which is ongoing, 
continues to overburden the Liberian Government with 
unnecessary loss of lives and property and the displacement of 
a large number of our people. It is the request of the 
Government of Liberia that you utilize all forms of influence 
at your disposal to ensure the sanctity of our borders and the 
maintenance of peace, security and stability within the 
framework of the Mano River Union.
    As the inviolability of the borders between Liberia Guinea 
and Sierra Leone remains a crucial issue, I recommend the 
following and request the support of the United Nations in 
ensuring their speedy implementation:

        (a) The Government of Liberia again calls for a monitoring 
        presence of the United Nations at these borders to monitor all 
        crossing points capable of conveying vehicular traffic. We 
        recognize the enormous cost to individual nations of policing 
        the entire length of these borders and suggest the utilization 
        of an airborne multi-spectral service in detection of any 
        unusual movements along the entire border.
        Intelligence gathered therefrom could be shared by all 
        appropriate authorities. The cost, which is relatively minor, 
        could be borne by the international community;
        (b) On the status of RUF, as has been previously done, the 
        Liberian Government has again called for the immediate 
        disarmament and simultaneous deployment of troops from the 
        Economic Community of West African States (ECOWAS) under the 
        United Nations Mission in Sierra Leone (UNAMSIL) in areas 
        recently considered as RUF-dominated.

    Along these lines, RUF has announced a new leadership 
acceptable to ECOWAS and has informed EDOWAS through its 
Chairman that it welcomes our call for disarmament and 
demobilization and that it has begun the process leading to the 
transformation to a political entity and subsequent 
reintegration into society. Additionally, RUF has informed 
ECOWAS of its wish to return weapons retrieved from United 
Nations peacekeepers and its desire to establish communication 
with the High Command of UNAMSIL, to facilitate and accelerate 
the return of the weapons and the process of confidence-
building.
    In keeping therewith, it is our recommendation that these 
initiatives be immediately exploited by the United Nations, 
leading to a ceasefire; the withdrawal of all belligerent 
forces to positions as at 7 July 1999; the simultaneous 
deployment of ECOWAS troops, under UNAMSIL; and the total 
disarmament and demobilization of the armed factions.
    You are doubtlessly aware of our unreserved support for 
Security Council resolution 1306 (2000), calling for an end to 
the smuggle of diamonds from Sierra Leone. As evidence of this, 
we are undertaking several initiatives, including the enactment 
of a statute criminalizing the export of undocumented or 
uncertificated diamonds; the enforcement of legislation 
requiring the Central Bank of Liberia to issue certificates of 
origin; and our request to the International Monetary Fund and 
the World Bank to second experts who would assist in the 
development of a transparent process. Furthermore, the 
Government calls for assistance from the international 
community to convene a meeting of international experts to 
focus on the trade and certification process in the Mano River 
Union countries.
    The Government of Liberia assures you of its continued 
commitment to the pursuit of peace and stability both at home 
and in the subregion and welcomes the convening of this Summit 
with hope and anticipation for the evolution of solutions that 
will make our world a safer place for our children.
    Finally, I wish to request that you kindly circulate the 
present letter to all members of the Security Council as a 
document of the Council.

                      Dahkpannah Dr. Charles Ghankay Taylor
      

                                


                                 Diamond Dealers Club, Inc.
                                         New York, New York
                                                 September 19, 2000

Congressman Philip M. Crane, Chairman
Subcommittee on Trade
House Committee on Ways and Means
Longworth House Office Building
Washington, D.C.

