[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
CONFLICT DIAMONDS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TRADE
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
OCTOBER 10, 2001
__________
Serial No. 107-46
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
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For Sale by the Superintendent of Documents, U.S. Government Printing Office
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COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California
WES WATKINS, Oklahoma KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
Allison Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Trade
PHILIP M. CRANE, Illinois, Chairman
E. CLAY SHAW, Jr., Florida SANDER M. LEVIN, Michigan
AMO HOUGHTON, New York CHARLES B. RANGEL, New York
DAVE CAMP, Michigan RICHARD E. NEAL, Massachusetts
JIM RAMSTAD, Minnesota WILLIAM J. JEFFERSON, Louisiana
JENNIFER DUNN, Washington XAVIER BECERRA, California
WALLY HERGER, California JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania
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, Alan Eastham, Special Negotiator for
Conflict Diamonds.............................................. 23
Office of the United States Trade Representative, James E.
Mendenhall, Deputy General Counsel............................. 26
__________
Amnesty International USA, Adotei Akwei.......................... 55
DeWine, Hon. Mike, a United States Senator from the State of Ohio 8
Hall, Hon. Tony P., a Representative in Congress from the State
of Ohio........................................................ 12
Jeweler's Vigilance Committee, and World Diamond Council, Cecilia
Gardner........................................................ 43
Wolf, Hon. Frank R., a Representative in Congress from the State
of Virginia.................................................... 20
World Diamond Council, and Jewelers of America, Inc., Matthew
Runci.......................................................... 40
World Vision United States, Rory E. Anderson..................... 45
``CONFLICT DIAMONDS''
----------
WEDNESDAY, OCTOBER 10, 2001
House of Representatives,
Committee on Ways and Means,
Subcommittee on Trade,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:07 a.m., in
room 1100 Longworth House Office Building, Hon. Philip M. Crane
(Chairman of the Subcommittee) presiding.
[The advisory and revised advisory announcing the hearing
follow:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON TRADE
CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
September 25, 2001
No. TR-6
Crane Announces Hearing on Trade
``Conflict Diamonds''
Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade
of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing on ``Trade in African Diamonds.'' The
hearing will take place on Tuesday, October 9, 2001, in the main
Committee hearing room, 1100 Longworth House Office Building, beginning
at 4:00 p.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 Office of the United States Trade
Representative. 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:
Last year, the Subcommittee on Trade held a hearing on the diamond
trade and its link to illegal arms trafficking and civil war in Africa.
``Conflict 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 been trading ``conflict diamonds'' to finance its war
against the government of Sierra Leone. The United Nations has adopted
several resolutions calling for embargoes against diamonds from Sierra
Leone and other African countries. The resolutions call on member
states to ban the importation of rough diamonds unless those diamonds
are exported under a certification system approved by a Security
Council Sanction Committee. The Administration has responded with
several executive orders implementing these resolutions. See the White
House website at: http://www.whitehouse.gov/news/releases/2001/05/
20010523-11.html.
The United States has been actively involved in efforts to curb the
trade in ``conflict diamonds'' and in developing an international
regime known as the ``Kimberley Process'' to help countries identify
the source of diamonds in order to implement the United Nations
resolutions. This month in London, further agreement was reached on
control procedures. However, many important questions remain to be
decided, and these questions need to be resolved in the next several
meetings in order to successfully conclude the negotiations and report
to the United Nations by November.
Under current 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.
FOCUS OF THE HEARING:
The focus of the hearing will be to evaluate legislative options
available that: (1) are administrable and WTO consistent, (2) will not
undermine ongoing Administration efforts to reach an international
consensus banning such trade, and (3) will effectively curtail conflict
diamond trade without impacting the legitimate diamond trade. In
announcing the hearing, Chairman Crane stated: ``I would like to
explore what progress the Administration has made since our hearing
last year in building an international coalition to stop these
`conflict diamonds' from Africa, with a view toward moving an
appropriate legislative proposal this year.''
DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:
Requests to be heard at the hearing must be made by telephone to
Traci Altman or Bill Covey at (202) 225-1721 no later than the close of
business, Monday, October 1, 2001. The telephone request should be
followed by a formal written request to Allison Giles, 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, October 5, 2001.
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,
October 23, 2001, to Allison Giles, 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--HEARING RESCHEDULED * * *
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON TRADE
CONTACT: (202) 225-6649
FOR IMMEDIATE RELEASE
October 5, 2001
No. TR-6--Revised
Hearing Rescheduled for
Subcommittee Hearing ``Conflict Diamonds''
Wednesday, October 10, 2001
Congressman Philip M. Crane (R-IL), Chairman, 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, October 9, 2001, at 4:00 p.m., has been
rescheduled for Wednesday, October 10, 2001, at 10:00 a.m., in the main
Committee hearing room, 1100 Longworth House Office Building.
All other details for the hearing remain the same. (See
Subcommittee press release No. TR-6 dated September 25, 2001.)
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 they could
testify.
Last year, we had a hearing to take testimony from many of
these same witnesses about the same state of affairs in Africa.
I think no one disputes the tragic facts of the illicit diamond
trade and how it continues to fund the rebel wars and poverty
in Africa. This hearing takes all of that as a point of
departure. Our focus is to look at where international
negotiations are, what progress has been made in stopping the
conflict diamond trade, and what legislation may be appropriate
this year.
I am mindful that international relations and negotiations
are supposed to conclude this year and in this delicate time of
international diplomacy, we must be especially careful not to
disrupt the administration's efforts, however well intentioned
we may be, 85 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
derived and 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.
We will hear first from our esteemed colleagues from
Congress about their concerns on the progress of solving the
problem of trade in conflict diamonds, and then we will hear
from the administration for a response and comment on
legislation. Finally, representatives from the diamond industry
and non-government organizations will testify.
I ask everyone to address the legislative criteria that
this Committee is bound to follow. Will legislative proposals
be administrable and consistent with our international trade
obligations? Will legislation undermine the administration's
efforts to reach an international consensus? And if so, how?
Will the proposals be effective in curtailing trade in conflict
diamonds? And finally, how will these proposals adversely
affect the legitimate diamond trade in the countries in Africa
that depend upon such trade?
Any legislation must help, not hinder, the solution to this
illegal trade. And I would now like torecognize our
distinguished ranking member, Mr. Levin, for any statement he would
like to make.
[The opening statement of Chairman Crane follows:]
Opening Statement of the Hon. Philip M. Crane, a Representative in
Congress from the State of Illinois, and Chairman, Subcommittee on
Trade
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.
Last year we had a hearing to take testimony from many of these
same witnesses about the state of affairs in Africa. I think no one
disputes the tragic facts of the illicit diamond trade and how it
continues to fund rebel wars and poverty in Africa. This hearing takes
all of that as a point of departure. Our focus is to look at where
international negotiations are, what progress has been made in stopping
the conflict diamond trade, and what legislation may be appropriate
this year. I am mindful that international negotiations are supposed to
conclude this year, and in this delicate time of international
diplomacy, we must be especially careful not to disrupt the
Administration's efforts, however, well-intentioned we may be.
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 towards
achieving this goal.
We will hear first from our esteemed colleagues from Congress about
their concerns on the progress of solving the problem of trade in
conflict diamonds, and then we will hear from the Administration for a
response and comment on legislation. Finally, representatives from the
diamond industry and non-government organizations will testify.
I ask everyone to address the legislative criteria that this
Committee is bound to follow. How will legislative proposals be
administrable and consistent with our international trade obligations?
Will legislation undermine the Administration's efforts to reach an
international consensus, and if so, how? Will the proposals be
effective in curtailing trade in conflict diamonds? Lastly, how will
these proposals adversely affect the legitimate diamond trade and the
countries in Africa that reply upon such trade? Any legislation must
help, not hinder, the solution to this illegal trade.
I now recognize our distinguished Ranking Member, Mr. Levin, for
any statement he would like to make.
Mr. Levin. I thank you, Mr. Chairman, and on behalf of my
Democratic colleagues that are not here, only because, as you
may have heard the rumors, we have a caucus for the election of
a whip, and so I want to enter into the record a few remarks on
behalf of Mr. Rangel who is our ranking member on the full
Committee and myself.
Chairman Crane. Without objection, so ordered.
Mr. Levin. Thank you for holding this hearing. The issues
of trafficking in conflict diamonds is being considered in our
Committee because it has trade ramifications. That being said,
we think we all agree that the importance of the issue extends
beyond its effect on U.S. trade laws and goes more directly to
the issue of what our responsibility is to assist the nations
of sub-Saharan Africa with bringing peace to that continent.
Diamonds should enrich the lives of the African people.
Instead of wealth, however, diamonds in Angola, Sierra Leone
and elsewhere are bringing pain and suffering. The two Security
Council resolutions calling for United Nations (U.N.) members
to prohibit the trade in conflict diamonds from Sierra Leone
and Angola are welcome first steps toward preventing rebel
groups from financing their civil war activities and human
rights abuses through illegal diamond trade.
We are encouraged that the administration has been actively
engaged along with a wide range of other governments, industry
representatives, and non-governmental organizations (NGOs) in
the Kimberley Process, which will develop a system for
monitoring the rough diamond trade that will enable governments
to restrict trade in illegal diamonds.
Congress has a critical role to play. H.R. 2722 is broadly
supported legislation; it demonstrates our commitment as a
country to curbing the trade in conflict diamonds, and sends a
powerful message to the international community that they need
to work as quickly as possible to develop an international
system for monitoring the diamond trade.
Time is of the essence. Every day we delay action will
prolong the trade in conflict diamonds and the atrocities
associated with it. We look forward to listening to our
representatives from the U.S. Trade Representative (USTR), the
U.S. Department of State, the private sector, and
representatives from human rights groups as well as our
distinguished colleagues in the House and in the Senate.
As you know, last year, the Congress passed and the
President signed into law historic legislation that recognizes
that the nations of sub-Saharan Africa can be our partners in
economic progress and prosperity. In working to pass that
legislation, my colleagues and we recognize that the bill would
not be a panacea for the African continent. We understood that
creating a new framework for closer economic cooperation with
the region while a good first step was only the beginning.
So today our Committee and our Subcommittee continues its
commitment to the nations of sub-Saharan Africa with this
hearing. I hope we will enforce that commitment with passage of
H.R. 2722. Thank you, Mr. Chairman.
[The opening statement of Mr. Rangel follows:]
Opening Statement of the Hon. Charles B. Rangel, a Representative in
Congress from the State of New York
Diamonds should enrich the lives of the African people. Instead of
wealth, however, diamonds in Angola, Sierra Leone, and elsewhere are
bringing pain and suffering. For several years, rebel groups in sub-
Saharan Africa have been using diamonds extracted from illegally
controlled mines to finance arms purchases and civil war activities.
The sale of these so-called ``conflict diamonds''--estimated to account
for about 4 percent of the global diamond trade--has played a key role
in financing organizations that have killed several million people,
driven millions more from their homes, and committed countless human
rights abuses.
The two Security Council resolutions calling for UN Members to
prohibit the trade in conflict diamonds from Sierra Leone and Angola
are welcome first steps toward preventing rebel groups from financing
their civil war activities and human rights abuses through illegal
diamond trade.
We are further encouraged that the Administration has been actively
engaged, along with a wide range of other governments, industry
representatives, and non-governmental organizations, in the Kimberley
Process, which will develop a system for monitoring the rough diamond
trade that will enable governments to restrict trade in illegal
diamonds.
Congress has a critical role to play in this process. As you know,
the Clean Diamonds Trade Act, H.R. 2722, has been referred to this
Committee. This broadly supported legislation demonstrates the United
States' commitment to curbing the trade in ``conflict diamonds'' and
sends a powerful message to the international community that they need
to work as quickly as possible to develop an international system for
monitoring the diamond trade.
Time is of the essence--every day we delay action will prolong the
trade in conflict diamonds and the atrocities associated with it. We
ask that we all work together to pass this legislation before the end
of the year.
As you know, last year the Congress passed and the President signed
into law historic legislation that recognizes that the nations of sub-
Saharan Africa can be our partners in economic progress and prosperity.
In working to pass that legislation, we recognized that the bill would
not be a panacea for the continent. We understood that creating a new
framework for closer economic cooperation with the region, while a good
first step, was only the beginning.
Now we continue our commitment to the nations of sub-Saharan
Africa, calling for effective measures that will sever a key source of
funding for organizations that have been causing pain and suffering in
many nations. In doing so, we will preserve the dignity of an industry
which can and should be a source of wealth for countries around the
world.
Chairman Crane. I would now like to recognize our first
panel of members from the House and from the Senate. Our first
three witnesses will be Senator DeWine, Congressman Hall, and
Congressman Wolf, and I welcome you all, and we shall defer to
our distinguished colleague from the other chamber, who is on a
tight time constraint, and then, Mike, you are excused if you
have to run after you havemade your statement.
STATEMENT OF THE HON. MIKE DeWINE, A UNITED STATES SENATOR FROM
THE STATE OF OHIO
Mr. DeWine. Mr. Chairman, Congressman Levin, thank you very
much. It is good to be back in the Longworth Building. I spent
8 years here. It is good to be home and good to be with my
friends. Thank you for holding this hearing on this very, very
important topic. Your colleagues and my colleagues Congressman
Hall and Congressman Wolf have really been the leaders in this,
and they are the driving force behind this bill.
I have tried to take the lead in the Senate along with
several of my colleagues to try to complement their efforts. As
you know, the diamond trade, and as you pointed out, Mr.
Chairman, is one of the world's most lucrative industries. With
its potential for extreme profitability, it is not surprising
that a black market and illicit trade have emerged alongside
the legitimate industry.
Candidly, diamond trading has become an attractive and
sustainable income source for violent rebel groups and
terrorist networks around the world. In fact, the sale of
illicit diamonds has yielded disturbing reports that an
associate of bin Laden is involved in the trade, and that there
clearly is an established link between Sierra Leone's diamond
trade and well-known Lebanese terrorists.
In Africa currently where the majority of the world's
diamonds are found there is ongoing strife and struggle
resulting from the fight for control of the precious gems.
While violence has erupted in several countries including
Sierra Leone, Angola, the Congo, and Liberia, Sierra Leone in
particular has one of the world's worst records of violence.
In that nation, a nation embroiled in civil war for nearly
a decade, rebel groups, most notably the Revolutionary United
Front (RUF) have seized control of many of the country's
diamond fields. Since the start of the rebels' quest for
control of Sierra Leone's diamond supply, the RUF has
conscripted children, children often as young as 7 or 8 years
old, to be soldiers in their makeshift army.
They have ripped an estimated 12,000 children from their
families. This rebel army, child soldiers included, has
terrorized Sierra Leone's population, killing, abducting,
raping, and hacking off the limbs of victims with their
machetes.
We can do something about this. We can begin to change
things. We have the power to help make a difference, to help
end the indiscriminate suffering and violence in Sierra Leone,
Angola, and elsewhere in Africa.
Mr. Chairman, we have this power and we simply must use it.
As the world's biggest diamond customer purchasing the majority
of the world's diamonds, the United States has obvious clout.
With that clout, we have the power, the power to remove the
lucrative financial incentives that drive the rebel groups to
trade in diamonds in the first place.
Simply put, Mr. Chairman, if there is no market for their
diamonds, there is little reason for the rebels to engage in
their brutal campaigns to secure and protect their diamonds.
Specifically, our legislation would prohibit the import of
diamonds and diamond jewelry into the United States, unless the
exporting countries have a system in place that includes
forgery-proof certification documents as well as a uniform
database to track and monitor the global diamond trade.
This means, Mr. Chairman, that every diamond brought into
the United States would require a certificate of origin and
authenticity indicating that it was not laundered onto the
market by a rebel group.
Finally, Mr. Chairman, our bill also stipulates that fines
and proceeds from seized contraband will be contributed to the
USAID's War Victims Fund. These funds would be returned to the
very people, the very people who suffer from the profitable
sale of the diamonds. This legislation, Mr. Chairman,
represents a turning point, a point of unity among the industry
and the international community, and it is our hope that the
bill will bring immediate attention to the violence in Africa
and add momentum to international promises of action.
Mr. Chairman, I thank the chair, and again thank my two
colleagues from the House for their tremendous leadership on
this very important issue.
Chairman Crane. Well, we want to thank you, Mike, and we
appreciate your problems with scheduling and all, and so you
are free to leave, but we are grateful that you came and
testified to open up the hearing this morning.
Mr. DeWine. Thank you, Mr. Chairman.
[The prepared statement of Mr. DeWine follows:]
Statement of the Hon. Mike DeWine, a United States Senator from the
State of Ohio
Chairman Thomas and Ranking Member Rangel--thank you for allowing
me to testify at this very important and very timely hearing today. As
you know, the diamond trade is one of the world's most lucrative
industries. With its potential for extreme profitability, it is not
surprising that a black-market and illicit trade have emerged alongside
the legitimate industry.
Candidly, diamond trading has become an attractive and sustainable
income source for violent rebel groups and terrorist networks around
the world. In fact, the sale of illicit diamonds has yielded disturbing
reports that even Osama bin Laden is involved in this trade. The
February 22, 2001 U.S. District Court trial, United States vs. Osama
bin Laden attests to this. Additionally, there is an established link
between Sierra Leone's diamond trade and well known Lebanese
terrorists.
In Africa currently, where the majority of the world's diamonds are
found, there is on-going strife and struggle resulting from the fight
for control of the precious gems. While violence has erupted in several
countries, including Sierra Leone, Angola, the Congo, Guinea [gih-
knee], and Liberia, Sierra Leone--in particular--has one of the worst
records of violence. In this nation--a nation embroiled in civil war
for nearly a decade, rebel groups--most notably, the Revolutionary
United Front (RUF)--have seized control of many of the country's
diamond fields. Once in control of a diamond field, the rebels
confiscate the diamonds; launder them onto the legitimate market
through other nearby nations, like Liberia; and ultimately finance
their terrorist regimes and their continued efforts to overthrow the
legitimate government.
Upon reaching the market, it is nearly impossible to distinguish
the illegally gathered diamonds--also known as ``conflict'' or
``blood'' diamonds--from legitimate or ``clean'' stones. And so, over
the past decade, the rebels have been able to smuggle out at least $10
billion dollars in diamonds.
Since the start of the rebel's quest for control of Sierra Leone's
diamond supply, the children of this small nation have borne the
biggest brunt of the insurgency.
For over eight years, the RUF has conscripted children--children
often as young as seven or eight years old--to be soldiers in their
make-shift army. They have ripped an estimated 12,000 children from
their families. After the RUF invaded the capital of Freetown in
January 1999, at least 3,000 children were reported missing.
As a result of deliberate and systematic brutalization, child
soldiers have become some of the most vicious--and effective--fighters
within the rebel factions. The rebel army--child-soldiers included--has
terrorized Sierra Leone's population, killing, abducting, raping, and
hacking off the limbs of victims with their machetes. This chopping off
of limbs is the RUF's trademark strategy. In Freetown, the surgeons are
frantic. Scores of men, women, and children--their hands partly chopped
off--have flooded the main hospital. Amputating as quickly as they can,
doctors toss severed hands into a communal bucket.
I cannot understate nor can I fully describe the horrific abuses
these children are suffering. The most vivid accounts come from the
child-soldiers, themselves. I'd like to read a few of their stories,
taken from Amnesty International's 1998 report called, ``Sierra Leone--
A Year of Atrocities against Civilians.'' According to one child's
recollection:
``Civilians were rounded up, in groups or in lines, and
then taken individually to a pounding block in the village
where their hands, arms, or legs were cut with a machete. . . .
Men were then ordered to rape members of their own family. If
they refused, their arms were cut off and the women were raped
by rebel forces, often in front of their husbands . . . victims
of these atrocities also reported women and children being
rounded up and locked into houses which were then set [on
fire].''
A young man from Lunsar, describing a rebel attack last spring,
said this:
``Ten people were captured by the rebels and they asked us
to form a [line]. My brother was removed from the [line], and
they killed him with a rifle, and they cut his head with a
knife. After this, they killed his pregnant wife. There was an
argument among the rebels about the sex of the baby she was
carrying, so they decided to open her stomach to see the
baby.''
Rape, sexual slavery and other forms of sexual abuse of girls and
women have been systematic, organized, and widespread. Many of those
abducted have been forced to become the ``wives'' of combatants.
According to Isatu, an abducted girl now 18:
``I did not want to go; I was forced to go. They killed a
lot of women who refused to go with them.''
She was forced to become the sexual partner of the combatant who
captured her and is now the mother of their three-month-old baby.
Mr. Chairman, we are losing these children--an entire generation of
children. If the situation does notimprove, these kids have no future.
But, as long as the rebels' diamond trade remains unchallenged, nothing
will change.
We can do something about this. We can make a difference. We have
the power to help put an end to the indescribable suffering and
violence in Sierra Leone, Angola, and elsewhere in Africa. We have that
power, Mr. Chairman, and we must use it.
As the world's biggest diamond customer--purchasing the majority of
the world's diamonds--the United States has tremendous clout. With that
clout, we have the power to remove the lucrative financial incentives
that drive the rebel groups to trade in diamonds in the first place.
Simply put, if there is no market for their diamonds, there is little
reason for the rebels to engage in their brutal campaigns to secure and
protect their cache.
That is why, along with my distinguished Senate colleagues, Senator
Durbin and Senator Feingold, I have introduced legislation called the
``Clean Diamonds Act of 2001'' to remove the rebels' market incentive.
My colleague from Ohio, Congressman Tony Hall, and Congressman Frank
Wolf from Virginia have introduced a similar measure in the House.
Our bill is very simple. The whole idea behind it is to facilitate
the implementation of a system of controls on the export and import of
diamonds, so that buyers can be certain that their purchases are not
fueling the rebel campaign.
Specifically, our legislation would prohibit the import of diamonds
and diamond jewelry into the United States unless the exporting
countries have a system in place that includes forgery-proof
certification documents, as well as a uniform database to track and
monitor the global diamond trade. This means that every diamond brought
into the United States would require a certificate of origin and
authenticity, indicating that it was not laundered onto the market by a
rebel group.
Additionally, the bill requires the President to report annually to
Congress on the control system's effectiveness and also requires the
General Accounting Office to do the same within three years of
enactment.
Finally, our bill stipulates that fines and proceeds from seized
contraband will be contributed to the USAID's War Victims Fund. These
funds would be returned to the very people who suffer from the
profitable sale of the diamonds and would be used to help finance
humanitarian relief and microenterprise efforts.
Our bill represents a turning point--a point of unity among the
industry and the international community. And, it is our hope that this
legislation will bring immediate attention to this problem and add
momentum to international promises of action.
We have an obligation--a moral responsibility--to help stop the
violence, the brutality, the needless killing and maiming. No other
child should kill or be killed in Sierra Leone and other African
nations. It is the humane thing to do. It is the right thing to do.
Chairman Crane. You bet. And now we will yield to our House
witness Tony Hall.
STATEMENT OF THE HON. TONY P. HALL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Hall. Thank you, Mr. Chairman, and Mr. Houghton and Mr.
Herger. I have a statement for you. I will not read it. I would
just like to refer to it from time to time. I am very glad to
be here with my good friend Frank Wolf.
Chairman Crane. Well, if you will yield a moment, it will
be a part of the permanent record, too.
Mr. Hall. And I appreciate Senator DeWine coming over here
and being an important part of this legislation, along with Mr.
Houghton, Mr. Rangel, Mr. Feingold, and Mr. Durbin. It is a
very, very bipartisan bill. I think Mike has outlined it. I
think you know the issues. We have a hundred of the best human
rights groups in the world that are solidly behind this. We
have a diamond industry that is part of this consensus
legislation.
We have tremendous bipartisan support. Frank Wolf and I
have seen the effects of what it is to trade in conflict
diamonds and what it does to countries. The first thing it does
it takes money away from the countries, especially the poorest
countries in the world, that ought to be going to their
treasuries to help their poor people. But because it is
smuggled or because it becomes conflict diamonds, it is traded
to fund most of the civil wars that are going on today.
And to see the results of that, as Frank and I have seen in
various refugee camps, to see all the people who are missing
limbs because they just happened to be in the way, and if we
can solve this problem of conflict diamonds, we can take the
money and the guts out of a lot of the civil wars that are
going on in Africa today.
I will never forget visiting Angola a few years ago. I came
out of a restaurant at night in the capital and saw about 30
orphan kids, real little kids just living on the street in an
alleyway on top of each other like puppies. Their misery was
caused by diamonds, caused by war. You cannot walk in Angola or
in the Congo or Sierra Leone without seeing people who have
been harmed in so many different ways. Their ears are cut off,
their noses are cut off, their limbs are cut off. They have
suffered wholesale killings and butchery that is beyond
anybody's imagination.
And to learn in recent weeks that there is a very, very
good possibility that bin Laden is part of this because he is
able to use these organizations as one of his moneymaking
schemes. I do not know what else I can say to you. I have
testified before this Committee. We think we have good
legislation. We have worked with the Customs people, with the
State Department. We feel that the bill meets our obligation to
the World Trade Organization (WTO).
We are open to your ideas as to how you think the bill
could be improved. We need to move on this. We really do, and
judging by the promise and the commitment that was made by
Chairman Thomas, hopefully we can in the next week or two. I
think that if we can put legislation on the books, it will help
the Kimberley Process. It will move the United Nations' efforts
ahead even further. We have lots of allies that want us to pass
this legislation.
This is important legislation for all legitimate diamond
dealers, whether they be in our country or in Belgium,
Botswana, Namibia, or South Africa. This legislation will help
them. So with that, I just say thank you for this hearing.
I have here 200 letters from students from the Julius West
Middle School in Rockville, Maryland. I understand they were
going to be with us yesterday, and I appreciate their teacher
being here with us today. Every time Frank and I have ever been
able to talk to young people or anybody in the country about
conflict diamonds, we hear tremendous support for ending this
blood trade.
Why should we pass this bill? Because we buy about 50
percent of all the diamonds in the world every year. We can
make a difference. And with that, I thank you, sir, and
appreciate testifying.
[The prepared statement of Mr. Hall follows:]
Statement of the 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 holding this hearing today, and the opportunity to
testify before the Committee again on conflict diamonds.
You have a very strong line-up today, people who are working hard
to end this scourge. You also have two strong advocates for human
rights to hear from--Frank Wolf and Mike DeWine. I think you know where
I stand; I'll be brief so you can hear from the other witnesses.
Why Congress Should Act
All of us work on issues that--let's face it--won't be affected
much one way or the other, no matter what we do. This isn't one of
them. This is something where action by American consumers, and the
American Congress, can make all the difference.
Consumers can make a difference, because we buy the majority of the
world's diamonds--a product whose value depends entirely on its image
as a symbol of love and commitment. That image doesn't always match the
reality that, sometimes, diamonds are used to fund terrible atrocities.
Congress can help because, at the same time that American consumers
are unwittingly helping fund wars in Africa, our country is the biggest
donor of humanitarian aid to its victims. That is a losing proposition:
in the past decade--as we have spent more than $2 billion in
humanitarian aid to the four countries involved in wars over diamonds--
more than $10 billion in conflict diamonds has been smuggled out of
these same countries.
There is one more reason for Congress to act. Our country cannot
afford to let this resource, which has channeled billions of dollars
into black-market economies, turn into easy money for terrorists--
whether they belong to organizations, like Sierra Leone's Revolutionary
United Front, that terrorize Africans; or to Al Qaeda, whose cells are
involved in a range of money-making activities that includes diamond
trading. I do not know the extent of Al Qaeda's activities, and do not
want to be an alarmist. But I do know that diamonds--the most
concentrated source of wealth ever known to mankind--should be put off
limits to anyone bent on destruction. Especially Osama bin Laden.
Conflict Diamonds are Stolen Goods
Finding a solution to this illegal trade is not an easy task. I
know your focus, Mr. Chairman, is usually on finding ways to lift
restrictions on trade. I agree with you sometimes, and with Mr. Rangel
and Mr. Levin sometimes. But I share the commitment that you all have
to letting trade be the engine of our economy, and of economies around
the globe.
However, this is not a question of free trade, or fair trade.
Conflict diamonds are stolen from companies and countries. They are
smuggled to avoid paying taxes that are one of African countries' key
sources of income. And then, most horrifying of all, they are turned
into weapons against innocent civilians who might interfere with these
thugs' control of the diamond mines. In Sierra Leone, for example,
rebels told many of their victims that they were forcibly amputating
their hands as punishment for using them to cast ballots in the
nation's first democratic election.
I respect the Subcommittee's concerns about fulfilling our
country's obligation to the World Trade Organization. I think the Clean
Diamonds Trade Act does that in several ways, which are described in
material attached to my testimony.
But I know that if conflict diamonds had been treated like other
stolen goods by the countries that import them, or by diamond traders,
this problem would have been prevented--or solved much sooner. As the
journalist and author Sebastian Junger put it, ``If international
diamond brokers made a concerted effort to avoid buying illicitly mined
diamonds, groups such as UNITA and the RUF would have a much, much
harder time bankrolling their wars.'' I would add countries that import
diamonds to the list that includes diamond brokers.
I know the Subcommittee is aware of the efforts both countries and
companies have made to agree on the international framework--an
approach that both industry and non-governmental organizations say is
the only real answer. Our State Department has been a steady
participant in this work, as have the U.S. Customs Service and other
agencies. This legislation is designed to strengthen their hand in
these negotiations, and help prevent them from dragging into a third
year.
Consensus Between Industry and Activists
Notwithstanding our diplomats' efforts, much of the work of the
Kimberley Process to construct this framework has been driven by NGOs
and the diamond industry, whose representatives have teamed up to
support the legislation the Subcommittee is considering today. Coming
together behind a constructive solution was not easy--either for the
Campaign to Eliminate Conflict Diamonds, which is a coalition of more
than 100 human rights, humanitarian, and faith organizations; or for
the World Diamond Council, whose members include all of that industry's
many factions.
The NGOs have been sharp critics of the diamond and jewelry
industries, but were thoughtful and fair in taking the opportunity to
work on a difficult problem together. At a time when many of their
colleagues in the same organizations are on the front lines of the
battle for responsible trade, with a product made vulnerable by its own
marketing success, and with made-for-TV images of terrible suffering,
these advocates' efforts are nothing short of extraordinary.
The industry faced an equally difficult challenge in compromising
with critics--and I count myself among them--who sometimes have
forgotten to acknowledge that its ranks are filled with honorable men
and women, and honest business people. Critics who have asked this
industry to be much more nimble than those that sell oil, gas, timber,
col-tan, or other products that have funded wars.
Compared to the distance this coalition has traveled in a few short
months, the differences here in Congress--even in this room, even this
week--seem easy to bridge. But there's a catch: the NGOs have agreed to
work with industry only until we adjourn this year. The Campaign's
representatives feel strongly that consumers need to be informed about
how some of the money they spend on diamonds is used, and they believe
that severing the funding for these wars is an urgent need that cannot
be allowed to run the course of ordinary legislation. I fully
understand and support their unwillingness to put their work on behalf
of suffering people on hold while Congress is in recess.
Likewise, the World Diamond Council and Jewelers of America also
are anxious for Congress to act. I think industry representatives are
right to worry that protests and consumer-awareness events outside
jewelry stores this holiday shopping season might make it very
difficult to maintain the unusual alliance of miners, traders, and
retailers that the World Diamond Council represents.
I hope the Members of the Committee will listen closely to what
Adotei Akwei, Rory Anderson, Cecilia Gardner, and Matt Runci will say
today. They are among the very small number of people who have worked
tirelessly to end the trade in conflict diamonds. They each speak for
tens of thousands of others who support the work their organizations
do. And they are right: Congress should join their efforts by passing
the Clean Diamonds Trade Act.
``We Understand What Suffering Is''
In the same spirit of cooperation that our coalition partners have
demonstrated, Congressman Frank Wolf and I have worked with Republicans
and Democrats here in the House and in the Senate. We have strong
partners in Amo Houghton and Charlie Rangel--and in Mike DeWine, Dick
Durbin, and Russ Feingold.
We have met with senior officials in the Bush Administration, and
we stand ready to work with them and with you to craft a responsible
and effective bill. We are grateful for Chairman Thomas's commitment to
move legislation this year, and appreciate your Subcommittee's
contribution to that.
In closing, I want to draw your attention to part of a Wall Street
Journal article published in the aftermath of the attacks on our
country last month that described the reaction of other countries:
``Until last week, Sierra Leone had little in common with
New York. Now, the two share huge death tolls, obliterated
landmark buildings and entire city blocks in rubble. Tens of
thousands of Sierra Leoneans were maimed, brutalized and killed
in a 10-year war between rebels and various governments. The
blighted land is ranked last among 162 countries'' by the
United Nations.
The article goes on to describe how Sierra Leoneans are ``reaching
out beyond their own misery'' to express ``the sorrow in their heart''
about the attacks. An unemployed driver in a nation where Islam is the
faith of most people, put it this way: ``We feel America's suffering .
. . because we understand what suffering is,'' Hussain Konteh said.
Mr. Chairman, Members of the Committee: Frank Wolf and I saw what
Mr. Konteh was talking about two years ago, and it has weighed heavily
on us ever since then. We already understood what suffering is, as does
our colleague Mike DeWine--who has made children's well-being a
priority and logged countless hours and miles in helping and protecting
them. We understood not in the same way Mr. Konteh does, but we've all
seen countless people suffering from hunger, or disease, or every
atrocity and violation of human rights we'd thought imaginable.
Still, very few things could have prepared us for meeting the 2\1/
2\-year-old whose arm was forcibly amputated. Or the 14-year-old girl
who lost both arms and was pregnant with her rapist's child. Or the
young student who lost an ear, because rebels thought that would end
his studies. Or other losses that Sierra Leoneans we met in refugee
camps described.
Even now, as our country joins the war that was declared on us;
even now, as we worry for our soldiers' lives and our economy's health;
even now, Mr. Chairman, I believe we must also address the trade in
conflict diamonds. This is a problem we can do something about,
something we are in a unique position to address. And, I would
respectfully submit, if we can't do something about this suffering--
with everything we know about its cause, with the specter of these
wars' continuing until this problem is addressed, and with the support
of everyone who is represented here today--if we can't do something
about this, then we all ought to pack it in.
Thank you for your work here and in the days ahead. I appreciate
the opportunity to testify today, and would be happy to answer any
questions.
Frequently Asked Questions--Clean Diamonds Trade Act
Q. Why is U.S. legislation needed? Aren't there UN Security Council
resolutions barring diamonds from Liberia, the Revolutionary United
Front (Sierra Leone), and UNITA (Angola)? Isn't a targeted approach a
better course?
A. Sanctions against conflict diamonds, imposed against two rebel
groups and the country of Liberia, are in place, but they are an
imperfect solution because they do nothing to help block the smuggling
of these diamonds through other channels. For example, UNITA today
earns $100 million a year selling its diamonds--despite the fact that a
UN embargo has been in place for three years.
Nor are temporary UN sanctions an appropriate basis for a
comprehensive system, which is what's needed to stop the current blood
trade and to deter future wars over diamonds. This is a global problem
that cannot be solved with a piecemeal approach--whether that is UN
embargoes, or individual producing countries' laws. That is the firm
conviction of the diamond industry, of civil society, and of others
familiar with the problem of conflict diamonds.
Most observers believe the United Nations will endorse the global
system being devised by the Kimberley Process, and it commissioned this
work precisely because it knows the patchwork of embargoes is not
working.
Q. Why should Congress act now on this problem? Isn't a global
solution imminent, one that has the support of a broad range of
diamond-producing and trading nations, plus the diamond industry--and
that is likely to be endorsed by the United Nations?
A. Last December, the United Nations General Assembly voted
unanimously to charge nations, aided by representatives of the diamond
industry and civil society, with submitting a recommendation for a
global system of controlling rough diamonds. Participants in the
Kimberley Process set forth a timetable for making their recommendation
in December 2001--but whether they will meet their deadline remains to
be seen. The most difficult decisions have not yet been made, and while
progress has been good, there are valid reasons to be concerned.
The legislation provides ample room for this initiative, (1) by
taking effect six months after enactment, and (2) by letting the
President issue a waiver for any country that is cooperating through
the KimberleyProcess. It does not pre-empt the Kimberley Process; in
fact, it defers to it. But few observers believe its progress will
continue without the consumer pressure that the legislation
articulates. That was one reason the industry agreed to compromise with
NGOs on this bill: to keep the Kimberley Process moving apace.
More importantly, the United States--as the world's largest
consumer of diamonds, and the biggest contributor to humanitarian
relief for victims of these diamond wars--has a rightful interest in
ending this blood trade. It is reasonable for our country to cooperate
with international efforts, and this bill encourages that. And it would
be inappropriate for us to cede our responsibility to act, particularly
as some 27,000 American jewelers likely will be the first to feel the
impact of inaction, which will continue to tarnish diamonds' image in
consumers' eyes.
Finally, a coalition of all American stakeholders has called on
Congress to act to fulfill the United States' moral obligation to lead
efforts to stop the atrocities that conflict diamonds fund. The
coalition includes more than 100 human rights, humanitarian, and faith
groups--the Campaign to Eliminate Conflict Diamonds--whose member
organizations have the support of millions of Americans; and
representatives of the diamond and jewelry industries--the World
Diamond Council and Jewelers of America. They reached a consensus on
the Clean Diamonds Trade Act (H.R. 2722) and the Clean Diamonds Act (S.
1084) months ago and have agreed to work together through 2001 to win
passage of the consensus these bills represent.
Q. Would the system the bill requires be effective?
A. The bill does not require any specific system of controls on
rough diamonds. Instead, it gives the Customs Service and the State
Department leeway to define what a workable system is. It does set out
some minimum standards, which were recommended by the diamond industry
and which have been used as the starting point by the countries
participating in the Kimberley Process. The bill does not spell out
every aspect of the system for three reasons:
1. LOur obligations to the World Trade Organization require the
United States to target problems that affect trade narrowly, so that
importers have more than one way to meet our concerns. Different
importers should have different abilities to satisfy Customs officials
that their diamonds are clean, because the situation in Canada may be
different than in Sierra Leone, for example. (This is not necessarily
true, but the presumption under trade law is difficult to refute). The
bill allows this ``safe harbor'' provision to comply with WTO rules.