Dear Congressman Crane,
    I am pleased to have the opportunity to offer our comments 
regarding the hearing on trade in African diamonds convened by the 
Subcommittee on Trade of the Committee on Ways and Means that was held 
on September 13, 2000.
    The Diamond Dealers Club is a trade association of diamond dealers, 
brokers and manufacturers established in 1931. Since the founding of 
our organization, we have been located in New York City. Our nearly 
2,000 members come from more than 30 different countries and are 
importers of the overwhelming percentage of diamonds that enter the 
United States. Our By-Laws embody our founders recognition of our 
organization's key goal ``to cooperate with governmental agencies.'' 
The following comments are presented with this goal in mind.
    As mutilations of civilians and severe civil rights violations 
occurring in certain civil wars in Africa became more frequent, we 
became increasingly appalled. Particularly alarming to the diamond 
industry was the news that diamonds, which enter the world diamond 
market from these countries, are responsible for these violations and 
are used to finance civil wars. Therefore, beginning in 1999, we 
devoted considerable attention to resolving the problem of conflict 
diamonds. We have met and worked with members of the U.S. Congress, 
representatives of foreign governments and industry leaders to come up 
with an effective solution to this problem.
    Our commitment to eliminating the sale of conflict diamonds is 
evident. Our membership-elected Board of Directors adopted the 
following resolution to battle the sale of conflict diamonds: ``Dealing 
in conflict diamonds shall constitute conduct unbecoming of a member 
for which suspension shall be instituted.''
    The Diamond Dealers Club supports the resolution adopted by the 
World Diamond Congress on July 19, 2000. We believe that the effective 
implementation of this proposal would go a long way towards eliminating 
the problem of conflict diamonds and their use to purchase arms and 
finance civil wars.
    Clearly, the WFDB proposals would benefit both the diamond-
producing nations as well as the American industry. Their strict 
implementation would mean that instead of diamonds being used to 
finance the death and destruction of innocent civilians, they would 
provide--as they have in such countries as South Africa and Botswana--
employment for tens of thousands of Africans as well as encourage 
economic development in diamond-producing nations.
    Concomitantly, we feel that proposals that could lead to a boycott 
of diamonds would be harmful to the entire diamond industry. This 
includes the miners and governments in the producing nations that have 
benefited from these resources as well as the small business dominated 
diamond industry in several countries including the United States.
    We hope that the Subcommittee finds these comments useful in its 
deliberations on the subject of trade in African diamonds. We look 
forward to working with you to resolve the problem of conflict 
diamonds. If you have any requests for additional information from the 
Diamond Dealers Club, please do not hesitate to contact us.
            Sincerely,

                                                Jacob Banda
                                                          President
      

                                


Statement of Mary Diaz, Executive Director, Women's Commission for 
Refugee Women and Children, New York, New York

    The Women's Commission for Refugee Women and Children is an 
expert resource and advocacy organization working to improve 
conditions for refugee women and children around the world. The 
Women's Commission has sponsored several fact finding missions 
in West Africa, including Sierra Leone, Liberia and Angola over 
the past five years and released a report assessing the 
protection and assistance needs of Sierra Leonean children and 
adolescents. As part of a campaign to monitor the situation in 
Sierra Leone, the Women's Commission has supported local 
women's organizations, who are working to rebuild their 
country.

The following question and answer piece was initially prepared to raise 
awareness among consumers about the problem of conflict diamonds and to 
                      promote possible solutions.

Diamonds: Symbols of Love or War?

    Questions and Answers

1. Why should I be concerned about diamonds?

    Diamonds from Sierra Leone, Angola, and the Democratic 
Republic of the Congo have been used by rebel groups to 
purchase weapons and commit unspeakable atrocities against 
civilian populations. In Sierra Leone, with the aim of 
conquering diamond-rich areas and securing the mines for 
themselves, rebels have used machetes to brutally chop off the 
limbs of women, children, and even babies. They have forcibly 
recruited and drugged child soldiers. They have also abducted 
thousands of women and young girls as sex slaves who are often 
beaten and gang-raped. This violence has displaced almost a 
million people within Sierra Leone, created 460,000 refugees in 
neighboring countries and abroad, and left thousands of 
children disabled by dismemberment and mutilation. American 
consumers buy about 65 percent of diamonds worldwide, and while 
diamonds are usually regarded as symbols of love and 
commitment, diamonds mined from conflict areas are actually a 
source of horror.

2. How can the United States play a leadership role in stopping 
diamond fueled conflict?

    The US can play a leadership role by enacting the Consumer 
Access to a Responsible Accounting of Trade (CARAT) Act. 
Currently, there is no way of guaranteeing where diamonds sold 
in the US, or anywhere else in the world, originate. The CARAT 
Act would require the diamond industry to provide US consumers 
with information about whether a diamond for sale originated 
from a conflict area. The Consumer Access to a Responsible 
Accounting of Trade Act, otherwise known as the CARAT Act (HR 
3188) was introduced by Congressman Tony Hall (D-OH) and 
Congressman Frank Wolf (R-VA) in November of 1999. A revised 
version will be introduced this September. This bipartisan 
legislation acknowledges that some diamonds fuel Africa's wars 
and seeks to give Americans crucial information about the 
diamonds they buy.

3. What are conflict diamonds?

    Conflict diamonds are diamonds mined or stolen by rebel 
forces who are fighting the legitimate and internationally 
recognized government of that country. Currently, these 
conflict diamonds are mined in Sierra Leone, Angola, and the 
Democratic Republic of the Congo. They are often smuggled out 
of these countries and into neighboring countries such as 
Liberia and the Ivory Coast. The latter have negligible diamond 
resources themselves but sell millions of US dollars worth of 
diamonds to trade centers around the world. Liberia's illicit 
diamond trade is widely recognized by diamond industry experts; 
to illustrate, Liberian diamond mining capacity is only about 
100,000 to 150,000 carats per year but the country has exported 
over six million carats annually.

4. Can the American consumer help break the cycle of violence 
in the illegal diamond trade?

    Yes. The Women's Commission has joined a broad based 
coalition of non-governmental and humanitarian assistance 
organizations that are committed to educating consumers about 
the illegal diamond trade and providing information that will 
allow consumers to make informed diamond purchases. Independent 
diamond experts have estimated that about 10-15 percent of the 
world's supply of diamonds are from conflict areas in Africa. 
Although this is a relatively small percentage of the overall 
diamond market, it is significant because the diamonds from 
these conflict countries are largely gem quality diamonds. Gem 
quality diamonds are the most valuable portion of the diamond 
market and constitute 75 percent of the diamond profit. Because 
rebels are able to sell diamonds throughout the world at a 
large profit, they are able to sustain the wars in these 
countries. Therefore, it is imperative that consumers know 
where their diamonds are from in order to make informed 
purchasing decisions and eliminate these conflict diamonds from 
the market.

5. Are all diamonds from conflict areas?

    No. In fact, diamonds from Africa can have a very positive 
effect on those countries with legitimate diamond industries 
and cutting centers. In Botswana, Namibia, and South Africa, 
the diamond industry has bolstered the economies, making them 
among the most prosperous and stable countries in Africa. 
Diamond cutting centers in India and Israel employ large 
numbers of people. If you buy a diamond from these areas, you 
will actually be supporting a vital industry. We are not 
advocating for a total boycott of diamonds because this would 
prove detrimental to these vital legitimate industries. Rather, 
informed consumers can do the responsible thing by buying 
legitimate diamonds and avoiding conflict diamonds.

6. What can be done to end the trade in conflict diamonds?

     Support the CARAT Act (HR 3188) that would provide 
consumers with information about where their diamonds 
originate;
     Educate consumers about diamonds that fuel 
Africa's wars, such as those from Sierra Leone, and those from 
legitimate diamond industries, such as Botswana;
     Demand that every diamond be accompanied by full 
forgery-proof documentation of the country of origin, not just 
the place of purchase or export;
     Support government regulation to bring 
transparency to diamond transactions such as through Customs 
offices that employ statistical procedures to identify the 
number of carats exported from a particular country and ensure 
that the export number is consistent with that country's mining 
capacity;
     Support technology for diamond ``fingerprinting'' 
to reliably determine the origin of diamonds.

This research was compiled based in part on information from 
the following sources:

    Ashton, Hilton. ``Technical Forum on the Issue of 
``Conflict Diamonds,'' summary by BoE Securities of ``Conflict 
Diamonds--Maintaining Consumer Confidence,'' forum held May 11-
12, 2000 in Kimberley, South Africa. May 25, 2000.
    De Beers Mining Company. ``De Beers: U.S. Congressional 
Hearings,'' Written testimony before the US Congress, House 
Subcommittee on Africa, hearing on ``Conflict Diamonds.'' May 
9, 2000.
    Global Witness. ``Conflict Diamonds: Possibilities for the 
Identification, Certification, and Control of Diamonds.'' May 
10, 2000.
    Harden, Blaine. ``Africa's Gems: Warfare's Best Friend.'' 
The New York Times on the Web, April 6, 2000.
    Rapaport, Martin. ``Guilt Trip.'' April 7, 2000. Available 
at www.diamonds.net
    Smillie, Ian, Lansana Gberie and Ralph Hazleton. ``The 
Heart of the Matter: Sierra Leone, Diamonds, and Human 
Security.'' Partnership Africa Canada, January 2000.