2. LSome 40 countries, along with representatives industry and
civil society, have been working for the past 18 months on an
international system of controls. Experts, including in the diamond
industry, say that a comprehensive approach is the only serious way to
address the smuggling that is at the root of this blood trade. The bill
is designed to encourage the Kimberley Process to complete its work,
according to the timetable set by its own participants. It is not
designed to make their decisions for them, though, and therefore lets
the system they devise satisfy U.S. requirements contained in this
bill.
3. LAt bottom, this is a law enforcement problem. Conflict diamonds
are stolen, and smuggled across many borders. There are, of course,
laws in producing countries that are the primary victim of this crime
(both because their people suffer terrible atrocities inflicted by
rebels funded by conflict diamonds; and because they are losing $60-
$200 million1 per year in uncollected tax revenues). These
laws have not worked for two reasons: (a) other countries participating
in the diamond trade have done nothing to help enforce these laws, and
that is the reason a global system is needed; and (b) any system or new
law must be flexible enough to respond to criminals' abilities to find
ways around them. That is why the bill gives Customs officials
flexibility to target this problem, and avoids spelling out exactly
what steps they must take.
\1\ USAID estimated in 2000 that Liberia, Sierra Leone, Angola, and
the Democratic Republic of the Congo lose $60 million per year in
uncollected taxes--which average 3% on the value of rough diamonds
exported from there. A senior official of Botswana estimated (verbally)
in 2001 that the total was $200 million.
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Q. How would a system of controls on rough diamonds work?
A. The primary focus of the system being devised by participants in
the Kimberley Process is the first time a rough diamond is traded.
Models are being tested in Sierra Leone and Angola now, and have won
praise from some of the sharpest critics of the diamond industry and
countries that have ignored this problem.2
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\2\ Global Witness, a British NGO, examined Angola's system of
controls closely; its report is available on its website: http://
www.oneworld.org/globalwitness/.
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Here's how the system works, in brief:
LRough diamonds are exported in secure containers, whose
contents are disclosed on an export certificate that accompanies the
diamonds. The certificate's details are logged into an official
database by the exporting country's authorities--and checked against
that database by the importing country's authorities.
LFrom there, a chain of warranties helps ensure the
``clean stream'' of diamonds stays clean. This chain is a series of
assurances, by sellers to buyers, that accompanies the diamonds until
they are cut and polished.
LIn addition, countries are considering the need for
issuing re-export certificates every time a rough diamond is traded.
Those may rely in part on the industry's chain of warranties, but there
is not yet consensus on the workability of controls past the first
import. The U.S. delegation in particular, prompted by enforcement
concerns raised by Customs, has opposed re-export certificates.
Here's how the system works, in detail:
From the mine/mining area to export--This stage of the process of
exporting diamonds poses the most difficult challenge to implementing
an effective system of controls. That is because it is very difficult
to monitor ``the first 10 yards'' a diamond travels from thousands of
individual miners, to a diamond buyer. This problem is the focus of
continuing work, but currently the expectation is that the system would
require a producing country to license miners and regulate their
activities closely. This once was a common practice, but has been
neglected in some countries, a casualty of corruption and the chaotic
nature of war.
To help correct the inherent difficulty of monitoring the trade,
especially at its start, the global system will give diamond-trading
countries that participate through the Kimberley Process a forum for
alerting producing countries to problems. That will help dilute the
incentive to cheat--because while a producing country will want to get
all of its diamonds through, an importing country will want to protect
its supply of clean gems from the taint of conflict diamonds. It
therefore will have an incentive to help the producing country
safeguard its exports. That help could come in the form of carrots
(like financial assistance), or sticks (like rejection of diamonds
whose origin is easiest to determine at this stage).
From first export to first import--Rough diamonds to be exported
are taken to a producing country's authorities, who collect taxes on
them (which average 3% and are the primary benefit African countries
get from this resource; to keep this sum in perspective, rough diamonds
now fetch about $60 per carat in Antwerp). Authorities then issue a
numbered export certificate on each parcel of diamonds, and log details
about the parcel--including its total carat weight--on the certificate
and into a database.
When the parcel arrives in the importing country (which is Belgium,
in the case of 85% of rough diamonds traded), authorities check its
contents against the certificate affixed to the parcel, and against the
database. Because experts usually can tell a diamond's origin before it
is cut, they have this tool to help them judge the veracity of the
certificate. Even in the rare instance when they cannot tell where the
diamond is from, they almost certainly can conclude it is not from the
country issuing the certificate, if that is the case. Several shipments
have been interdicted in this manner already.
This ability to rely on a technical safeguard, and the expertise of
Belgian authorities, makes this stage the logical place to focus
enforcement efforts. If diamonds entering legitimate commerce are
clean--and downstream countries protect the stream against imports from
outside the clean stream--most smuggled diamonds (including those used
to fund conflict) can be blocked from trading as legitimate goods.
From first import to first sale--The customers of importers whose
export certificates have been validated have a legal basis for issuing
a warranty to anyone to whom they sell these diamonds. From there, each
sale of the same diamonds--even if the parcel is broken up--can be
accompanied by a warranty that traces its authority back to that first
sale.
The World Diamond Council, an industry association formed to
address the problem of conflict diamonds, has pledged to monitor
industry participants employing this chain of warranties and to take
disciplinary action against any who use it improperly. Individual
buyers also have recourse, through civil lawsuits, against improper
warranties. Government or independent auditing of this chain of
warranties would add credibility to it, in the view of civil society
representatives and others. Such a proposal is now under consideration
by the industry. However, U.S. Government experts doubt that a chain of
warranties--whether it is audited or not--could provide a sufficient
safeguard to constitute the basis for a government certificate.
The outstanding question is whether the chain of warranties is a
useful contribution to efforts to block conflict diamonds from
legitimate trade. The answer may be determined by how many private
businesses are willing to participate in the chain. As offered, this
initiative represents a good-faith effort by an industry whose active
participation in safeguarding the clean stream is essential. It could
have a significant practical effect if it is widely used and, given the
realities of the trade, that potential should not be underestimated.
From first import to subsequent export--To combat the problem of
conflict diamonds' entering the clean stream of legitimate diamonds,
some observers believe that rough diamonds should be accompanied by re-
export certificates as they cross every border. These would adhere to
the same rules set forth above--the parcel's carat weight disclosed, a
unique number recorded on the certificate and in a database maintained
by the exporting country, and information checked by the importing
country. However, U.S. officials and others disagree on whether this
mechanism could be enforced.
One alternative solution to this transshipment problem may be the
creation of a police force that has access to detailed statistical
information and tough law enforcement powers. The Securities & Exchange
Commission offers one model for this: it routinely handles sensitive
information which, like diamond trade flows, are considered proprietary
by industry participants. And the SEC routinely exercises police power
that serves as a significant deterrent to wrong-doing.
Q. Why doesn't the system simply require diamonds to move
individually, in sealed packets with individual numbers that can
continue to be tracked? Alternatively, why aren't physical marks on the
diamonds being considered--since those would be removed in the cutting
process anyway and would not diminish the diamonds' value?
A. Some 850 million stones trade every year, most of them in
parcels of dozens or hundreds of diamonds until they are cut. It would
be a logistical nightmare to separate these parcels into individual
diamonds. Likewise, coating rough diamonds with wax that contains a
special colorant (like U.S. currency uses)--or etching a mark into
individual diamonds, also would impose a burden, because either
approach would hinder the sorting and cutting process by emplacing a
physical barrier to the process of quickly judging a diamond's value.
As much of the value added by diamond traders is their sorting and
marketing parcels of diamonds, this barrier's effect should not be
minimized.
Between 80 and 95% of diamonds are not from conflict zones.
Hopefully, the wars that have been fueled by diamond revenues will
end--with the help of these efforts--and a system of controls will
remain in effect to deter future conflicts. The bill endeavors to
address the problem without imposing an undue burden either on industry
or on countries involved in what is, for the most part, a legitimate
trade.
Q. Why doesn't the bill impose a system of controls on polished
diamonds, or diamond jewelry?
A. Efforts have focused on rough diamonds because their trade (1)
is where the problem of rebels' funding from conflict diamonds arises,
and (2) lends itself to verification by technical means. The goal is to
prevent rough diamonds from being cut and polished--which is the point
at which they gain much of their value, and the point past which no
means of determining a diamond's origin currently exist.
The bill does close loopholes that could exist for polished
diamonds and diamond jewelry, by requiring countries that supply the
U.S. market to get the diamonds they use from the clean stream.
Q. This bill seems to be an effort to end diamond smuggling--a
worthwhile goal, perhaps, but one that seems impossible to attain. Will
this increase red tape for legitimate industry, without stopping
criminal smugglers?
A. Smuggling is endemic in the diamond trade: estimates of its
prevalence range from 22 to 40% of all diamonds traded. The
extraordinarily low tax paid on these transactions--0.04%--underscores
the loss African nations that depend on diamond revenues suffer at the
hands of smugglers.
But the bill's goal is more narrow: to end the smuggling that is
used to fund conflict--whose costs are calculated in lives, not
dollars. Together with UN and regional peacekeeping, and other efforts,
choking off the money that rebels and invading armies can earn by
looting diamond mines promises to bring these wars to an end. Ensuring
systems are in place so that diamonds cannot be used to fund future
wars, along with other efforts, will help deter more suffering.
No law can stop crime, but enacting this will enlist legitimate
members of the industry--who make up the overwhelming majority of the
diamond trade--in efforts to stop the most destructive smuggling: that
used to fund wars.
Q. Does this bill violate our obligations under the World Trade
Organization?
A. Considerable care was taken to ensure that the United States
does not violate its WTO obligations if this bill is enacted into law.
1. LAs a general matter, the United States could defend against any
WTO challenge to this bill under either the general exceptions (Article
XX) or essential security exceptions (Article XXI) of the WTO (GATT
1994). Court decisions on these exceptions suggest these exceptions
could be used successfully to defend this legislation against any WTO
challenge. The Congress in its findings takes note of these exceptions.
2. LThe bill provides the President with administrative flexibility
so that he could implement the bill in a way that would withstand any
WTO challenge. For example, instead of requiring all diamond exporters
to implement a single system:
LIt permits the President to allow imports from
countries with systems that are functionally equivalent to the one
spelled out in the bill3; or that meet the requirements of
the system designed by the Kimberley Process4; or
---------------------------------------------------------------------------
\3\ Section 4(a)(1)(B).
\4\ Section 4(a)(1)(C) or (D).
---------------------------------------------------------------------------
LIt lets an importer demonstrate to Customs officials
that its diamonds are conflict-free so they can import them even if its
country has not implemented any system of controls5; and
---------------------------------------------------------------------------
\5\ Section 5(A)(iii).
---------------------------------------------------------------------------
LIt lets the President tailor penalties--such as barring
imports from a country--to fit the violation.6 For example,
if the problem is that rough diamonds are being smuggled into the
United States from a country, he can bar rough diamond imports from
that country (instead of barring all diamond and diamond jewelry
imports).
---------------------------------------------------------------------------
\6\ Section 6(a), by permitting the President to issue a partial
waiver.
---------------------------------------------------------------------------
3. LThe bill provides the President with waiver authority that, if
a WTO challenge were imminent, could be exercised to remove a country's
standing to lodge that challenge. This would give our diplomats the
ability to try to work out any disputes before they rose to the level
of a challenge to the WTO.7
---------------------------------------------------------------------------
\7\ Section 6(a).
---------------------------------------------------------------------------
4. LFinally, the bill contains a self-correcting mechanism, so that
if there were ever a WTO ruling against the United States, the Treasury
Secretary and Customs would not be required to take any action under
the bill that would be in violation of our WTO obligations.8
---------------------------------------------------------------------------
\8\ Section 10.
---------------------------------------------------------------------------
The bill also was crafted to facilitate several defenses to any WTO
challenge:
1. LGATT 1994's Article XXI permits a nation to assert it is acting
in its security interests, (a) to address the traffic in arms or
materials that supply a military establishment, or (b) in pursuance of
its UN obligations--such as to enforce the current sanctions on the
RUF, UNITA and Liberia, or an expected future UN resolution
implementing the Kimberley Process.
The bill includes findings 9 that would support the
United States if it asserts a security defense against a WTO challenge.
---------------------------------------------------------------------------
\9\ Section 2 (4).
---------------------------------------------------------------------------
2. LGATT 1994's Article XX(b) permits a nation to assert it is
acting out of necessity to protect human life and health--so long at
its action does not arbitrarily or unjustifiably discriminate against a
country, or is not taken simply to disguise a restriction on trade.
L The bill includes findings that detail the toll conflict
diamonds is exacting on human life and health10 and that
explain international efforts to devise a global approach to this
problem.11 The United States could use either to defend
against any WTO challenge.
---------------------------------------------------------------------------
\10\ Section 2 (1).
\11\ Section 2 (6) and (8).
---------------------------------------------------------------------------
Q. Would this bill increase costs to American taxpayers? Would it
increase the price of diamonds that American consumers pay?
A. The Administration has not indicated it expects Customs'
enforcement or other costs borne by taxpayers to increase because of
this bill.
As to the price of diamonds, a regulatory system like the one the
bill encourages should not impose additional costs on diamond traders
that were significant enough to pass along to consumers.
On the contrary: the diamond and jewelry industries support this
bill, in part, because they are concerned that their sales may be hurt
if they do not provide consumers with assurances that their diamonds
are conflict-free. Some are even investing in advertising to convey
that message, despite warnings by the Federal Trade Commission and an
industry ethics body that this claim cannot be supported until there is
a system in place such as the one the bill encourages.
If this problem is not addressed, jewelers likely will feel growing
pressure to distance their wares from these atrocities. Advertising and
other costs, including lost sales--likely would be a heavier burden
than anything a system of controls like the ones required by the bill
might impose.
Q. Will passage of this bill hurt America's effort to build a
coalition against terrorism?
A. The Revolutionary United Front in Sierra Leone is a terrorist
organization, according to the State Department. Moreover, there is
strong evidence that al Qaeda, Osama bin Laden's organization, has been
and still is involved in diamond trading in Africa.
This bill's primary effect will be to put this resource--the most
concentrated source of wealth known to mankind--off-limits to
terrorists now wreaking havoc in Africa, and believed to be planing and
funding future attacks in America. Given that there is widespread
acceptance of the need to address the problem of conflict diamonds, and
because the bill provides so much flexibility to U.S. diplomats, it is
hard to foresee the day when sanctions are imposed against any country.
Instead, the bill aims to encourage all countries supplying the
U.S. market with diamonds to take steps that will ensure Americans
remain steady consumers of their diamonds--so that this luxury product
doesn't go the way of ivory and fur in consumers' eyes. Such measures
are in these countries' own best interests, and most of them are
working actively to put them into place. The bill's goal is to make
diamonds a blessing for all countries, instead of the curse they are on
some. The bill imposes no sanctions and it respects the rights of
countries involved in the diamond trade to determine how best to
address smuggling that should have been stopped years ago.
If it affects the United States' ability to build a coalition
against terrorism at all, it likely will do so in a positive way--by
addressing a terrible injustice and helping stop those who would
terrorize Africans as well as Americans.
Chairman Crane. We thank you for your testimony. And now
Frank.
STATEMENT OF THE HON. FRANK R. WOLF, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VIRGINIA
Mr. Wolf. Thank you, Mr. Chairman. I will be brief, too. I
think Mr. Hall and Mr. DeWine made the case. I think it is
important for the industry as their plans develop. Quite
frankly, I know people who will not, absolutely will not, buy a
diamond today unless they can be absolutely positively
categorically sure that it is not a blood diamond. They just do
not want to have a diamond on their hands. So for the industry
which supports Mr. Hall's bill, it is absolutely critical that
you pass this.
Second, given the importance of diamonds for places such as
South Africa, Namibia, and Botswana, it is critical for them
that you act to protect the legitimate trade before it is too
late and the image of diamonds is tarnished forever. Once you
tarnish an image, it is very difficult, not impossible, but
very difficult to ever, ever get it back.
Third, as Mr. Hall said, in this case, and I do not know if
you have read it, the United States of America versus Osama bin
Laden, it was the World Trade Center bombing in 1993. We will
be glad tofurnish it for the record. They talk about diamonds
helped with regard to funneling and furnishing resources for the
operation in 1993. Al Qaeda has financial interests in the diamond
trade. Foti Sanco, the RUF in Sierra Leone, Charles Taylor, they have
all been trained in Libya. It is almost a loose affiliation with regard
to the terrorist operations, and for this Congress not to deal with
this issue would be really wrong.
Lastly, you got to pass this before the Congress goes home.
This really is not something that can be kicked over to next
January. One, if there is an economic boycott, the jewelers on
Main Street who really should not be hurt, and I think what is
taking place for them, they are feeling the pain, should not be
hurt by this. This Congress has to pass this before we go home.
Obviously, with the support of the majority and the
minority, you could put it on the supplemental. You could put
it on--we would take it on a State, Commerce, Justice
Appropriations bill, or anything, but please find a vehicle
once you all shape this and work this out.
I think Mr. Hall and Mr. DeWine have worked out a good one.
Let it pass before we go home whether it be the first week of
November or second week in November, because I am afraid that
if it carries over, one, people are going to think we are
stupid with terrorists being funded by this operation; and
secondly, the diamond industry could be severely hurt; and
thirdly, I think a lot of people in Africa will experience
tremendous pain and suffering and agony in a way that frankly
none of us want.
So thanks for the hearings. Thanks for moving this process
fast and hopefully we can make it public law before
Thanksgiving. Thank you very much and I yield back the balance
of the time.
[The prepared statement of Mr. Wolf follows:]
Statement of the Hon. Frank R. Wolf, a Representative in Congress from
the State of Virginia
Thank you, Mr. Chairman. I appreciate the opportunity to testify
today about the issue of conflict diamonds. I appreciate your committee
taking the time to hold this important hearing and I also thank
Chairman Thomas for his willingness to facilitate the passage of
conflict diamonds legislation before the end of this session.
For nearly two years now, I have been supporting the efforts of my
friend and colleague, Tony Hall, who has truly been the champion in
bringing Congress's attention to the severe consequences of diamonds
that fuel civil conflict in several of Africa's most troubled areas
including Sierra Leone, Angola and the Democratic Republic of the
Congo. His efforts have brought the world's attention to people blessed
to live in areas rich in diamond resources, but who have been cursed by
the violent conflict that these diamonds have caused.
I also want to recognize and thank the Bush Administration for
working with us on developing effective legislation to address this
problem, specifically the State Department and the Office of the United
States Trade Representative. I especially appreciate their efforts in
light of recent circumstances, and the attention that the
Administration is dedicating to the critical needs of our nation's
security matters, both at home and overseas.
In the interest of allowing the Committee and the Administration to
have as much time as possible at this hearing, I will be brief. I just
want to emphasize why I believe we need legislation such as H.R. 2722,
introduced by Congressmen Houghton and Rangel with support of
Congressman Hall and myself, before Congress adjourns this year.
As this committee is aware, the U.S. is involved in multilateral
negotiations with over 40 other nations at what is known as the
``Kimberley Process.'' While it is undoubtedly difficult to have so
many nations agree on a system of such a complex nature, our passage of
legislation facilitates this international system. We import almost 70
percent of the world's jewelry diamonds. We therefore have a unique
responsibility to address this issue and take steps to only import
clean diamonds, untainted by the blood of innocent victims. Legislation
that requires clean diamonds will spur the many nations interested in
maintaining their imports to the U.S. into making such a system a
reality.