Other useful sources:

    Collier, Paul. ``Economic Causes of Civil Conflict and 
their Implications for Policy.'' World Bank. June 15, 2000.
    Fowler, Robert R. ``Report of the Panel of Experts on 
Violations of Security Council Sanctions Against UNITA.'' 
Report to the United Nations Security Council. March 10, 2000.
    Global Witness. ``A Crude Awakening: The Role of the Oil 
and Banking Industries in Angola's Civil War and the Plunder of 
State Assets.'' January 2000.
    Global Witness. ``A Rough Trade: The Role of Companies and 
Governments in the Angolan Conflict.'' December 1998.
    Kempster, Norman. ``Dripping in Diamonds--and Blood.'' Los 
Angeles Times. May 12, 2000.
    National Intelligence Council. ``Africa: The Economics of 
Insurgency in Angola, the Democratic Republic of the Congo, and 
Sierra Leone.'' Report from State Department conference on 
October 5, 1999. October 1999.
    Rapaport, Martin. ``Blood Money.'' Rapaport Corporation. 
November 5, 1999. Available at www.diamonds.net
    ``Report of the Panel of Experts on Violations of Security 
Council Sanctions Against UNITA'' Report to the United Nations 
Security Council. March 10, 2000.
      

                                


Statement of Rory E. Anderson, Government Relations Manager, and Africa 
Policy Specialist, World Vision

    Thank you, Mr. Chairman, for the opportunity to present 
testimony to the Trade Subcommittee on solutions to the 
``conflict diamond'' trade in Africa. I am Rory E. Anderson, 
Government Relations Manager and Africa policy specialist for 
World Vision, the largest privately-funded international relief 
and development organization in the U.S. Later this month World 
Vision will celebrate its 50th anniversary. Currently, World 
Vision implements more than 6,000 relief, rehabilitation and 
long-term development projects in 95 countries.
    Natural resources, from diamonds to oil, have a significant 
role in igniting and fueling human conflict. In Africa, the 
shape of Post-Cold War conflict has increasingly been financed 
and perpetuated by natural resources, which conveniently do not 
demand any ideological loyalty. The May 4th capture of UN 
peacekeepers in Sierra Leone has brought widespread scrutiny to 
the causes of this 9-year conflict, and has forced policymakers 
at all levels to ask why war seems intractable in many parts of 
Africa. In the recent conflicts of Sierra Leone, Angola and the 
Democratic Republic of the Congo, diamonds are at the heart of 
the matter, and access to this and other resources have become 
a primary incentive for war.

                       Conflict Diamonds Defined

    There are various nuanced definitions of the term 
``conflict diamonds.'' In this testimony, I attempt to describe 
both potential as well as current situations where the sale of 
diamonds are used to sustain violent conflict. As defined here, 
conflict diamonds are those which originate from areas under 
the control of forces that are in opposition to democratically 
elected and internationally recognized governments,\13\ or 
diamonds used by State institutions or non-State forces to fund 
campaigns of human rights abuses against civilians. Many 
critics of the term ``conflict diamonds'' argue that diamonds 
don't kill people, rather, people and guns kill. But in each of 
the above cases, diamonds fund the purchase of small arms which 
perpetuate conflict. Diamonds are lucrative stones. In 1998 the 
diamond industry produced an estimated 115 million carats of 
rough diamonds with a market value of US$6.7 billion. At the 
end of the diamond pipeline, this was converted into 67.1 
million pieces of jewelry worth close to US$50 billion.\14\ At 
both ends of the diamond pipeline--from mine to finger--there 
are huge financial incentives. Further, diamonds are easily 
smuggled. To the untrained eye, rough diamonds look like mere 
pebbles, which can innocently be wedged in a shoe, sock, or any 
kind of body orifice, and can go undetected through most metal 
detectors or x-ray machines.
---------------------------------------------------------------------------
    \13\ Conflict Diamonds: Possibilities for the Identification, 
Certification and Control of Diamonds, briefing document by Global 
Witness, June 2000, p. 1.
    \14\ Smillie, I., Gberie, L., Hazelton, R. The Heart of the Matter: 
Sierra Leone Diamonds and Human Security, Partnership Africa Canada, 
Ottawa, Canada: January 2000, p. 1.
---------------------------------------------------------------------------
    The most visible examples of diamonds and their role in 
conflict have been in Sierra Leone, Angola and the Democratic 
Republic of the Congo (DRC). In all three of these cases, 
guaranteed access to the diamond mines has been a dominant 
incentive for war, and, ironically, war has enabled the diamond 
industry to prosper. Because diamonds can move so easily and 
quickly, a dealer can buy low, sell high and reap windfall 
profits, particularly during the height of a war. For the 
seemingly intractable wars of Sierra Leone, Angola and the DRC, 
the point of each of these wars may not be to actually win 
them, but to engage in profitable crime under the cover of 
warfare. Over the years, the informal diamond mining sector, 
long dominated by what might be called ``disorganized crime,'' 
has now become increasingly influenced by organized crime and 
by the transcontinental smuggling of diamonds, guns, drugs, and 
vast sums of money in search of a laundry. Each of these 
smuggled items has become critical components to warfare, and 
thus, violence becomes central to the advancement of those with 
vested interests.\15\
---------------------------------------------------------------------------
    \15\ Smillie et al, p.1.
---------------------------------------------------------------------------