At the same time, the legislation has the necessary flexibility for
the Administration to meet its international trade requirements under
the WTO and more importantly, enough flexibility for the Administration
to delay its implementation as the global system becomes a reality. Our
staffs are ready to continue working with the Office of USTR to meet
their concerns.
A second reason why this legislation is so important is for the
diamond industry itself. While I do not purport to speak for the NGOs
on their future plans, I do believe that failure to pass legislation
will result in a significant consumer backlash in the near future. This
will be especially true as new conflicts develop or old ones resurface.
For instance, Angola's conflict rages on and recently the UNITA rebel
group has shown signs of again heightening the violence. Given the
importance of diamonds for places such as South Africa, Namibia and
Botswana, it is critical that we act to protect the legitimate trade
before it is too late and the image of a diamond is tarnished forever.
Finally, I would like to address the issue of conflict diamonds in
relation to recent events. As President Bush has stated so eloquently,
the scope and reach of global terror networks such as Al Qaeda will
require our fighting them on all fronts. One of these will be on the
financial front and the Treasury Department has already taken steps in
this direction.
Diamonds are easy to launder and court testimony after the World
Trade Center bombing in 1993 indicates that Al Qaeda has financial
interests in the diamond trade. While it is impossible to know how
closely tied in this group or other groups are to those who trade in
conflict diamonds, it is significant that such connections may exist.
According to the State Department, the RUF rebel leaders in Sierra
Leone are a terrorist group. Many of their leaders have connections to
traders of conflict diamonds in Lebanon and, of course, were very
closely connected to Liberian President Charles Taylor. In short, there
is a global network of ``bad guys'' out there. Passage of this
legislation will at least impart some accountability to a highly
launderable item and make it more difficult for any criminal or
terrorist organization to use it as a financing mechanism.
I would like to end with one closing thought. Members of this
committee are some of the strongest and most eloquent advocates for
free trade, globalization and international commerce. You point to the
great economic opportunity that increased commerce offers for both our
country and developing nations as well. I share and understand this
basic principle.
However, too often the argument of free trade and globalization is
framed too simplistically--you are either for or you are against.
Rather, I believe that cleaning up the diamond trade offers unique
opportunity to address the issue in more realistic terms--international
commerce with accountability. The benefits of the diamond trade need to
reach the people on the ground that live in these regions. If we can
successfully address the issue of conflict diamonds, human rights,
labor conditions and the general welfare of people living in these
conflict areas will improve.
Again, thank you for giving me the opportunity to testify here
today. With the Chairman's permission, I will submit my entire written
testimony for the record.
Chairman Crane. Well, we thank you both for this commitment
to this effort, and we will proceed now. I want to get one
thing straight, though, Frank. You did say the first or second
week of November, not December; right?
Mr. Wolf. Well, I think we will be out of here; my sense we
will be out of here in the first or second week or November.
That would be my hope.
Chairman Crane. That would be.
Mr. Wolf. Yeah.
Mr. Levin. Whenever we leave, we should have passed this,
and it is a tribute to the two of you and others who have been
toiling to get this done, and I think we owe it to you, and you
would say, and you are right, to the people of Africa, as well
as the terrorist connection. So we will do everything we can.
Chairman Crane. Thank you. Amo.
Mr. Houghton. Let me just ask one question. Aside from the
humanitarian issue, which is enormous, what is the main
economic impact here? Because it depresses the price of
diamonds so that the people who are producing diamonds can help
those people in need in their country? What is it?
Mr. Hall. Well, just take one country, Sierra Leone. Sierra
Leone should be one of the richest countries in the world. It
has diamonds. It has an abundance of water. It has great soil.
It has beaches. It has a lot of fish. They could have all kinds
of industry there.
And yet what has happened over the years is they rank last
in the world when the United Nations looks at a country's gross
national product, infant mortality rates, et cetera. They rank
either second to last or last because they do not declare their
resources, they have not done that for years because there has
been so much killing and smuggling conflict diamonds out in
ways other than through the government.
If the diamonds could just go through the government of
Sierra Leone, there would be a tax, there would be a license;
the money would go to some of the poorest people in the world.
Mr. Houghton. So basically it is a resource for the
country.
Mr. Hall. It is a resource for the country.
Mr. Houghton. And it is being sucked out illegally and
therefore no benefits come back to the government to be able to
do the things they need for their people.
Mr. Hall. That is the first benefit. One of the second
benefits is the United States has invested a couple billion
dollars in these countries over the past decade, and yet $10
billion has been sucked out of these countries in conflict
diamonds. So, the money is not going where it should be going.
If that money, if a portion of that $10 billion could stay in
the country, it could save us money and help a lot of people.
Mr. Houghton. Thank you very much. Thanks, Mr. Chairman.
Chairman Crane. Well, gentlemen, again, we thank you, and
your written statements will be made a part of the permanent
record.
Mr. Hall. Thank you.
Chairman Crane. And with that, now I would like to call our
next panel: Alan Eastham, special negotiator for conflict
diamonds at the U.S. Department of State; and James Mendenhall,
deputy general counsel, Office of the United States Trade
Representative.
And gentlemen, if you can please try and keep your oral
testimony to approximately 5 minutes, any written statements
will be made a part of the permanent record, and with that we
will proceed with Mr. Eastham first.
STATEMENT OF ALAN EASTHAM, SPECIAL NEGOTIATOR FOR CONFLICT
DIAMONDS, U.S. DEPARTMENT OF STATE
Mr. Eastham. Thank you very much for the chance to come
before you today to report on our efforts to deal with the role
of diamonds in conflict. I am very grateful to the Committee
for organizing what I think will be a very significant event in
terms of raising public and official awareness of this problem
and of the need to do something about it, as has been testified
by the previous panel.
The natural wealth which is represented by diamonds ought
to be a source of funds for development and human welfare in
Sierra Leone, Angola, and other countries in Africa. Instead,
in too many cases, the money produced by diamond sales provides
the funding for rebel movements to purchase illicit arms, to
support rebel armies, and to prolong civil wars that have
terrorized societies and destroyed communities. This is the
case in Angola and Sierra Leone.
The Fowler Report in March 2000 and the landmark report by
the British NGO Global Witness last year helped to build a
consensus within and outside governments that we must confront
and break the linkage between diamonds and conflict while
permitting the legitimate trade to continue and flourish.
Our objective in these efforts is to choke off the money
from diamond sales that fuels violence and to use that money to
build peace and stability in the countries which are affected
by conflict now.
We have attacked this problem through two avenues: the
United Nations Security Council and the Kimberley Process. We
recognized in this effort that it will take joint action by all
diamond trading nations, producers and traders, to take
effective action, and that it will be much more effective than
action by one country alone. We are still convinced this
approach is valid. It is consistent with our international
obligations. It recognizes the inherent nature of the diamond
trade and it is a reflection of the interconnected global
market realities of today's world.
In the Security Council, we chose to support prohibiting
direct or indirect import of diamonds from Angola and Sierra
Leone except through controlled certificate of origin regimes.
More recently, we have supported efforts by the Security
Council to reduce sanctions leakage to try to dry up funding
for these insurrections. The most significant of these efforts
was U.N. Security Council Resolution 1343 last May that banned
rough diamond imports from Liberia. That was in response to
Liberia's support for the RUF.
Outside the formal U.N. processes, we have sought a broader
solution to the conflict diamonds problem through what has come
to be known as the Kimberley Process. The Kimberley Process has
held four meetings this year with over 35 governments
participating along with non-governmental organizations and
members of industry to establish the details of a certification
system as called for by the U.N. General Assembly in its
resolution of December 1, 2000.
I am pleased to report that Kimberley has maintained its
commitment to the road map which was agreed earlier this year.
At the most recent meeting in September in London, delegates
revised a draft document that sets out the essential elements
of a system including the use of forgery resistant certificates
and tamper-proof containers for shipments of rough diamonds,
internal controls and procedures to provide credible assurance
that conflict diamonds do not enter the legal market, and
effective enforcement of the system through dissuasive and
proportional penalties.
The London meeting in our view made significant progress.
However, we recognized there was not as much progress as we
would have liked in coming to conclusions about the obligations
that governments and industries would undertake in an
internationally agreed certification system.
Some of these questions are quite significant and how we
answer them in Kimberley goes to the heart of whether a global
system will be effective. I know members are very concerned
about the amount of time this is taking. I know you will ask me
whether I think Kimberley will succeed. Given where it stands
at the moment, I do not have an answer to that question. What I
can assure you is that the team that I will take to Luanda and
to Botswana later in the year will put maximum effort to
achieving a workable and effective system to break this
linkage.
We appreciate your interest, Mr. Chairman. The sponsors of
the Clean Diamonds Act have realized a significant
accomplishment in the reaching a consensus between industry and
the non-governmental organizations. With that, Mr. Chairman, in
summary, I have run out of time and I will defer to your
questions later on.
[The prepared statement of Mr. Eastham follows:]
Statement of Alan Eastham, Special Negotiator for Conflict Diamonds,
U.S. Department of State
Thank you for this opportunity to report on our efforts to deal
with the role of diamonds in conflict. I am very grateful to the
Committee for organizing what I believe will be a very significant
event, a chance for the world to see first-hand the interest in
Congress in this issue and to assemble the views of various experts as
we prepare for the next round of ``Kimberley Process'' talks in Angola
at the end of this month.
The natural wealth represented by diamonds should be a source of
funds for development and human welfare in Sierra Leone, Angola and
other countries in Africa. Instead, in all too many cases, the money
produced by diamond sales provides the funding for rebel movements to
purchase illicit arms and to support rebel armies, prolonging civil
wars that have terrorized societies and destroyed communities. While
conflict diamonds have been estimated to make up only about four
percent of the world diamond trade, they have a disproportionate impact
on the welfare of certain populations.
--LIn Angola, where UNITA exported between $3 and 4 billion worth
of diamonds from 1992 to 1998, over half a million lives have been
lost, more than three and a half million people have been displaced,
and over 300,000 refugees have fled the country.
--LIn Sierra Leone, diamonds have helped transform a band of about
400 rebels of the RUF into an army of thousands that has become
infamous for its brutal treatment of civilians, including particularly
horrific atrocities against children. The civil war in that country has
killed more than 50,000 people, displaced over one-third of the
country's population of 4.5 million inhabitants, and sent over 500,000
refugees abroad.
The Fowler Report of March 2000 on UNITA activity in Angola and the
landmark report by the British NGO Global Witness helped to build a
consensus within and outside governments that we must confront and
break the linkage between diamonds and conflict, while permitting the
legitimate trade, a source of wealth for nation-building, to continue
and flourish. Our government began to work towards this goal with the
objective of choking off the money from diamond sales that fuels
violence and building peace and stability in west and central Africa.
At the same time, we recognized that the economies of other countries,
such as those in southern Africa, benefit greatly from diamond exports
and must not be harmed by our efforts to stop conflict diamonds.
We have attacked conflict diamonds through two avenues: the United
Nations and the Kimberley Process. We chose to do so because we
recognized that joint efforts by all diamond trading nations would be
immeasurably more effective than action by one country alone. We are
still convinced that this approach is valid. It is consistent with our
international obligations. It recognizes the inherent nature of the
diamond trade. And it is a reflection of the inter-connected global
market realities of today's world.
In the United Nations Security Council, we chose to prohibit the
direct or indirect import of diamonds from Angola and Sierra Leone,
except through controlled certificate of origin regimes. USAID assisted
the government of Sierra Leone in developing a certification system
that provides a secure, legitimate channel for diamonds to be exported
from that country.
More recently, we have supported efforts by the Security Council to
reduce sanctions leakage to try to dry up funding for these
insurrections. The most significant of these was UNSC Resolution 1343
last May that banned rough diamond imports from Liberia, in response to
its government's support for the RUF.
Outside of the formal United Nations processes, we have sought a
broader solution to the conflict diamonds problem through what has come
to be known as the Kimberley Process. This Process was initiated in
Kimberley, South Africa, in May, 2000, when representatives of key
producing, trading and consuming countries, the diamond industry, and
civil society began a series of meetings to examine the conflict
diamonds problem. Their efforts culminated five months later with an
endorsement of a global system for preventing conflict diamonds from
entering the legitimate trade. On December 1, 2000, the U.N. General
Assembly endorsed Kimberley and called for its members to broaden
participation and develop minimum acceptable standards for
certification.
An expanded Kimberley process, with over 35 governments
participating, has held four meetings this year to establish the
details of this system. At the first meeting in February in Namibia,
delegates agreed to a road map that established benchmarks for
subsequent meetings, with the objective of presenting the details of a
system to the United Nations Secretary General by December 1, 2001--the
anniversary of the General Assembly resolution.
I am pleased to report that Kimberley has kept to this road map. At
its most recent meeting, on September 11-13 in London, delegates
revised a draft document that set out the essential elements of a
system. These elements include: the use of forgery-resistant
certificates and tamper-proof containers for shipments of rough
diamonds, internal controls and procedures which provide credible
assurance that conflict diamonds do not enter the legal market, and
effective enforcement of the system through dissuasive and proportional
penalties. The London meeting made significant progress toward
outlining how this system would work, both in terms of physical
security of diamond shipments and in the procedural requirements,
including internal control measures, which would underpin a
certification system. However, there was not as much progress as we
would have liked in coming to conclusions regarding the obligations
governments and industry would undertake in such a system.
Some of these questions are quite significant and how we answer
them in Kimberley goes to the heart of whether a global system will be
effective. I know that Members of Congress are very concerned about the
length of time the Kimberley Process is taking to come to grips with
these issues, and that you will ask me whether I think Kimberley will
succeed in the objectives outlined for us in the U.N. General Assembly
Resolution. Given where Kimberley stands at the moment, I don't have an
answer to that question; what I can assure you, though, is that the
U.S. team will put its maximum effort toward achieving a workable
system in the two remaining meetings forecast in the roadmap.
Kimberley participants plan to hold two more meetings before
preparing the mandated December report for the Secretary General. At
these meetings, we will focus the discussion on the essential elements
of a system that will work, that is simple, effective, and cost-
effective, and that will to the maximum extent possible get to the
heart of the problem so that we can move on to put it in place and
break the link between the diamond trade and conflict.
We appreciate congressional interest in addressing the conflict
diamonds problem, which has helped to motivate Kimberley participants
to work more quickly towards developing a global system. The
congressional sponsors of the Clean Diamonds Act have realized a
significant accomplishment by bringing together the diamond industry
and interested non-governmental organizations in support of a single
piece of legislation. We also appreciate their efforts to listen to our
views, and their willingness to learn about the Kimberley Process.
At this stage, it is fairly clear that we will need legislation to
implement the system that Kimberley participants devise. We favor
passage of a bill along the lines of the Clean Diamonds Act that is
consistent with our goals as I have outlined them above. With
significant issues of policy still to be decided by Kimberley
participants, it is important that any legislation enacted within the
United States be crafted to authorize what is needed to put the
Kimberley system into place and permit what may be necessary in the
future.
Let me repeat: We remain committed to creating the most effective
system possible to control the trade in conflict diamonds and are
pleased to work with Congress towards achieving this goal. We will
certainly need Congressional support, and we will probably need
legislation if we are to carry out the steps eventually to be agreed
within the Kimberley process. We will work closely with you, with your
staff, with industry, and with the NGOs toward this end.
Chairman Crane. Thank you, Mr. Eastham. And now Mr.
Mendenhall.
STATEMENT OF JAMES E. MENDENHALL, DEPUTY GENERAL COUNSEL,
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Mr. Mendenhall. Thank you, Mr. Chairman. Thank you for
inviting me to testify before you today. The stories that we
have all heard and the pictures that we have seen of the
atrocities linked to groups profiting from the sale of conflict
diamonds are truly horrible. We heard testimony to that effect
earlier today, and it is truly moving.
The USTR wholeheartedly supports efforts to deal
effectively with this problem and is committed to working with
Congress to devise an effective solution. As we all recognize,
preventing trade in conflict diamonds is an extremely
complicated problem that defies simple solutions. Input and
good faith cooperation from all sides is crucial if we are
going to succeed in stopping trade in conflict diamonds.
In our view, the types of measures that will make a system
effective are the same types of measures that will ensure that
the United States and other nations of the world are acting in
conformity with their international obligations. These two
concerns, effectiveness and international sustainability, go
hand in hand.
In designing a regime to prevent trade in conflict
diamonds, three important goals must be taken into account.
First, the regime should be effective. Second, it should be
internationally sustainable and should minimize the impact on
the legitimate diamond trade which is crucial to many African
countries. And finally, it should not undermine efforts to
negotiate an international regime through the Kimberley
Process.
As we continue to work with you and your staffs, we should
keep these three goals in mind. In addition, it is important to
recognize that the diamond trade is very complex and any system
that attempts to address the problem of conflict diamonds must
take into account several complicating factors.
First, it is very difficult to identify and track diamonds
as they move through the stream of commerce. This is not a
problem that is unique to conflict diamonds, but is instead a
problem that is inherent to the manner in which diamonds are
distributed and processed. The diamond trade is fluid and
multinational. Diamonds often cross borders multiple times
between the point of extraction and the point of final sale.
They are mixed and sorted with diamonds from many sources
along the way and it is very difficult and sometimes impossible
to trace the origin of any particular diamond by the time it
reaches the border of the United States. Due in large part to
these difficulties, the origin of diamonds is usually reported
as the country of export rather than the country where the
diamonds were actually extracted.
Second, conflict and other illicit diamonds often enter the
international stream of commerce through smuggling or other
illegal behavior which may conceal the actual origin of a
diamond. In some cases, governments may be complicit in
laundering conflict diamonds. The most notable example of this
phenomenon is Liberia, and this is one reason why the U.N.
Security Council has called on countries to prohibit the
importation of any rough diamonds from Liberia.
The third complicating factor is that any remedy for the
problem must be finely tuned to minimize the impact on the
legitimate diamond trade. We should not lose sight of the fact
that most diamonds are not conflict related. In fact, several
African countries are dependent on trade in legitimate
diamonds. Disrupting the ability of these countries to bring
their diamonds to market could have a potentially devastating
and destabilizing impact on these economies. And as a result,
well intentioned efforts to stop trade in conflict diamonds
could, if not designed properly, be counterproductive.
Multinational efforts to deal with the problem of conflict
diamonds have focused on two fronts: United Nations sanctions
and the negotiation of an international certification regime in
the Kimberley Process. The U.N. sanctions have been imposed on
three countries: Sierra Leone, Angola, and Liberia.
In Sierra Leone and Angola, certain areas of the country
are controlled by rebel groups that are mining and trafficking
in diamonds in order to fund their activities. Consequently,
the U.N. Security Council has issued resolutions calling on
countries not to import diamonds from these countries unless
the diamonds are accompanied by a certificate of origin issued
by the internationally recognized authority. A certificate of
origin is only issued for diamonds that are mined in areas
controlled by the government.
Liberia presented a different problem and called for a
different solution. Liberia has a history of acting as a
conduit for conflict diamonds coming from other countries. Many
diamonds from Sierra Leone, for example, were smuggled into
Liberia and exported as if the diamonds originated in Liberia.