                      Conflict Diamonds in Africa

    In the current deliberations on conflict diamonds there 
have been fewer references to the DRC, yet diamonds from this 
area are equally problematic. Several warring factions, 
including the rebel government and multiple international armed 
forces who all desire access to the DRC's mineral resources, 
have wrecked a humanitarian crisis that is quickly outpacing 
the enormity of the Sudan. This factor, coupled with gross 
human rights abuses committed among all factions, warrants the 
label of conflict diamond for any stone originating from the 
DRC. In Sierra Leone, two inseparable factors have enabled the 
violence to perpetuate. A legacy of decades of official 
corruption--much of which was rooted in the diamond trade--has 
left remnants of a weakened State unable to defend its 
territory from internal and external threats, which has 
resulted in the breakdown of law and order. This absence of 
national security has expanded the economic opportunity of 
conflict diamonds.
    In Angola, political power implies a license for 
kleptocracy over the country's resources. Rather than accept 
the 1992 elections which foreign observers judged free and 
fair, UNITA (Union for the Total Independence of Angola) rebel 
leader Jonas Savimbi simply resumed his war by seizing control 
of the Cuango River Valley, Angola's richest diamond territory. 
UNITA began a major mining operation that made them the richest 
rebels in Africa. Diamond money paid for UNITA offensives that 
in the 1990s elevated Angola's civil war to a new plateau of 
savagery, killing more than half a million, displacing 4 
million, and maiming 90,000 as a result of land mines.\16\
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    \16\ ``Africa's Diamond Wars,'' Harden, B. The New York Times on 
the Web, www.nytimes.com/library/world/africa/040600africa-
diamonds.html.
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                        The Humanitarian Impact

    For every conflict diamond sold, there is a corresponding 
humanitarian crisis. It has been said that Angola is the worst 
place to be a child. Thirty percent of Angolan children die 
before they reach their fifth birthday.\17\ As of April 2000, a 
total of 3.7 million people were classified as ``war affected'' 
by the UN, defined as ``those who depend on emergency 
humanitarian assistance due to war and the resultant loss of 
assets and earning opportunities.'' \18\ Of these, over 1.7 
million are displaced, three-quarters of whom are women and 
children.\19\ One-hundred and fifty thousand (150,000) people 
are estimated to have either been killed or permanently maimed 
due to landmine accidents.\20\ Two-thirds of the Angolan 
population live in absolute poverty.
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    \17\ UN Secretary General's report to UN Security Council, 23 
November 1998.
    \18\ UN Consolidated Appeal for Angola for Jan-Dec 2000, November 
1999
    \19\ IRIN-SA, ``A grim humanitarian outlook by UNICEF,'' 13 Jan 
2000
    \20\ UN Consolidated Appeal for Angola for Jan-Dec 2000, November 
1999
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    In the DRC, it has been found that since August 1998 there 
has been at least 1.7 million deaths in war-affected areas over 
and above the 600,000 that would normally be expected. The 
overwhelming majority of these additional deaths are 
attributable to preventable diseases and malnutrition--a tragic 
consequence of a health care system destroyed by war. On 
average, some 2,600 people are dying every day, and further 
research is finding that the first months of the year 2000 were 
even worse than 1999.\21\ Thirty four percent of these deaths 
have been children under the age of five (over 590,000), and 47 
percent of all violent, war-related deaths are women and 
children. The highest death rates are among populations 
displaced by the fighting, and civilians continue to be 
targeted by all sides in the conflict. As one NGO leader has 
explained this: ``The loss of life in the Congo has been 
staggering, It's as if the entire population of Houston was 
wiped off the face of the earth in a matter of months.'' \22\
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    \21\ Mortality in Eastern DRC: Results from Five Mortality Surveys, 
International Rescue Committee Report, May 2000.
    \22\ Ibid.
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    Ranked last on the UN Human Development Index, the war in 
Sierra Leone has exacted a heavy humanitarian toll on the 
population. An estimated 70,000 people have been killed since 
the war started in 1991. Approximately 5,000 were killed in and 
around Freetown in the January 1999 rebel offensive against the 
capital. Civilian and child amputations have been a trademark 
atrocity, with estimates of 1,800 amputees. Currently, almost 1 
million Sierra Leonians are internally displaced, in addition 
to the 470,000 refugees who have fled to neighboring Guinea and 
Liberia. Thirty percent (30 percent) of Sierra Leone's 
population of 4.6 million have been uprooted because of this 
conflict. Humanitarian response continues to be hampered by the 
issue of access to war-affected populations trapped in the 
northern and eastern parts of the country. Fifty-five percent 
(55 percent) of the population live in conflict affected areas 
and are inaccessible by humanitarian aid.