As a result, the Security Council issued a resolution calling
on all countries to prohibit the importation of any rough
diamonds from Liberia as I noted earlier.
The Kimberley Process is a much broader initiative. Over 30
members of the international community including the United
States have come together to negotiate an effective
international regime to eliminate trade in conflict diamonds.
The members of the Kimberley Process are grappling with all
of the difficult issues outlined above and we are under a
deadline to complete our work and report to the U.N. by
December of this year. Thus, there is a developing
international framework for addressing the problem of conflict
diamonds and this work will only come to fruition with the full
cooperation of all relevant actors including governments,
industry, and the NGO community.
In fact, without cooperation and international consensus,
it may be difficult to resolve some of the apparently
intractable problems surrounding the effort to prevent trade in
conflict diamonds.
Any attempts to deal with this problem at the national
level prior to the completion of the Kimberley Process should
be designed in a way to give further impetus to the
negotiations and to allow the United States to plug into the
international system once it is in place.
Thank you again for the invitation to testify here today,
and I look forward to working closely with you and your staffs
in the future to address this difficult and complex problem.
Thank you.
[The prepared statement of Mr. Mendenhall follows:]
Statement of James E. Mendenhall, Deputy General Counsel, Office of the
United States Trade Representative
INTRODUCTION
Thank you for inviting me to testify before you today. The stories
that we have all heard, and the pictures that we have seen, of the
atrocities linked to groups profiting from the sale of conflict
diamonds are truly horrible. USTR wholeheartedly supports efforts to
deal effectively with this problem and is committed to working with
Congress to devise an effective solution.
As we all recognize, preventing trade in conflict diamonds is an
extremely complicated problem that defies simple solutions. Input and
good faith cooperation from all sides is crucial if we are going to
succeed in stopping trade in conflict diamonds.
In our view, the types of measures that will make a system
effective are the same types of measures that will ensure that the
United States and other nations of the world are acting in conformity
with their international obligations. These two concerns--effectiveness
and international sustainability--go hand in hand.
ADMINISTRATION GOALS
In designing a regime to prevent trade in conflict diamonds, three
important goals must be taken into account. First, the regime should be
effective. Second, it should be internationally sustainable and should
minimize any impact on the legitimate diamond trade which is crucial to
many African countries. Finally, it should not undermine efforts to
negotiate an international regime through the Kimberley Process. As we
continue to work with you and your staffs, we should keep these three
goals in mind.
In addition, it is important to recognize that the diamond trade is
very complex. Any system that attempts to address the problem of
conflict diamonds must take into account several complicating factors.
Identifying and Tracking Diamonds through the Stream of Commerce
First, it is very difficult to identify and track diamonds as they
move through the stream of commerce. This is not a problem that is
unique to conflict diamonds. It is instead a problem that is inherent
to the manner in which diamonds are distributed and processed. The
diamond trade is fluid and multinational. Diamonds often cross borders
multiple times between the point of extraction and point of final sale.
They are mixed and sorted with diamonds from many sources along the
way. As a result, it is very difficult, and some say impossible, to
trace the origin of any particular diamond by the time it reaches the
border of the United States. Due in large part to these difficulties,
the origin of diamonds is usually reported as the country of export
rather than the country where the diamonds were extracted.
Government Complicity, Smuggling and Other Illicit Behavior
Second, conflict and other illicit diamonds often enter the
international stream of commerce through smuggling or other illegal
behavior which may conceal the actual origin of a diamond. In some
cases, governments may be complicit in laundering conflict diamonds.
The most notable example of this phenomenon is Liberia. As a recent
report from a UN panel of experts found, ``a large proportion of the
diamonds entering Belgium under the Liberian label represent neither
country of origin nor country of provenance [i.e., country of
transshipment]. Most are illicit diamonds from other countries, taking
advantage of Liberia's own involvement in the illicit diamond trade,
its inability or unwillingness to monitor the use of its name
internationally, and the improper use of its maritime registry.'' \1\
This is one reason why the United Nations Security Council has called
on countries to prohibit the importation of any rough diamonds from
Liberia.
---------------------------------------------------------------------------
\1\ Report of the Panel of Experts Appointed Pursuant to Security
Council Resolution 1306 (2000), Paragraph 19, in Relation to Sierra
Leone, S/2000/1195, para. 130 (December 20, 2000).
---------------------------------------------------------------------------
Impact of Legitimate Diamond Trade
Third, any remedy for the problem must be finely tuned to minimize
the impact on the legitimate diamond trade. We should not lose sight of
the fact that most diamonds are not conflict-related. In fact, several
African countries are dependent on trade in legitimate diamonds.
Disrupting the ability of these countries to bring their diamonds to
market could have a potentially devastating and destabilizing impact on
these fragile economies. As a result, well-intentioned efforts to stop
trade in conflict diamonds could, if not designed properly, be
counterproductive.
EFFORTS TO ADDRESS THE PROBLEM OF CONFLICT DIAMONDS AT THE
INTERNATIONAL LEVEL
Multinational efforts to deal with the problem of conflict diamonds
have focused on two fronts--United Nations sanctions and the
negotiation of an international certification regime in the ``Kimberley
Process.''
UN sanctions have been imposed on three countries, Sierra Leone,
Angola, and Liberia. In Sierra Leone and Angola, certain areas of the
country are controlled by rebel groups that are mining and trafficking
in diamonds in order to fund their activities. Consequently, the UN
Security Council issued resolutions calling on countries not to import
diamonds from these countries unless the diamonds are accompanied by a
certificate of origin issued by the internationally recognized
authority. A certificate of origin is only issued for diamonds that are
mined in areas controlled by the government.
Liberia presented a different problem and called for a different
solution. Liberia has a history of acting as a conduit for conflict
diamonds coming from other countries. Many diamonds from Sierra Leone,
for example, were smuggled into Liberia and exported as if the diamonds
originated in Liberia. As a result, the Security Council issued a
resolution calling on all countries to prohibit the importation of any
rough diamond from Liberia.
The Kimberley Process is a much broader initiative. Over thirty
members of the international community, including the United States,
have come together to negotiate an effective international regime to
eliminate trade in conflict diamonds. The members of the Kimberley
Process are grappling with all of the difficult issues outlined above
and are under a deadline to complete our work and report to the UN by
December of this year.
Thus, there is a developing international framework for addressing
the problem of conflict diamonds. This work will only come to fruition
with the full cooperation of all relevant actors, including
governments, industry, and the NGO community. In fact, without
cooperation and international consensus, it may be difficult to resolve
some of the apparently intractable problems surrounding the effort to
prevent trade in conflict diamonds.
Any attempts to deal with this problem at the national level prior
to the completion of the Kimberley Process should be designed in a way
to give further impetus to the negotiations and to allow the United
States to plug into the international system once it is in place.
If we are not careful, the focus of the multinational effort could
easily shift away from dealing with the root problem of conflict
diamonds to finding ways to deal with conflicting national
certification regimes. If this is the turn the international
negotiations take, then the result will be confusion and an enormous
disruption of trade. It is in everyone's interest to avoid this
outcome.
Thank you again for the invitation to testify here today. I look
forward to working closely with you and your staffs in the future to
address this difficult and complex problem.
Chairman Crane. Thank you for your testimony.
Mr. Eastham, there are a lot of statistics floating around
about how big the trade in conflict diamonds is. How do you
determine how many diamonds come out of rebel mines in Sierra
Leone, and is this based upon conjecture or information about
specific diamonds being smuggled out and put into circulation?
Mr. Eastham. Mr. Chairman, not only are statistics
difficult to come by on conflict diamonds, I have found in my 1
month on the job as the negotiator on this subject that it is
difficult to come by accurate statistics on the legitimate
trade in diamonds, much less to divide out the conflict portion
of the trade.
The best estimate that I have seen which is derived from
non-governmental sources is that the value of conflict diamonds
would be in the neighborhood of $250 to $300 million a year at
point of origin where the rough diamonds are originally sold.
That would be as a percentage of the trade something less
than 5 percent of the trade in diamonds. Nevertheless, it
yields a significant amount of funding. It is very, very
difficult to trace the movement of rough diamonds when they are
traded in an illicit and smuggled way, and the purpose of the
Kimberley Process, Mr. Chairman, is to try to choke off that
particular source of revenue for insurgencies, in addition, as
I think was identified by Mr. Hall, we want to put the diamonds
into a legitimate chain of trade where they can be taxed and
where the revenue from that taxation can be used for legitimate
purposes.
Chairman Crane. Would it be helpful to move legislation
this year that is both WTO compliant, helpful to stop trade in
conflict diamonds, and would not cause problems in the
remainder of the negotiations, and if so, what would that
legislation look like?
Mr. Eastham. Mr. Chairman, we have been studying this issue
with a great sense of urgency within the administration for the
past several months in close collaboration with the interested
Members of Congress, the sponsors of the bills in both houses.
We have in recent weeks since the conclusion of the last
round of Kimberley been attempting to take a look at what
legislation might be appropriate and have not come to a formal
conclusion within the administration about what approach to
legislation should be taken.
Let me offer you my perspective as the participant and the
leader of the delegation in the last round of the Kimberley
talks, and as the prospective leader of the delegation which
will go to Luanda in 3 weeks time for a further round.
It is fairly clear to me, Mr. Chairman, that we are very
likely to need legislation in order to implement an eventual
Kimberley Process understanding on certification of rough
diamonds. When we were in London, I told the assembled group
that based on my own analysis of the situation, the United
States did not have explicit legislative authority to do some
of the things which were contemplated in the Kimberley Process
agreement.
I asked our colleagues in the Kimberley Process to identify
for me as precisely as possible what they felt the obligations
of governments would be. We did not get to the point in that
discussion, Mr. Chairman, that would lead me to come forward
with precise legislative language for you, so my inclination as
the head of the delegation would be to say that in the absence
of clarity about the ultimate obligations which would be
created by Kimberley, it would be very difficult to craft
legislation which would be both sufficiently authoritative and
sufficiently flexible to give us what we need at this point.
I hasten to add, however, that I am not saying ``no'' when
I say that. We will continue in the coming days and weeks
leading up to Luanda to stay in close touch with industry, with
the NGOs, and with staff members here on the Hill to see
whether we can craft something which would meet the
requirements.
Chairman Crane. Are there links between diamonds and Osama
bin Laden?
Mr. Eastham. Mr. Chairman, I have heard the mention of that
on several occasions already this morning, and I am aware of
the one report relating back to the 1993 bombing and to a
transaction in diamonds which was contained in the public
record of that case. I have not done a detailed analysis of
that, and I am not aware of a substantial connection, but if I
may reserve on that and go back and consult my colleagues on
it. I did not realize that was going to be an issue of such
concern this morning, sir.
Chairman Crane. Thank you. Mr. Mendenhall, in my view,
making the system effective and WTO consistent are not mutually
exclusive. Can you comment on this, and how can we get at these
rebel diamonds and comply with WTO?
Mr. Mendenhall. Mr. Chairman, I agree that making a system
effective and WTO consistent are not, in fact, mutually
exclusive. In the view of USTR, in fact, effectiveness is in
many ways inextricably intertwined with WTO consistency, and I
think it is possible to design a bill, and we are working with
the staffs of the sponsors and with some of the staff, some of
your own staff, to develop ideas that will allow us to address
both of those problems at the same time. Thank you.
Chairman Crane. Very good. Mr. Rangel.
Mr. Rangel. Thank you, and thank you Mr. Chairman, for
having hearings on this very sensitive and serious issue, and
thank both of you for trying to bring me and others up to some
degree of expertise. I am going to ask the Chairman's question
in a different way. The authors of this legislation that would
put restrictions on the importation of certain diamonds have
been working very hard to make certain that it is WTO
consistent and that we comply with the directions of the USTR,
and that is one of the reasons why this Committee has not
drafted the legislation.
But if we were to draft the bill based on the input that
you will give us, what harm would we bring to Kimberley or to
the delegation that you are leading, Mr. Eastham. If some
Members of the Congress might believe that if we give you a
stated position and legislate America's position and is signed
into law, we would like to believe that you are better armed to
negotiate a better deal in this area. What harm would we do by
not waiting until you decide what we should do? Mr. Eastham.
Mr. Eastham. Mr. Rangel, my main concern in that area would
be the very real possibility that we would have to come back at
a second bite at the apple with the Congress.
Mr. Rangel. What damage could we do to you in the job that
you have to perform and that you do so well?
Mr. Eastham. I think damage would be overstating it. The
point I am making is that the Kimberley Process is a
cooperative one in which all issues are open. And we are not
foreclosing one approach or another approach to attacking this
problem. We would be obliged to follow the laws of the United
States. We all take an oath to do that. And I think that the
effect of legislation would be to some extent, and I would say
damage might be overstating it, but it would be to narrow down
the options that I would have available to put forward to agree
to things at Kimberley.
I will give you an example off the top of my head. One
provision which exists at the moment in the Kimberley Process
is a provision, a guideline, which states that in order to
issue a re-export certificate, the guideline states the
government would have to rely on an assurance from an exporter
of rough diamonds from the United States that that person had
the entire chain of warranties in their possession at the time
of the proposed export.
To my understanding, that issue is not addressed in the
legislation. It is a subject which we will need to discuss at
some length, I believe, with industry at this stage so that we
are sure that we have a full understanding of industry's
position on this. But under the legislation as crafted with the
definition of the export certificate, which is contained in it,
I would be on shaky ground to ask industry to come forward with
a chain of possession of that nature such as is contained in
the present Kimberley document.
It is a question not of doing damage, but of retaining the
full flexibility to agree or disagree with the Kimberley
Process.
Mr. Rangel. Thank you. Mr. Mendenhall, would there be any
objection from USTR if we just moved the legislation in its
present form, or after receiving whatever recommendations your
office may give? Would there be any objections from the USTR
with us moving forward now?
Mr. Mendenhall. Mr. Rangel, my understanding is that we are
continuing to work with the staffs of the sponsors of the
legislation and with Ways and Means staff and that the bill
will continue to evolve. I think we have a constructive dialog
going on and we are giving our input. We plan to provide
further input. We plan to come forward with more specific
proposals on how we can address our concerns in any legislation
this year.
Provided our concerns regarding effectiveness,
international sustainability, and the relationship with the
Kimberley Process are addressed, I think USTR would be willing
to support efforts to move forward. But we need to make sure
that all of those concerns are taken into account.
Mr. Rangel. Well, that is not exactly an answer to my
question. I am satisfied that this Committee is respectful of
the reservations you have about the legislation that is before
us. I am not satisfied that the authors of the legislation
believe that we should wait any longer before we enact into
law.
Your response to me, have you shared that with the authors
of the legislation and do they agree with you that this is an
ongoing process and their willingness to wait until you believe
that it is necessary to legislate? Is that generally
discussions you have had with them? That is Hall, Wolf, and
DeWine.
Mr. Mendenhall. My understanding is that they are willing
to work with us on coming up with a solution that everyone
believes is effective and addresses those concerns. I
understand the urgency in moving forward with legislation, and
we are willing to help in that effort, and that is my
understanding from our meetings with the representatives and
with their staffs as well. But we do understand the urgency of
that.
Mr. Rangel. Next time you meet with them tell them to share
that view with the members of this Committee as well, their
willingness to work with you and to be satisfied that we are
making progress and that they are willing to wait until you
call upon us to legislate.
Mr. Mendenhall. I can assure you that Ambassador Zoellick
fully supports the efforts to work with the sponsors of the
legislation and their staff and has tasked me and various
members in the agency to make all efforts we can to assist in
that effort.
Mr. Rangel. But it would help me if Mr. Zoellick would
reiterate his support for the members that have drafted the
legislation before us.
Mr. Mendenhall. I understand. Thank you.
Mr. Rangel. Thank you.
Chairman Crane. Thank you. Mr. Houghton.
Mr. Houghton. Thank you, Mr. Chairman. I am a little
confused here. You really want to tighten up--and I am talking
to you, Mr. Mendenhall at this particular point--tighten up the
process, and yet at the same time I think the greater
flexibility that you have, the broader, the looser the process,
so that you can get at wherever you need, would be the most
effective approach. You do not know what the Kimberley Process
is going to produce. You do not know whether the $5 million is
going to help. You do not know whether cutting off funds from
Ex-Im (Export-Import Bank) and OPIC (Overseas Private
Investment Corp.) is really going to be effective or not. Don't
you want a sort of a broader, more flexible approach here?
Mr. Mendenhall. Absolutely. I think a flexible approach is
essential to make the system effective for a variety of reasons
because I think the situations in various countries differ both
in terms of whether they are conflict countries or non-conflict
countries and in their ability to implement the obligations
that we may ask them to undertake. I fully agree that
flexibility is an important part of any regime and should be an
important part of any measure that the United States takes.
Mr. Houghton. Yes, but I thought the thrust of some of your
remarks was to narrow this process.
Mr. Mendenhall. I am sorry if I was not clear in my earlier
remarks. I did not mean to imply that we should narrow our
flexibility in applying measures. That was not my purpose. What
I was suggesting is that there are ways to tailor the
legislation to make it more effective and to make it
internationally sustainable both from a political and a legal
standpoint.
Mr. Houghton. Do you have any comments, Mr. Eastham?
Mr. Eastham. I agree with my colleague. I think from the
point of view of negotiator and from the point of the view of
the Kimberley Process, and this is the same point I was making
to Mr. Rangel earlier, was that the greater the flexibility in
the range of tools we can apply the better.
Of course, Mr. Houghton, the greatest, in one sense the
most flexible and most powerful tool that we have applied to
conflict diamonds is the tool of the mandatory U.N. Security
Council Resolution implemented in this country with the use of
the International Emergency Economic Powers Act.
My preference would be to find a way to legislate
specifically on conflict diamonds and to keep that as distinct
body of the law and implement the process through legislation
rather than through the use of those big powerful guns which
would provide an opportunity for congressional consultation,
but which do not benefit from the specific authorization of the
U.S. Congress.
Mr. Houghton. I just have one other question. Legislation
passes. Kimberley Process works. Then what is the key to
monitoring this? What is going to be the critical element to
make this effective?
Mr. Eastham. That is a very difficult question, and if you
study, Mr. Houghton, the reaction to the London meeting on the
part of some of the non-governmental organizations which have
been intimately involved in this process from the beginning,
you will find that that was a very critical issue to the NGOs
as to how the monitoring process would work.
In my view, the Kimberley Process should mandate as much
transparency as is possible in terms of production of trade
statistics in almost real time, production of statistics on the
movement of diamonds across borders so that smart people can
study those statistics to detect anomalies which might need to
be addressed. We are dealing with a commodity here which is
highly valuable and which can move undetected in a way that
very few commodities in the world can move.
And the objective of the Kimberley Process is to set up a
system wherein the legal trade is legal. We all will know that
it is legal and we can see it happening. We will need a very,
very good statistical and monitoring system as an outcome of
Kimberley in order to be able to detect anomalies. One of the
greatest concerns, for example, is the question of transforming
rough diamonds, which are the subject of Kimberley, into
polished diamonds and entering them into the legitimate trade
as polished diamonds in a way which is unconstrained at the
moment.
And I think it is very, very important to have statistics
to be able to understand very quickly if something like that is
happening to circumvent what eventually comes out of Kimberley.
There are some interesting facts which have been shown by
the good statistics that the Belgian government maintains on
the diamond trade. You can identify certain countries where the
capacity for mining diamonds is very small and the movement of
diamonds into international trade is very large, and I think
that it is that sort of anomaly which we will have to correct
in Kimberley.
Mr. Houghton. I am sorry to ask this question, but I feel
that I should. So sort of sum that up in a sentence in terms of
the key monitoring steps.
Mr. Eastham. Good statistics, transparency. You have to
have some transparency on the part of industry in terms of
internal movements of diamonds, and I support the concept of
independent monitoring. The NGOs call that external monitoring
which means that the industry would not monitor industry. You
would have government monitor industry; you would have industry
involved in some way.
In a sentence, we need to build in some checks and balances
to make sure that we know what is going on in the diamond trade
so that we can keep conflict diamonds out of the legal trade.
Chairman Crane. Mr. Herger.
Mr. Herger. Thank you very much. Mr. Mendenhall, if I could
get your opinion on this. Do you feel that this legislation and
the fact that the Congress is working on this helps put, if you
will, emphasis or perhaps even positive pressure on these
international groups like Kimberley Process to move perhaps a
little more quickly than they might have otherwise and try to
come up a solution a little sooner to these incredibly
horrendous crimes that are taking place?
Mr. Mendenhall. I believe many countries are probably
monitoring very closely what the United States is doing here. I
have not been as intimately involved with the Kimberley Process
as my colleague has and that may be a question that may be more
appropriate for him.
I guess my concern, which is a concern that I think I share
with the State Department, is that if we do go forward and if
the purpose of the legislation is to give momentum to the
Kimberley Process, we need to make sure that the legislation
does not, in fact, work at odds with what may come out of
Kimberley. The mechanism that we use, the legislation that we
adopt, needs to be capacious enough, it needs to be flexible
enough, to allow the United States to participate in Kimberley.
It should not get ahead of where the Kimberley participants
are.
There are several very complex questions that are still
being worked out in the Kimberley Process. Given that it is an
international process with cooperation by many governments, the
NGO community and the business community, they may hit upon
ways to address this problem that will be very effective. I
think we need to be concerned about adopting measures that
preempt that process or undermine it.
Mr. Herger. How long has the Kimberley Process been going
on now? Do you know, Mr. Eastham?
Mr. Eastham. It has been in two stages. It has been about a
year and a half since the meeting in Kimberley which launched
the process. I would mark the real definitional phase of that,
though, from the first of December of last year when the U.N.
General Assembly passed Resolution 55/56, which gave some
direction and required a report at the end, so there have been
two phases of it.
Mr. Herger. Mr. Eastham, the same question to you. Do you
feel the emphasis in the U.S. Congress to move forward with
legislation indicating certainly the great importance that the
Congress places on it gives emphasis to perhaps move along more
rapidly the Kimberley Process?
Mr. Eastham. Yes, sir, I think that emphasis of the
Congress and the NGO community but certainly the Congress
because the Congress has the power to make laws is a very
important element in stimulating action on the part of the
Kimberley Process.
When we were in London at the last meeting, on the Senate
side the bill moved as an attachment to an appropriations
measure, and that was very much on the minds of the other
delegations at Kimberley. That is one example.
I think that there is a general recognition that the
Congress is pushing the administration to take action on this,
and there should be a recognition--if there is not, I will
state it explicitly--that if Kimberley does not eventually
produce, and by eventually I mean by the first of December, a
workable certification system, that the Congress will certainly
act.
Congress may act before that. That is within your purview.
And I have heard the recommendation from Mr. Hall and Mr. Wolf
this morning that you move in the next week or two. So Congress
may act sooner, but it will certainly act following the
conclusion of the current Kimberley road map and the report to
the Secretary General which is going to be at the end of it. So
I think that is very much in the minds of our partners in the
Kimberley Process and it does give it a sense of urgency and a
sense of importance.
Mr. Herger. Very good. Thank you very much, both of you.
Thank you, Mr. Chairman.
Chairman Crane. Mr. McDermott. Oh, Mr. McDermott is not
here. Mr. Camp or--I am sorry--Mr. Jefferson.
Mr. Jefferson. Thank you, Mr. Chairman, and I thank you for
this hearing. This is a very important subject. We are all
concerned about the presence of what we call conflict diamonds
in the world community and the atrocities that they are
connected with. All of us have that concern. Many of us have
also been concerned about how this legislation might affect
diamond trade in countries like Botswana, Namibia, South
Africa, and Tanzania that have legitimate diamond operations.
And, therefore, with the help of Mr. Rangel and Mr. Payne,
we were successful with the Chairman's acquiescence in adding
some provisions in the bill that acknowledge that and that
tries to make sure that whatever we do with respect to
eliminating the atrocities that we are all concerned about that
we do not do it in such a way that we forget about the
constructive work that is being done in developing countries,
and that our work here works to eliminate the trade in conflict
diamonds but not in legitimate diamonds.
And so I am pleased that we are focusing on this issue, and
I want to recognize the Honorable A.M. Duvay who is Botswana's
Special Envoy to the United States. He is here in the audience.
I had the pleasure of going to Botswana in April--he was here
in the audience--meeting with President Mogae with about five
other Members of Congress. We had a chance to take a firsthand
look at Botswana's diamond regime.
We investigated how the legislation before us would affect
that and we discovered that Botswana is particularly vulnerable
in this situation, and that it is the largest producer of gem
quality diamonds in the world and that unlike some African
nations, the Botswana diamond trade is entirely legitimate and
tightly controlled, as you know.
So I want to, Mr. Chairman, make the point and underscore
the point again that we all support legislation to eliminate
conflict diamonds, but we ought to make sure that we do it the
right way, and I think the inclusions of section 2 in the
Findings and the new sections added to the bill will be very
helpful in that respect.
I want to, if I might, introduce into the record a letter
from the Special Envoy, whose name I mentioned earlier, that
congratulates Mr. Rangel and Mr. Payne and myself for work on
this bill and for visiting the country back in April, and those
of us who did, and that points out the interests of the
Botswanagovernment in making sure that whatever we do here
takes into account and protects legitimate trade in diamonds, and that
it recognizes that it is our process, it is our decision to make, and
they do not want to interpose themselves into this discussion.
But they want us to know about how important it is for
their country, for their development, and they speak to this
issue without taking a position on the bill. They are careful
not to do that, but just want to inform the Committee of where
they stand.
So, Mr. Chairman, if I might, I would like to have leave to
introduce a copy of this letter into the record of the
Committee's proceedings so that we may be aware of the interest
of the Botswana government in this very important topic.
Chairman Crane. Without objection, so ordered.
Mr. Jefferson. Thank you, Mr. Chairman.
[The information follows:]
Embassy of Botswana
Washington, DC 20036
October 4, 2001
The Honorable William J. Jefferson
240 Cannon House Office Building
Washington, DC 20515
Dear Congressman Jefferson,
We understand that the House Ways and Means Committee's
Subcommittee on Trade, will hold a hearing on ``Trade in African
Diamonds,'' on Tuesday October 9th, 2001.
Knowing of your longstanding activity on the Subcommittee relating
to this issue, we thought it important again to share Botswana's view
with you. Botswana was honoured to host the congressional fact-finding
mission that you led in April this year. We were particularly pleased
that you were able to observe our diamond industry firsthand and be
briefed by both public and private officials.
President Mogae paid a visit to Washington shortly thereafter, in
June, to brief Congress on the vital role that the diamond industry
plays in the economic and social development of Botswana. We are
grateful that you and your colleagues in the Congressional Black Caucus
received the President so warmly, and that he was able to hold such
productive discussions with the congressional leadership.
During the meetings in Botswana, we demonstrated to your delegation
that Botswana's diamond industry is 100% secure and legitimate. It is
the economic bedrock of our 35-year-old democracy. Through the
exploitation and careful management of our natural resources,
especially diamonds, we have achieved remarkable economic development
over the last 25 years. Botswana as you know, is now hailed as one of
the fastest growing economies in the world. Our economic prosperity for
example has allowed us to develop one of the world's most comprehensive
anti-HIV/AIDS efforts, as we face the most devastating pandemic in
Africa. We believe that the example of Botswana illustrates, as
President Mogae said in his Washington speech, the good that diamonds
can accomplish when responsibly used by nations, as against the evil
they can do when commandeered and exploited by corrupt and
unaccountable leaders as is happened in some countries. Congressman
Jefferson, we applaud you, Congressman Payne, and Congressman Rangel
for your efforts to recognize and make this distinction as your
Congress deliberates this issue.
During your visit you were also able to observe that our diamond
mines and sorting floors have developed the highest level of security
comparable to the best in the world. Our export pipeline is seamless,
from the valuation floors in Gaborone, to the sales floors at the
Diamond Trading Co. in London. The entire production of Botswana's
rough diamonds is exported through this channel. Furthermore under our
Mines and Minerals Act, all mineral rights belong to the nation, and
government issues mining leases for development and extraction. We
therefore have considerable leverage and control over our mining
industry.
We have made clear in all our discussions with you how we abhor the
presence of diamonds in the market, that are now playing a direct role
in the atrocities taking place in some countries on our Continent.
Botswana is eager to find a cooperative solution to the issue of
conflict diamonds. However, it must be a solution that not only bans
such diamonds from the trade, but that also safeguards the legitimate
market upon which our country is so dependent. A solution that helps to
prevent the spread of regional conflicts; and preserves the ability of
peace-loving democracies like ours, to use their mineral wealth for the
good of their citizens. We therefore support the UN General Assembly
Resolution 55/56 of December 1st, 2000, and are active participants in
the Kimberley Process. We believe that ultimately we must have an
international agreement on certification through the Kimberley Process
to effectively protect the legitimate diamond trade.
Congressman, we have great respect for your legislative process. We
applaud your efforts and those of your colleagues, to confront the
serious issue of conflict diamonds. And, again we especially thank you
and your colleagues for all your endeavors to protect democratic
economies such as Botswana who do not trade in conflict diamonds.
With my best wishes,
I remain, Yours Sincerely
A.M. Dube
Minister/Special Envoy
Chairman Crane. Mr. English.
Mr. English. Thank you. Mr. Mendenhall, reviewing my
colleague Mr. Houghton's legislation, in your view, would this
legislation if enacted be enforceable?
Mr. Mendenhall. I am sorry? Would it be enforceable?
Mr. English. Yes.
Mr. Mendenhall. There are certain aspects of the bill that
we have concerns about that we have raised with staff of the
members who sponsored the legislation. We are working through
those issues with them.
Mr. English. Would you care to elaborate?
Mr. Mendenhall. We have raised concerns with them about--it
is essentially the same questions that are being debated in
Kimberley, which are how do you track a diamond as it moves
through the international stream of commerce, and do we have a
system that is actually going to be workable, and is the
industry going to come forward with proposals like a chain of
warranties or something else that will actually be enforceable
and confirmable or verifiable by Customs authorities?
There is flexibility built into the bill. We have questions
that we have raised about certain aspects of the bill and how
it deals with, for example, transshipment through various
countries. My understanding is that we have an ongoing dialog
with them to see how this is going to play out. We need to
confirm how the bill is going to work in practice and there are
some ambiguities that I think need to be cleared up.
Mr. English. Accepting those ambiguities, do you have any
cost estimates of what it would cost for the United States to
implement this new regime?
Mr. Mendenhall. I do not have a cost estimate. That
question would be appropriate for Customs to answer. They are
going to be responsible for implementing this for the United
States. And so I am not in a position to answer that question.
I do not know.
Mr. English. Mr. Eastham, would you care to comment on any
of those points?
Mr. Eastham. Let me agree that we do not know what the cost
of implementing the bill would be. I suspect that the marginal
cost would be fairly low. But since Customs is already
implementing the control regimes on Sierra Leone and Angola, I
would just endorse the views that Mr. Mendenhall has expressed
on the other aspects of it.
Mr. English. Thank you. I have no further questions, Mr.
Chairman.
Chairman Crane. We want to express appreciation to both of
you for your participation today, and we look forward to
working with you in the future on this issue.
And with that, we shall move to the final panel, and that
is Matthew Runci, president and chief executive officer of
Jewelers of America, Inc., in New York City; Cecilia Gardner,
general counsel, World Diamond Council, New York City; Rory
Anderson, government relations manager for Africa area, World
Vision; and Adotei Akwei, senior advocacy director of Amnesty
International.
And if you folks will be seated, we shall proceed in the
order that I presented you, and I would ask you all if you
will, please, try and keep your oral testimony to 5 minutes or
less and your written testimony will be made a part of the
permanent record, and with that, Mr. Runci, you can open up.
STATEMENT OF MATTHEW RUNCI, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, JEWELERS OF AMERICA, INC., NEW YORK, NEW YORK, AND
EXECUTIVE DIRECTOR, WORLD DIAMOND COUNCIL, NEW YORK, NEW YORK
Mr. Runci. Mr. Chairman and members of the Trade
Subcommittee, thank you for this opportunity to testify in
support of the Clean Diamonds Trade Act, the purpose of which
is to choke off illicit traffic in conflict diamonds.
We in the industry would like to thank Congressman Hall,
Congressman Wolf, as well as Senator DeWine, who have appeared
this morning, for their courageous leadership and persistence
in connection with this matter.
I am Matthew Runci, president and chief executive officer
of Jewelers of America and executive director of the World
Diamond Council. Jewelers of America, founded in 1903,
represents more than 10,000 U.S. retail jewelers including
family-owned stores and major national chains.
The World Diamond Council representing all segments of the
diamond and jewelry industries here and abroad was founded a
year ago to establish a workable system to eliminate trade in
conflict diamonds. Both organizations--along with trade groups
associated with the importing, processing and distribution of
diamonds in the United States--urge prompt enactment of H.R.
2722. This legislation is a major and essential step in
eliminating the illicit trade in conflict diamonds. Both moral
and business imperatives underpin our position. Halting this
insidious traffic also serves the U.S. foreign policy goal of
encouraging stability and economic progress in developing
African nations.
The moral case here is undeniable. Rebels and bandits in
parts of Africa have used the profits from diamonds they
appropriate to fuel their violent activities. Innocent citizens
have suffered deprivation and terrible atrocities as a direct
result. While criminals have grown rich, the economies of
Sierra Leone, Angola, and the Democratic Republic of Congo have
been impoverished. This evil cycle must end.
The business factor is also clear. Gems are objects of
beauty and symbols of enduring affection. They have value
because of the positive feelings they evoke. If consumers come
to believe that the diamonds they might buy are connected to
violence, the effects could be very damaging to thousands of
businesses and to their employees. The threat exists even
though it is clear that only a very small proportion of the
world supply can be linked in any way to conflicts. And it
exists even though there has been some progress toward
eliminating conflict diamonds, thanks to the efforts by the
United Nations, individual governments, non-governmental
organizations, and the industry.
The fact remains that as of today it is impossible for a
retail jeweler to tell a customer with absolute certainty
whether a particular stone offered for sale is conflict free.
So there is a cloud over our industry casting a shadow not only
on American retail establishments but also on all segments of
the industry here and abroad.
Removing this cloud requires firm and timely action by the
U.S. Government--specifically, enactment of the legislation now
before you. In recent years, as awareness of the conflict
diamond problem has grown, there have been several positive
steps, as I mentioned a moment ago. One of these is the effort
originally launched by South Africa now grown to include more
than 30 countries called the Kimberley Process.
Just last month, I was in London for the latest Kimberley
Process meeting, where there was agreement in principle on the
ingredients of an international monitoring system to protect
the legitimate supply chain from exploitation by those dealing
in conflict diamonds.
While we applaud this work--as well as the steps taken by
the United Nations--the fact is that a catalyst is required to
put in place the controls necessary to eliminate conflict
diamonds. Because the United States is the largest importer of
diamonds, we have the opportunity and the obligation to provide
that catalyst.
Enacting H.R. 2722 would serve that purpose admirably. It
would, first of all, allow the importation of diamonds and
diamond jewelry into the U.S. only from countries that have
adopted effective controls on the import and export of rough
diamonds. This alone would be a great incentive for other
nations to take appropriate action within an acceptable time
table. The legislation would also encourage the President to
negotiate an international agreement leading to a global
control system.
H.R. 2722 and its Senate companion, S. 1084, include a
number of other strong features. The Clean Diamonds Trade Act
is totally consistent with the resolutions adopted by both the
U.N. Security Council and the General Assembly. It is also
consistent with the principles approved by the Kimberley
Process.
Finally, this legislation is truly a consensus measure.
Interested members of both Houses and of both parties support
this bill. So does a broad coalition of humanitarian and faith-
based organizations concerned with the issue. Jewelers of
America, the World Diamond Council, and others representing
segments of the industry also believe that this legislation is
both sound and absolutely necessary for the success of our
campaign to rid the world of conflict diamonds.
Again, my many thanks for the opportunity to testify. I
will be happy to take any questions you may have.
[The prepared statement of Mr. Runci follows:]
Matthew Runci, President and Chief Executive Officer, Jewelers of
America, Inc., New York, New York, and Executive Director, World
Diamond Council, New York, New York
Mr. Chairman and Members of the Trade Subcommittee, thank you for
this opportunity to testify in support of the Clean Diamonds Trade Act,
the purpose of which is to choke off illicit traffic in conflict
diamonds.
I am Matthew Runci, president and chief executive officer of
Jewelers of America and executive director of the World Diamond
Council. Jewelers of America, founded in 1903, represents more than
10,000 U.S. retail jewelers, including family-owned stores and major
national chains. The World Diamond Council, representing all segments
of the diamond and jewelry industries here and abroad, was founded a
year ago to establish a workable system to eliminate trade in conflict
diamonds.
Both organizations--along with trade groups associated with the
importing, processing and distribution of diamonds in the U.S.--urge
prompt enactment of H.R. 2722. This legislation is a major and
essential step in eliminating the illicit trade in conflict diamonds.
Both moral and business imperatives underpin our position. Halting this
insidious traffic also serves the U.S. foreign policy goal of
encouraging stability and economic progress in developing African
nations.
The moral case is undeniable. Rebels and bandits in parts of Africa
have used the profits from diamonds they appropriate to fuel their
violent activities. Innocent citizens have suffered deprivation and
terrible atrocities as a direct result. While criminals have grown
rich, the economies of Sierra Leone, Angola, and the Democratic
Republic of the Congo have been impoverished. This evil cycle must end.
The business factor is also clear. Gems are objects of beauty and
symbols of enduring affection. They have value because of the positive
feelings they evoke. If consumers come to believe that diamonds they
might buy are connected to violence, the effects could be very damaging
to thousands of businesses--and their employees. The threat exists even
though it is clear that only a very small proportion of the world
supply can be linked in any way to conflicts. And it exists even though
there has been some progress toward eliminating conflict diamonds,
thanks to efforts by the United Nations, individual governments, non-
governmental organizations, and the industry.
The fact remains that--as of today--it is impossible for a retail
jeweler to tell a customer with absolute certainty whether a particular
stone offered for sale is conflict free. So there is a cloud over our
industry casting a shadow not only on American retail establishments
but also on all segments of the industry here and abroad.
Removing this cloud requires firm and timely action by the U.S.
Government--specifically, enactment of the legislation now before you.