             Remedies: Coordinated and Structural Solutions

    This humanitarian legacy of conflict diamonds is indelible 
and undeniable; so are the solutions. Although not necessarily 
complicated, an effective solution strategy first requires the 
recognition that it is actually a marriage of two components: 
coordinated and structural solutions. This recognition enables 
stakeholders to manage and ultimately contain the problem of 
conflict diamonds. Coordinated solutions mean actions 
implemented and communicated by the specific primary and 
secondary stakeholders. Assuming that all concerned 
stakeholders have the same goal of ending the trade in conflict 
diamonds, solutions will naturally compliment and not compete 
with one another, but the effectiveness is in the communication 
and coordination of action so that loopholes are closed. 
Structural solutions involve remedies aimed at providing 
alternatives to conflict diamonds.

                         Coordinated Solutions

    I have identified three stakeholders as the first line of 
defense against conflict diamonds:

     Industry Local civil society groups in diamond 
producing countries,
     Rough diamond exporting governments, and
     The diamond, especially rough stone traders.

    Secondary stakeholders in the second line of defense 
include:

     Rough diamond importing governments,
     Cut diamond consuming governments,
     International regulatory and trade bodies, and
     Cut diamond consumers.


Each stakeholder has a unique role to play:

     Local Civil Society. In Africa, particularly in 
rural areas, because communal obligations are usually placed 
above the individual, informal networks are strong. Because of 
this, it is well known who are the specific individuals mining 
and purchasing conflict stones. Grassroot organizations in 
diamond producing areas need to formalize this knowledge by 
documenting evidence so that this part of the solution does not 
turn into a witch hunt, but, rather, an effective monitoring 
tool.
     Diamond Exporting Governments. Because the profit 
incentives are so high, it is important that diamond exporting 
governments maintain tight regulations over this resource, 
otherwise anarchy results--as in the case of Sierra Leone and 
the DRC--and different factions violently compete over access 
to these lucrative resources. Closely associated with this 
strategy of regulation is reinvestment. National and local 
governments must reinvest diamond wealth in public goods like 
healthcare, education, roads and electricity, so there are 
fewer incentives for factions or individuals to trade in 
diamonds for the purpose of providing these basic needs.
     The Diamond Industry. The industry proposal laid 
out in Antwerp in July 2000 was a critical step for delineating 
specific actions needed by various stakeholders, while 
committing the industry to play a part in the solution. The 
industry has two unique mandates: the first is taking 
leadership in establishing its proposed rough controls, where 
stones are ``sealed and registered in a universally 
standardized manner'' (Joint Industry Statement, July 19, 
2000); and, second, enforcing the code of conduct. Because the 
industry is organized and takes pride in its structure of 
informal networks, such as the production level, members within 
the industry know individuals who are dealing with conflict 
stones. Therefore, the industry's second mandate is to maintain 
its commitment to the code of conduct stated in the Antwerp 
document, whereby ``failure to adhere to [an ethical code of 
conduct] regarding conflict stones [will] lead to the expulsion 
from the World Federation of Diamond Bourses, the International 
Diamond Manufacturers Association, and all other relevant 
organizations.'' Though the specific language is slightly vague 
in that no ethical codes of conduct were explained in the 
statement, the intent of the Antwerp document is very clear: 