In recent years, as awareness of the conflict diamond problem has
grown, there have been several positive steps, as I mentioned a moment
ago. One of these is the effort originally launched by South Africa,
now grown to include more than 30 countries, called the Kimberley
Process.
Just last month, I was in London for the latest Kimberley Process
meeting, where there was agreement in principle on the ingredients of
an international monitoring system to protect the legitimate supply
chain from exploitation by those dealing in conflict diamonds.
While we applaud this work--as well as the steps taken by the
United Nations--the fact is that a catalyst is required to put in place
the controls necessary to eliminate conflict diamonds. Because the
United States is the largest importer of diamonds, we have the
opportunity--and the obligation--to provide that catalyst.
Enacting H.R. 2722 would serve that purpose admirably. It would,
first of all, allow the importation of diamonds and diamond jewelry
into the U.S. only from countries that have adopted effective controls
on the import and export of rough diamonds. This alone would be a great
incentive for other nations to take appropriate action within an
acceptable timetable. The legislation would also encourage the
President to negotiate an international agreement leading to a global
control system.
H.R. 2722 and its Senate companion, S. 1084, include a number of
other strong features. The Clean Diamonds Trade Act is totally
consistent with the resolutions adopted by both the U.N. Security
Council and the General Assembly. It is also consistent with the
principles approved by the Kimberley Process.
Finally, this legislation is truly a consensus measure. Interested
Members of both Houses and both parties support this bill. So does a
broad coalition of humanitarian and faith-based organizations concerned
with the issue. Jewelers of America, the World Diamond Council, and
others representing segments of the industry also believe that this
legislation is both sound and absolutely necessary for the success of
our campaign to rid the world of conflict diamonds.
Again, my thanks for the opportunity to testify. I will be happy to
take any questions you may have.
Chairman Crane. Thank you, Mr. Runci. Ms. Gardner.
STATEMENT OF CECILIA GARDNER, EXECUTIVE DIRECTOR, JEWELER'S
VIGILANCE COMMITTEE, NEW YORK, NEW YORK, AND GENERAL COUNSEL,
WORLD DIAMOND COUNCIL, NEW YORK, NEW YORK
Ms. Gardner. Thank you, Mr. Chairman. I am Cecilia Gardner.
I am the executive director and general counsel of the Jewelers
Vigilance Committee (JVC), and I am general counsel of the
World Diamond Council. I am grateful to the Subcommittee for
the opportunity to testify on the critical need for enactment
of legislation to eliminate conflict diamonds. I also would
wish to join with Mr. Runci's comments that we are grateful to
Congressman Hall and Congressman Wolf and others for their
continued interest, concern and hard work in this area.
The Jewelers Vigilance Committee is a committee formed in
1917 with a membership of 11,000 retailers, manufacturers, and
related enterprises. We emphasize self-regulation and
compliance with all relevant laws. With this mission in mind,
it was natural for the JVC to become a founding constituent of
the World Diamond Council, which was organized in the summer of
2000 for the purpose of constructing an effective system to
protect the legitimate supply chain of diamonds worldwide from
the pollution of conflict diamonds.
My experience has been to participate in all of the
meetings of the Kimberley Process, essentially from the
inception after the U.N. Resolution and the World Diamond
Council, after the World Diamond Council was formed, in the
year 2000.
This morning I would like to provide a brief summary of the
international efforts to end this trade. This will provide the
context for our view that enactment of the Clean Diamonds Trade
Act is necessary to get the job done.
As you know, for several years, an awareness of this
problem grew and it was the subject of a number of Security
Council and General Assembly resolutions at the U.N. The
administration's acts over the past few years also have been in
compliance with those U.N. initiatives.
Meanwhile, evidence mounted that proceeds from diamonds
were a leading source of revenue to rebels and adventurers
whose only cause was profit. The societies of Angola, Sierra
Leone, and the Democratic Republic of Congo were crumbling in
the process.
While the immediate victims were the innocent citizens of
these nations, there were other prospective casualties starting
with peaceful African nations that rely heavily on legitimate
extraction and export of diamonds. Ultimately, a global
industry in which the United States is a major participant
could be blighted and therefore a coordinated international
response was necessary, and this is what brought into being the
ad hoc coalition which has come to be known as the Kimberley
Process after the site of its first meeting.
At the same time, the World Diamond Council was formed, an
industry coalition that had its initial organizing meeting in
September of 2000. These efforts have had some success. The
Kimberley Process is a process in which the World Diamond
Council is intimately involved, and we have agreed on main
ingredients of an international monitoring system to protect
the legitimate supply chain.
In fact, the features of that system are already being
employed pertaining to the rough diamond trade from Sierra
Leone, Angola, Guinea to Belgium. There is broad agreement in
the Kimberley Process to various elements that are very similar
to that that is contained in this legislation.
While these and other points of agreement represent
progress, the picture is still very incomplete. What is missing
is effective implementation of these very excellent goals. The
World Diamond Council believes that legislative action by the
United States is immediately necessary to achieve a catalyst to
the Kimberley Process.
Interested parties for months have debated the details of
the legislation and now we have found common ground in the form
of the Clean Diamonds Trade Act. It encompasses the very best
features of earlier bills. It is enforceable. It provides the
executive branch sufficient flexibility. It is consistent with
the principles adopted by the U.N., and it is consistent with
what is being formulated in the Kimberley Process.
It serves the interests of all diamond producing nations.
It does not impinge on the U.S. commitments to the World Trade
Organization. It is very unusual, as Members of Congress know,
for an industry to come to Washington to request government
intervention in its affairs, but conflict diamonds pose a very
unusual menace.
The industry has gone a long way into meeting this
challenge, and now the government's assistance is necessary to
complete the job. Thank you for your attention, and I would be
happy to answer any questions that you have.
[The prepared statement of Ms. Gardner follows:]
Cecilia Gardner, Executive Director, Jeweler's Vigilance Committee, New
York, New York, and General Counsel, World Diamond Council, New York,
New York
I am Cecilia Gardner, executive director of the Jewelers Vigilance
Committee and general counsel of the World Diamond Council. I am
grateful to the Subcommittee for the opportunity to testify on the
critical need for enactment of legislation to eliminate conflict
diamonds.
The Jewelers Vigilance Committee, with a membership of 11,000
retailers, manufacturers and related enterprises, dates to 1917. We
have the task of upholding ethical standards in our business,
emphasizing both self-regulation and compliance with all relevant laws.
With this mission in mind, it was natural for the JVC to become a
founding constituent of the World Diamond Council. The WDC was
organized during the summer of 2000 for the purpose of constructing an
effective system to protect the legitimate supply chain of diamonds--
worldwide--from pollution by conflict diamonds.
This afternoon I would like to provide a brief summary of the
international efforts to end the conflict diamond trade. This will
provide context for our view that enactment of the Clean Diamonds Trade
Act is necessary to get the job done.
For several years, as awareness of the problem grew, attempts were
made to counter it. For instance, in June of 1998, Security Council
Resolution 1173 targeted Angola's illicit diamond trade; two years
later, Security Council Resolution 1306 aimed at illegal exports from
Sierra Leone. Other measures sought to deal with Liberia's role in
illicit traffic and related issues.
Country-specific executive orders by both the Clinton
Administration and the current administration followed these U.N.
initiatives. Each was appropriate, but proved to be insufficient. For a
brief period in 1999, it was thought that Sierra Leone would be spared
further suffering thanks to the Lome peace accord--which the U.S.
helped to broker--but that agreement was short-lived.
Meanwhile, evidence mounted that proceeds from diamonds were a
leading source of revenue to rebels and adventurers whose only cause
was profit. The societies of Angola, Sierra Leone and the Democratic
Republic of Congo were crumbling in the process. While the immediate
victims were the innocent citizens of those nations, others were
prospective casualties--starting with peaceful African countries that
rely heavily on legitimate extraction and export of diamonds.
Ultimately, a global industry, in which the United States is a major
participant, could be blighted. Therefore a coordinated, comprehensive
international response is necessary.
This realization called into being--in the spring of 2000--an ad
hoc coalition that came to be known as the Kimberley Process, after the
site of its first meeting in South Africa. Soon after, all the
significant private-sector members of the diamond industry met in
Antwerp. That session adopted a set of strong principles to protect the
legitimate supply chain and authorized creation of the WDC, an industry
coalition that had its organizing meeting in September 2000.
Representatives of American organizations and individual companies have
played prominent roles in the WDC from the beginning. I have been among
the WDC team participating in Kimberley working sessions in Africa and
Europe.
These efforts have had some success. With the advice of the WDC,
the Kimberley Process has agreed on the main ingredients of an
international monitoring system to protect the legitimate supply chain.
The major features of that system are now being employed in a pilot
program that controls the export of rough diamonds from Sierra Leone to
Belgium. Last December, the U.N. General Assembly unanimously endorsed
the same principles and called for comprehensive application by all
relevant countries.
There is broad agreement on the following:
LCountries significantly involved in the extraction,
processing, transshipment and importation of diamonds should adopt
compatible monitoring methods.
LThis system should include, among other things, use of
counterfeit-proof certificates of origin of rough diamonds, tamper-
proof containers for shipments, and electronic data bases to track
shipments.
LViolators should be subject to stiff penalties.
LLegitimate diamond producing countries should not be
adversely affected by the monitoring regime.
While these and other points of agreement represent progress, the
picture is still incomplete. What is missing is effective
implementation of these excellent goals.
The World Diamond Council believes that legislative action by the
United States is necessary to achieve this breakthrough. Interested
parties for months debated the details of the legislation and now we
have found common ground in the form of the Clean Diamonds Trade Act.
It encompasses the best features of earlier bills. It is enforceable.
It provides the executive branch sufficient flexibility. It is
consistent with the principles adopted by the U.N. and the Kimberley
Process. It serves the interests of all the African diamond-producing
nations. It does not impinge on U.S. commitments to the World Trade
Organization. It is what American importers and retailers need to
protect their reputation and their products' standing in the
marketplace.
Members of Congress know that is very unusual for any industry to
request government intervention in its affairs. But conflict diamonds
pose a very unusual menace. The industry has gone a long way toward
meeting this challenge. Now the government's assistance is necessary to
finish the job.
Thank you for your attention. I would happy to answer any questions
you might have.
Chairman Crane. Thank you, Ms. Gardner. Ms. Anderson.
STATEMENT OF RORY E. ANDERSON, GOVERNMENT RELATIONS MANAGER AND
AFRICA POLICY SPECIALIST, WORLD VISION UNITED STATES
Ms. Anderson. Thank you, Mr. Chairman, for the opportunity
to present testimony to the Subcommittee on solutions to the
trade in conflict diamonds. My name is Rory Anderson,
government relations manager and Africa policy specialist for
World Vision, the largest privately funded international relief
and development organization in the U.S.
Currently, World Vision implements more than 6,000 relief,
rehabilitation and long-term development projects in 95
countries.
Mr. Chairman, you and the Committee have had a chance to
review my testimony which describes in specific detail how the
trade in conflict diamonds in Sierra Leone, Angola, and the
Congo contributes to war, poverty, and human misery. I was in
Sierra Leone and Liberia only 2 months ago, and it was my
second visit to Sierra Leone in less than a year.
The images of children, some as young as 5 months, with
arms and legs cut off by rebel soldiers will remain with me
forever. After seeing these faces of suffering in Sierra Leone,
I can honestly say that terrorism is not only a phenomenon that
is rooted in extremist Islamic fundamentalism. Terrorism, which
is the planned systematic violent attacks against unarmed non-
combatant civilians, has been a central platform to the wars in
Sierra Leone, Angola, and the DRC (Democratic Republic of the
Congo).
Terrorism has become a conventional weapon in 21st century
warfare, making war more brutal and more costly. Although
terrorism has become a conventional method, it is mostly
sustained through underground networks of money laundering and
weapon smuggling and trading in conflict diamonds.
As an internationally valued commodity, diamonds have
become the dollar, particularly in Sierra Leone. Because
diamonds can move so easily and quickly, a dealer can buy low,
sell high and reap high windfall profits, particularly during
the height of a war. For the seemingly intractable war in
Sierra Leone, the point of the war may not be to actually win
it, but to engage in profitable crime under the cover of
warfare.
As documented in the U.N. Panel of Experts Report submitted
to the U.N. Security Council in December of 2000, the
Revolutionary United Front in Sierra Leone is able to obtain
large quantities of arms and military equipment and related
material largely as a result of the purchasing power it derives
in the sale of conflict diamonds, and the willingness of some
major arms producing countries to sell weapons and with
disregard to the final end users.
Given this awful reality, what can we do? What are the
solutions? Mr. Chairman, I believe that there are two
significant solutions which will make a tremendous difference
in eradicating the trade in conflict diamonds.
The first solution is swift enactment of the Clean Diamonds
Trade Act. Mr. Chairman, World Vision and the Campaign to
Eliminate Conflict Diamonds, which is a coalition of more than
150 non-governmental organizations and faith groups,
unanimously applaud and welcomes the leadership that this
Committee has shown by introducing the Clean Diamonds Trade
Act.
If you do not object, I would like to submit for the record
a letter of endorsement signed by over 70 religious
organizations from across the country, ranging from Jewish,
Catholic, and a variety of protestant churches who all call for
the swift enactment of U.S. legislation to prevent conflict
diamonds from being sold in America.
Mr. Chairman, America consumes 65 percent of the world's
supply of diamonds. We in the campaign believe that the Clean
Diamonds Trade Act will make a significant contribution because
it sets up a system of transparent controls for the importation
of all diamonds including rough, polished and diamond jewelry.
Diamonds are the most concentrated form of wealth known to
humanity. They are also the most easily smuggled.
But the Clean Diamonds Trade Act specifies certification
standards for the importation of diamonds which will create a
clean stream of diamonds entering into the U.S. market. The
system's implementation will be monitored by a diverse
presidential commission, which will consist of representatives
from NGOs, industry and government. Tough penalties are also
specified for those who are dealing in conflict diamonds.
Further, we believe that this bill gives the administration
maximum flexibility to implement effective controls.
Mr. Chairman, a second solution is strong U.S. leadership
at the international level. One of the greatest strengths of
the Clean Diamonds Trade Act is that it is explicitly linked to
the ongoing global diamond certification agreement, also known
as the Kimberley Process.
A diamond is an international commodity that requires
international cooperation. If there is to be proper oversight,
U.S. legislation is crucial, and we believe that U.S.
legislation is shaping and helping to invigorate the
international process and it mirrors the specifications which
are being discussed at the international level.
This said, we also acknowledge that the only way to
effectively root out the trade in conflict diamonds is to have
universal standards of packaging and oversight of all diamond
producing, polishing and importing countries.
A tiered system prejudiced against African producing
systems and lax on importing and polishing countries creates
new loopholes for transshipment of blood diamonds. If this were
the case, conflict diamonds could simply be laundered through
Canada, Australia, or any other peaceful country. A global
certification system with standard import packaging and
controls including international independent monitoring of
diamond exports from mine to finger is the only way to
effectively end the trade in conflict diamonds while protecting
the legitimate diamond industry.
Mr. Chairman, I had the privilege to attend and participate
as an NGO representative in the recent meetings held in London.
Though the process is slow in getting definitive consensus, we
believe that the Clean Diamonds Trade Act is helping to bring
countries around, and we believe that invigorated U.S.
leadership is necessary at the highest levels to accomplish an
effective workable system.
Mr. Chairman, in conclusion, we at World Vision and the
entire Campaign to Eliminate Conflict Diamonds firmly believe
that American gifts of love should not be financing acts of
terror. The diamond ring on your finger or my finger should not
come at the expense of the finger of a child in Sierra Leone.
The Campaign to Eliminate Conflict Diamonds firmly calls
upon Congress to enact the Clean Diamonds Trade Act and we call
upon the Bush Administration to demonstrate a high level of
leadership in the negotiations of the international diamond
certification system. Thank you.
[The prepared statement of Ms. Anderson follows:]
Statement of Rory E. Anderson, Government Relations Manager, and Africa
Policy Specialist, World Vision United States
Conflict Diamonds: Funding Conflict, Fueling Change
Intro/Opening
Thank you, Mr. Chairman, for the opportunity to present testimony
to the Trade Subcommittee on solutions to the trade in conflict
diamonds. My name is Rory Anderson, Government Relations Manager and
Africa policy specialist for World Vision, the largest privately-funded
international relief and development organization in the U.S.
Currently, World Vision implements more than 6,000 relief,
rehabilitation and long-term development projects in 95 countries.
Mr. Chairman, it is nothing new that natural resources, from
diamonds to oil, have often had 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 type of ideological loyalty. There
has been clear evidence, including on going warfare, in the diamond
rich countries of Sierra Leone, Angola and the Democratic Republic of
the Congo that diamonds are at the heart of the matter, and access to
diamonds and other natural resources have become a primary incentive
for war.
Definition
There are various nuanced definitions of the term conflict
diamonds. In this testimony, my definition seeks to address current as
well as potential situations where the sale of diamonds could be used
to sustain violent conflict. Conflict diamonds are stones which
originate from areas under the control of forces that are in opposition
to democratically elected and internationally recognized governments;
or diamonds used by state institutions or non-state forces to fund
campaigns of human rights abuses against civilians. Some argue that
diamonds don't kill people, rather, people and guns kill people. But
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. 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 easily
be smuggled in a shoe, sock, or any kind of body orifice, and can go
undetected through most metal detectors or x-ray machines.
The Humanitarian Impact
For every conflict diamond sold, there is a corresponding
humanitarian crisis. In Angola, the 1990s proved to be the most violent
decade and the worst in terms of humanitarian suffering. By November
1999, 3.7 million, one third of the entire population, were classified
by the UN as ``war affected'', defined as ``those who depend on
emergency humanitarian assistance due to war and the resultant loss of
assets and earning opportunities.'' \1\ Of the 3.7 million, 2.5 million
are internally displaced, 65% of whom are children under the age of
fourteen, causing UNICEF to declare Angola ``the worst place for a
child to grow up.'' \2\ The denial of basic rights to food, education
and health, coupled with an estimated 6-15 million landmines littered
throughout the country, claim the lives of 30% of Angola's children
before they reach the age of five.\3\ In their August 2001 report, the
UN Office for the Coordination of Humanitarian Affairs identified all
seventeen Angolan provinces as being insecure and inaccessible because
of diamond extraction, mine infestation, and sustained violence.
---------------------------------------------------------------------------
\1\ UN Consolidated Appeal for Angola for Jan-Dec 2000, November
1999.
\2\ Angola, A Tangled Web: Many Players in a Complex War, World
Vision, July 2000, p.10.
\3\ Ibid., p.17.
---------------------------------------------------------------------------
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. 30% 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. 55% of the population live in conflict affected areas and are
inaccessible by humanitarian aid.
Within the current deliberations on conflict diamonds there have
been fewer references to the Democratic Republic of the Congo (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, I believe, warrants the label of conflict
diamond for any stone originating from the DRC. 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. Thirty-
four percent of these deaths have been children under the age of five
(over 590,000), and 47% 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.''