any member of the industry caught dealing in conflict stones 
will be expelled from the industry. Given this intent, it is 
the industry's sole responsibility to enforce this code.
     Rough Diamond Importing Governments. The role of 
importing is to reject parcels which are not sealed and 
registered by accredited diamond export authorities. 
Legislation must be passed and customs officials must be 
trained to implement new rough diamond control laws.
     Cut Diamond Importing Governments. Cut diamond 
importing States must enact responsive laws to prohibit the 
possibility of conflict diamonds from entering the market. In 
the U.S., the proposed Carat Act effectively does this. With 
tracking regimes, customs officials will subsequently be able 
to reject or accept parcels according to any international 
embargoes. An additional tool which both types of importing 
governments can use is one of diplomacy. As in the case of 
Liberia a known trans-shipment agent of conflict diamonds, 
diplomatic tools are helpful to politically isolate rogue 
countries involved in this type of trade.
     International regulatory and trade bodies. The 
proposed international diamond council, which will be comprised 
of industry, civil society and government, should be an 
important player in 1) the accreditation process of rough stone 
exporting centers; 2) monitoring the rough control system; and 
3) auditing both industry and exporting governments' handling 
of rough stones. Beyond this, it is also necessary to involve 
international governing and trade regimes like the WTO and the 
UN who have the authority of international law to arbitrate 
trade disputes and to enact sanctions against transgressor 
countries.
     Consumers. Although consumers are at the very end 
of a somewhat convoluted pipeline, they are the final but the 
most effective line of defense against conflict diamonds. The 
power of the purse can never be underestimated, particularly 
with the benefits of a free market economy where consumers can 
easily choose alternative gems or synthetic diamonds. If 
lawmakers and the industry fail to implement the described 
necessary changes, consumers could merely boycott diamonds all 
together, severely damaging both the conflict and the 
legitimate diamond business. Given the positive trends of 
reform, a boycott may not be necessary, but consumers still 
have an obligation and a right to know the origins of such a 
costly purchase. To maintain pressure on the industry and 
lawmakers to limit this trade in misery, consumers should 
demand to know the origins when purchasing a diamond, even if 
that information is not yet readily available.
    I have described the key stakeholders who have critical 
roles to play in the solution to end trade in conflict 
diamonds. The necessity and the miracle of involving so many 
coordinated players in the solution is like constitutional 
checks and balances; individual stakeholder actions can offset 
any weak link in the chain.

                          Structural Solutions

Reinforcing Weak Links

    Solutions are also needed to address the structural causes 
for conflict diamonds. These structural solutions can 
essentially be categorized in the areas of reinforcement and 
economic incentives. I recommend these solutions:
    1. Reinforce support of rough diamond exporting governments 
to establish viable certificate of origin schemes and systems 
of regulation over diamond mining areas. This could include 
capacity building in export licensing systems and establishing 
appropriate punitive actions for individuals who are found 
trading in illicit and conflict diamonds.
    2. Assist rough diamond exporting countries in the areas of 
good governance, linking all types of financial assistance to 
poverty reduction and social reinvestment.
    3. Build capacity among grassroot civil society groups to 
effectively monitor and report on the diamond trade at the 
local level, while being careful to ensure the safety of local 
evaluators.

Income Generation

    Along with solutions of structural reinforcement, there is 
a foundational need to address the economic reasons why 
individuals trade in conflict diamonds in the first place. Some 
of these reasons can be addressed at the government level, but 
many of the solutions have to reach the individual by providing 
economic alternatives to conflict diamonds and rebel violence. 
Micro-enterprise loan funds have been successful throughout the 
world in providing a way out of poverty by providing income 
choices. Expanded support for proven successful initiatives is 
important.
    Operational non-governmental organizations (NGOs) in 
Angola, DRC and Sierra Leone have to deal with the impact of 
conflict diamonds every day. In trying to provide structural 
solutions, World Vision, like many other NGOs, has found that a 
combined approach of temporary emergency relief coupled with 
income generation and civil society mobilization, are all 
important elements toward building long term peace and 
stability. In Sierra Leone, World Vision is finding success in 
the following ways:
     Food Aid. World Vision's food aid program in 
Sierra Leone is based on three premises: 1) give the farming 
population the tools and the best seeds they need to produce 
again, assist them with the best possible technical assistance 
and provide food to them so they do not eat their seeds and so 
they have strength to cultivate and harvest; 2) provide food to 
those populations who cannot provide for themselves, such as 
the vulnerable (elderly, institutionalized), the severely 
malnourished; and 3) give skilled tradesmen food so they can 
begin to reconstruct homes, clinics and schools. More than 
10,000 metric tons of US food will be used. The goal of this 
project is to significantly improve household food security and 
sustained productive capacity of the Sierra Leonian waraffected 
communities in 16 chiefdoms in Bo, Bonthe, and Pujehun and in 
11 chiefdoms in the Kono diamond district. This program 
addresses the acute food needs of 149,000 vulnerable persons 
through increased availability of, and access to food. It also 
increases household food security of 10,000 waraffected, 
returning farm families through increased availability of, and 
access to food and agricultural inputs (labor, seed rice, 
etc.). This program will improve organizational, physical, and 
productive infrastructure in rural areas through food-for-work 
activities, engaging 70,000 individuals, and it will enhance 
community interest and participation in the formal and 
nonformal education of youth via support to 4,500 at risk 
youth. This program is funded by USAID, Food for Peace.
     Transition Initiatives through Civil Society. The 
World Vision Sierra Leone Transition Initiatives Program was 
first established in January 1997 to address grassroots 
reconciliation and peace building issues. Funding was suspended 
after the May 25, 1997 military coup and was reinstated in 1998 
after the return of democracy. This program aims at 
facilitating the process of raising awareness on civic rights; 
local capacity building for peace, constructive engagements 
with combatant and other differing factions; effective 
consensus building; reconciliation and peaceful coexistence; 
youth recovery from marginalization and exploitation, and 
generally supporting the process of youth empowerment, so as to 
deter them from the lures of rebel warfare. World Vision works 
with over 50 different community and civic groups in Sierra 
Leone to accomplish the objectives of this program, which is 
funded by the Office of Transition Initiatives.
     Support for agriculture. The agriculture 
productive infrastructure of Sierra Leone started to 
deteriorate even before the war began in 1991. According to FAO 
reports, production of the country's staple crop, rice, fell 18 
percent between 1990 and 1997. As a result of the war, 
estimates have only half of the nation's requirement for rice 
being produced locally in 1999. People are beginning to return 
to their land and World Vision, with the support of the Office 
of Foreign Disaster Assistance, is helping to improve food 
production in Sierra Leone through support to the agriculture 
sector. There are three main objectives: 1) provide seeds and 
tools to 16,000 returnee and vulnerable farm families in the 
Kono district (10,000) and Kailahun district (6,000) during 
this year's crop season; 2) capacity building to improve 
agricultural practices among 48,396 farm families in our target 
communities through increased access to a network of 
strengthened communitybased extension services; and 3) improve 
agricultural productivity for 21,841 farm families in the 
Southern region by addressing other issues of agricultural 
recovery beyond the emergency supply of seeds and tools.

Conclusion

    Effective, holistic solutions are not implemented in a 
vacuum. Wise policymakers recognize that the solution to 
conflict diamonds is a constellation of actions involving key 
stakeholders, coupled with solutions addressing the fundamental 
causes for the proliferation of conflict diamonds. The diamond 
industry has an incentive to eliminate conflict diamonds by 
better monitoring the flow of rough stones. However, much of 
the success of these initiatives will have to come from 
importing and exporting governments and international 
regulatory and trade regimes. Given the present media attention 
and consumer scrutiny, there has been a lot of movement at 
government levels to address the issue of conflict diamonds. It 
is essential that civil society in diamond importing and 
exporting countries watch both industry and governments, and 
hold them accountable. No system is perfect, but no system 
means war. As long as greed exists, conflict diamonds won't 
entirely go away, but cooperative and consistent action can 
help to minimize the economic incentives for war.
    Thank you, Mr. Chairman, for the opportunity to present 
this testimony to the committee. I look forward to answering 
questions of the committee. Also, World Vision is prepared to 
work with the Congress and the Administration to implement any 
solutions that will lessen the suffering of people caused by 
conflict diamonds and restore stability, peace and responsible 
governance in Africa.