Crime and Terrorism
In the wake of the September 11 terrorist attacks, there has been a
necessary increased public attention to terrorism. However, terrorism
is not a phenomenon that is only rooted in extremist Islamic
fundamentalism; terrorism--which is planned, systematic violent attacks
against unarmed, non-combatant civilians--has been a central platform
to the wars in Sierra Leone, Angola, and the DRC. Terrorism has become
a conventional weapon in 21st century warfare, making war
more brutal and more costly. Although terrorism has become a
conventional method, it is mostly sustained through underground
networks of money laundering and weapons smuggling. As an
internationally valued commodity, diamonds have become the dollar,
particularly in Sierra Leone. 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
war in Sierra Leone, the point of the war may not be to actually win
it, 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.\4\
---------------------------------------------------------------------------
\4\ Smillie et al, p.1.
---------------------------------------------------------------------------
As documented in the UN Panel of Experts report submitted to the UN
Security Council in December of 2000, the RUF is able to obtain large
quantities of arms, military equipment and related material as a result
of the following key factors:
Lthe purchasing power it derives from the sale of conflict
diamonds;
Lthe willingness of some major arms producing countries to
sell weapons with disregard as to the final users;
Lthe willingness of some countries to provide their end-
user certificates and/or to facilitate the safe passage of weapons
through their territory;
Lthe largely unregulated activity of international arms
brokers and their intermediaries;
Lcorruption;
Lthe inability of Sierra Leone and its neighbours to
monitor and control their airspace;
LLiberia's interest in destabilizing its neighbours.
Solutions/Recommendations
An unlikely coalition between NGOs and the diamond industry,
calling upon governments to eliminate the trade in conflict diamonds
has proven to be an effective catalyst for change. This coalition has
been the impetus for refined U.S. legislation that is currently pending
before this committee, as well as the current discussions around
implementing a global diamond certification system which aims to root
out the blood trade while protecting the legitimate trade. These two
efforts are solutions that are inextricably linked to accomplishing an
end in the trade in conflict diamonds. The U.S. consumes 65% of the
world diamond supply. U.S. economic might and political clout obligate
us to take real leadership in ending the trade in conflict diamonds,
protecting American purchases of love from being a subsidy for terror.
The Clean Diamonds Trade Act, H.R. 2722
Mr. Chairman, World Vision applauds and welcomes the leadership
that this committee has shown by introducing and quickly acting upon
the Clean Diamonds Trade Act, H.R. 2722. We believe that this bill will
make a significant contribution because it sets up a system of
transparent controls for the importation of all diamonds, including
rough, polished and diamond jewelry. Diamonds are the most concentrated
form of wealth known to humanity; they are also the most easily
smuggled and, therefore, in need of some amount of reasonable controls.
The Clean Diamonds Trade Act specifies certification standards for the
importation of diamonds, which will create a ``clean stream'' of
diamonds entering into the U.S. market. The system's implementation
will be monitored by a diverse presidential commission which will
consist of representatives from human rights organizations, industry
and government. Tough penalties are also specified for those who are
dealing in conflict diamonds. Further, we believe that this bill gives
the Administration maximum flexibility to implement effective controls.
Strong U.S. Leadership in the Kimberly Process
One of the greatest strengths of the Clean Diamonds Trade Act is
that it is explicitly linked to the on-going international global
diamond certification system, known as the Kimberly Process. A diamond
is an international commodity that requires international cooperation
if there is to be proper oversight. Although U.S. legislation is
crucial, the only way to effectively root out the trade in conflict
diamonds is to have universal standards, packaging and oversight of all
diamond producing, polishing and importing countries. A tiered system,
prejudiced against African producing countries and lax on importing and
polishing countries, creates new loopholes for transshipment of blood
diamonds. Soon, conflict diamonds will simply be laundered through
Canada, Australia, and other peaceful countries. A global certification
system, with standard import packaging and controls, including
international independent monitoring of diamond exports from mine to
finger, is the only way to effectively end the trade in conflict
diamonds, while protecting the legitimate diamond industry.
Mr. Chairman, I had the privilege to attend and participate as an
NGO representative in the recent Kimberly Process meetings held in
London last month. Though progress is slow in getting definitive
consensus on workable international standards, certain key governments
involved in the diamond trade have made significant progress in
contributing towards a viable international system. World Vision, and
my many partners in the Campaign to Eliminate Conflict Diamonds
encourage the Administration to constructively contribute and engage on
this issue at the highest levels, particularly as the process reaches
its conclusion in December. The diamond and jewelry industry are
important parts of the U.S. economy; constructive U.S. leadership is
essential to make the Kimberly Process work. Anything less will not
only be an international embarrassment, but it will tacitly prolong the
trade in conflict diamonds.
Chain of Warranties
In the recent round of inter-governmental meetings held in London
last month, the World Diamond Council proposed a chain of warranties
systems to support producer government export regimes. It was a short
proposal, but as described, each industry trader would sign a series of
invoices, giving a guarantee that stones which a member of the industry
are handling do not contain conflict diamonds. This proposal needs to
be further developed, but it is a sound idea, and, if properly
developed, has the potential to lend support to governments in their
creation of an export certificate regime. A reliable industry chain of
warranties, from mine to point of export, can also provide
infrastructure for international monitoring, and, with the proper
documentation, it can verify official country and international
statistics. I encourage the World Diamond Council to seriously develop
this idea and submit a lengthier proposal for the Kimberly Process
government participants to consider.
Eliminate the Root Cause
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. In
this area, I recommend the following solutions:
1. LReinforce 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. LAssist rough diamond exporting countries in the areas of good
governance, linking all types of financial assistance to poverty
reduction and social reinvestment.
3. LBuild capacity among grassroots 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 to reinforce the international system, there
is a foundational need to address the economic reasons why individuals
trade in conflict diamonds. 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
U.S. food will be used. The goal of this project is to significantly
improve household food security and sustained productive capacity of
the Sierra Leonian war-affected 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 war-affected, 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
non-formal 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 co-existence; 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% 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 community-based 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, including NGOs,
industry and governments, 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.
Chairman Crane. Thank you, Mrs. Anderson. Mr. Akwei.
Mr. Rangel. Mr. Chairman.
Chairman Crane. Oh, yes. Mr. Rangel.
Mr. Rangel. Ms. Anderson had asked unanimous consent that a
list of supporters for the legislation before us be entered
into the record.
Chairman Crane. Without objection, so ordered. Mr. Akwei.
[The information follows:]
Interfaith Statement on Conflict Diamonds
As faith communities concerned about peace and justice for all
God's people, we, the undersigned, want to express our concern over the
trade in conflict diamonds--gems that are used to fund warfare and
civilian atrocities--and we want to collectively show solidarity with
our brothers and sisters who are suffering in Sierra Leone as a result
of a decade-long civil war where rebels seek to control diamond
resources. In particular, the brutal tactics of the Revolutionary
United Front (RUF), who routinely practice mutilation of innocent
civilians, notably amputation of limbs and other body parts; forced
recruitment of child soldiers, and abduction of women to be soldiers'
``wives,'' are all tactics intended to maintain their wicked reign over
resources. This cannot and should not be tolerated by any member of the
international community, least of all by those who believe all people
are God's creation.
The war in Sierra Leone is not about political liberation or
religious freedom--it is a war about conflict diamonds, where greed,
warfare and civilian terror have become a cover for controlling and
smuggling diamond resources. As Muctar Jalloh, a victim of the Sierra
Leone conflict explains, the bloodshed in his country ``is simply a war
over control of diamonds. Little pieces of rock that people around the
world like to wear on their fingers and hang from their ears. As you
can see, because of these rocks I no longer have an ear or five of my
fingers.'' The RUF controls two-thirds of Sierra Leone, including the
lucrative diamond-mining regions in the north. The sale of these
illicit gems to the diamond industry--often routed through other
countries such as Liberia--then supplies a constant stream of funding
for the rebels' arms purchases, which in turn leads to the continuation
of war, further displacement of the civilian population, and general
instability in the West African region. Angola, the Democratic Republic
of the Congo and many surrounding African countries also have similar
experiences of human suffering as result of the trade in conflict
diamonds.
While the worldwide diamond industry has made encouraging strides
toward establishing an international diamond certification system that
seeks to ensure that conflict diamonds are kept out of the retail
market, the pace of reform is slow. Delays in enacting an international
system leave millions of people at the mercy of atrocious human rights
abusers such as the Revolutionary United Front (RUF).
In response to this situation, we, the undersigned faith
communities in the U.S., are joining together in support of clean
diamond legislation, including the Clean Diamonds Act, which would
prohibit the direct or indirect importation of any and all diamonds and
diamond jewelry without a global certification system in place. By
taking leadership, the U.S. can send a message that the trade in
conflict diamonds is morally egregious and will not be tolerated. Moral
authority under these circumstances is not an option; it is an
imperative. The longer it takes to enact an international certification
system, the more hardship is inflicted on innocent people in Sierra
Leone, Angola, and the Congo, and the more risk of harm to the
legitimate diamond-producing nations of Botswana, Namibia, and South
Africa. It has been written: ``Do not profit by the blood of your
neighbor . . . you shall not hate your kinsman in your heart. Reprove
your neighbor but incur no guilt because of him. You shall not take
vengeance or bear a grudge against your kinsfolk. Love your neighbor as
yourself'' (Leviticus 19:16-18). Across our faith traditions, we teach
all to love others and speak up for those who cannot speak up for
themselves. We stand ready to commit what we can to this fight against
the use of conflict diamonds which inflict pain and suffering on the
innocent.
Signatories of the Interfaith Statement on Conflict Diamonds
as of October 1, 2001
Cantor Scott E. Colbert, Executive Vice-President, American Conference
of Cantors
Rabbi Paul Menitoff, Executive Vice-President, Central Conference of
American Rabbis
Rabbi Lane Steinger, Director, Midwest Council of the Union of American
Hebrew Congregations, St. Louis, MO
Rabbi Susan B. Stone, Temple Beth Shalom, Hudson, OH
Rabbi Norman T. Roman, West Bloomfield, MI
Rabbi Sue Levi Elwell, Director, Pennsylvania Council of the Union of
American Hebrew Congregations, Philadelphia, PA
Rabbi Jody Cohen, Ft. Lauderdale, FL
Rabbi Melinda Mersack, Shaker Heights, OH
Rabbi Elliott Kleinman, Director, Northeast Lakes Council of the Union
of American Hebrew Congregations, Cleveland, OH
Rabbi Karyn Kedar, Director, Great Lakes Council of the Union of
American Hebrew Congregations, Northbrook, IL
Rabbi David Fine, Pacific Northwest Council of the Union of American
Hebrew Congregations, Seattle, WA
Rabbi Harry Rosenfeld, Buffalo, NY
Rabbi Randi Musnitsky, Washington Township, NJ
Rabbi David Wolfman, Needham, MA
Rabbi Marc Israel, Director of Congregational Relations, Religious
Action Center of Reform Judaism
Rabbi David Saperstein, Director and Council, Religious Action Center
of Reform Judaism
Eileen B. Weiss, Co-founder, Jews Against Genocide
Roney A. Heinz, International Director, Canaan Christians Fund
Rev. Dr. Leon Spencer, Director, Washington Office on Africa
Rev. Richard P. Roy, M.Afr., Assistant Provincial, Missionaries of
Africa
Rev. Daniel Hoffman, Africa Office, Global Ministries, United Church of
Christ/Disciples of Christ
Rev. Rich Cizik, Vice-President, National Association of Evangelicals
Rev. Herbert Daughtry, National Presiding Minister of the House of the
Lord Church and the Church on the Mound, Brooklyn, NY
Kenneth Hackett, Executive Director, Catholic Relief Services
Kathy Thornton, RSM, National Coordinator, NETWORK
Kathryn Wolford, President, Lutheran World Relief
Larry J. Goodwin, Executive Director, Africa Faith & Justice Network
Serge Duss, Public Policy Director, World Vision
Stephen G. Price, Office of Justice and Peace, Society of African
Missions
Rev. Ian B. Straker, member, New York Annual Conference of the United
Methodist Church
Rev. Scott Summerville, Pastor, Asbury United Methodist Church,
Tuckahoe, NY
Bishop Elias G. Galvan, President, Council of Bishops, and Seattle
Episcopal Area
Bishop Warner H. Brown, Jr., Denver Episcopal Area
Bishop John L. Hopkins, Minnesota Episcopal Area
Bishop William W. Hutchinson, Louisiana Episcopal Area
Bishop S. Clifton Ives, West Virginia Episcopal Area
Bishop Alfred Johnson, New Jersey Episcopal Area
Bishop Hae-Jong Kim, Pittsburgh Episcopal Area
Bishop Linda Lee, Michigan Episcopal Area
Bishop Ernest S. Lyght, New York Episcopal Area
Bishop Joel N. Martinez, San Antonio Episcopal Area
Bishop Felton Edwin May, Washington Episcopal Area
Bishop Susan Morrison, Albany Episcopal Area
Bishop Albert Frederick Mutti, Kansas Episcopal Area
Bishop Edward W. Paup, Portland Episcopal Area
Bishop Joe E. Pennel, Jr., Richmond Episcopal Area
Bishop Sharon Z. Rader, Wisconsin Episcopal Area
Bishop Beverly J. Shamana, San Francisco Episcopal Area
Bishop B. Michael Watson, South Georgia Episcopal Area
Bishop Peter D. Weaver, Philadelphia Episcopal Area
Bishop Timothy W. Whitaker, Florida Episcopal Area
Jim Winkler, General Secretary of the General Board of Church and
Society
Aleticia Tijerina, Arizona
Esther Bohn Groves
Mary Alice and Kent Warner, Center Harbor, New Hampshire
Rev. Laurence C. Zirschky, Pastor of Spiritual Formation, Chapel Hill
Presbyterian Church, Gig Harbor, WA
Rev. Dr. Earl Palmer, Senior Pastor, University Presbyterian Church,
Seattle, WA
Dr. Phil Eaton, President, Seattle Pacific University, Seattle, WA
Gordon Aeschliman, President, Target Earth, Villanova, PA
Dr. John Crosby, Senior Pastor, Christ Presbyterian Church of Medina,
MN
Leighton Ford, President, Leighton Ford Ministries, Charlotte, NC
Paul Kennel, President, World Concern, Shoreline, WA
Dr. William L. Flanagan, Mission Pastor, St. Andrew's Presbyterian
Church, Newport Beach, CA
Bart Campolo, President, Mission Year, Philadelphia, PA
Richard J. Mouw, President and Professor of Christian Philosophy,
Fuller Theological Seminary, Pasadena, CA
Tony Campolo, Professor of Sociology, Eastern College, St. Davids, PA
Rev. Dr. M. Craig Barnes, Senior Pastor, National Presbyterian Church,
Washington, DC
Ronald J. Sider, President, Evangelicals for Social Action, Wynnewood,
PA
Millard Fuller, Founder and President, Habitat for Humanity, Americus,
GA
Peter Vander Meulen, Coordinator, Office of Social Justice and Hunger
Action, Christian Reformed Church of America
Paul Kortenhoven, Director, Christian Reformed Church Mission to Sierra
Leone, Christian Reformed Church of America
Kay M. Shively, Special Assignment and Recruitment Specialist for
Global Missions of the Church of God, Anderson, IN
Dr. Peter Borgdorff, Executive Director of Ministries, Christian
Reformed Church of America
Dr. Steve Hayner, Senior Associate Pastor, High Point Church, Madison,
WI
David Beckmann, President, Bread for the World, Washington, DC
Rev. Doug Calhoun, Pastor, Church of Christ Oak Brook, Oak Brook, IL
Debra Braaksma, Africa Office Mission Services Unit, Reformed Church in
America
Ken Hackett, President, Catholic Relief Services (relief and
development arm of the U.S. Conference of Catholic Bishops),
Baltimore, MD
Rev. Dr. Michael Curry, Director of Outreach Ministries, Church of God,
Anderson, IN
STATEMENT OF ADOTEI AKWEI, AFRICA ADVOCACY DIRECTOR, AMNESTY
INTERNATIONAL USA
Mr. Akwei. My name is Adotei Akwei, and I am the advocacy
director for Africa with Amnesty International USA. I am also
here representing a coalition of over 100 organizations that
come from a broad spectrum of society. The Campaign to
Eliminate Conflict Diamonds includes faith-based organizations,
unions, environmental, humanitarian and human rights
organizations, and these groups are in turn made up of
students, retired persons, young professionals, recently
engaged men and women, newly married couples, and yes, mom and
pop jewelry store owners.
Over the last year, these individuals have written letters,
held vigils and teach-ins and communicated with their
congressional representatives to raise awareness about the
issue of conflict diamonds and to try to push the United States
government to lead the international community toward taking
effective action against conflict diamonds.
On their behalf, I would like to express our appreciation
to you for holding these hearings. The members of the Campaign
understand that in these difficult and extraordinary times, it
is not as easy to work on other issues when so much remains to
be done here in the United States. It is a tribute to you and a
strong reassurance to the rest of the global community to see
that even in this period, the United States will not disengage
from international affairs or shirk its responsibility to be a
leader on human rights issues.
I would like to stress this last point, to be a leader on
human rights issues, because this is what the issue of conflict
diamonds is about, an effort by the United States Government,
the diamond industry and the non-governmental sector to take on
and end one of the most painful and avoidable human rights
abuses being inflicted on millions of children, women and men
in sub-Saharan Africa.
The misappropriation of a valuable natural resource like
diamonds, the use of revenues acquired from the sale of that
resource to purchase weapons, drugs, and supplies by armed
opposition groups, who then commit human rights abuses, is
unacceptable and avoidable.
The conflict diamond crisis is unacceptable because in
addition to the horrific suffering that continues to be
inflicted to innocent persons in these conflict zones is the
incalculable loss of development opportunities that legitimate
and efficient use of this resource could represent.
It is avoidable because we sitting here in Washington can
make a difference by helping build an international
certification system that would ensure a clean stream of
diamonds from the point of extraction to retail sale and that
would be transparent and independently monitored.
H.R. 2722, which complements and helps buildup to ongoing
Kimberley Process negotiations, does this by empowering the
U.S. Customs Service to permit diamond imports only from those
countries thathave adopted strong and effective controls on the
exportation and importation of rough diamonds to ensure that conflict
diamonds do not enter the international stream of commerce.
For the last 2 years, various parties in this initiative
have worked to try to cut off the revenue flows from the
illicit sales of diamonds to armed groups like the
Revolutionary United Front in Sierra Leone and to break the
linkage between the innocent American consumer, the legitimate
diamond industry and RUF atrocities.
In other words, Mr. Chairman, this bill, H.R. 2722,
represents the coming together of a broad variety of groups,
individuals and companies all with the same goal, ending the
brutal and avoidable human rights abuses that are linked to
conflict diamonds.
This is why I am sitting here before you today, along with
my colleagues from the diamond industry and with Members of
Congress, to urge you to take this legislation and the energy
and support of all the sectors behind it I have mentioned and
make a difference. Pass H.R. 2722 before you go out on recess.
I would like to just make a few comments on H.R. 2722
before wrapping up. First, input for this legislation has come
from the industry, from sectors of the administration, notably
Customs, and international as well as U.S. non-governmental
organizations.
The bill has been shared and previewed with members at the
Kimberley Process and we, therefore, feel that there has been a
common agreement and approach on the way in which the bill is
drafted and also for the action to be taken by the United
States Congress.
I would also say that this is supportive and complementary
to the Kimberley Process and all three of my colleagues have
also mentioned that. It in no way undermines this and, in fact,
leaves the President the necessary flexibility to negotiate and
to come into compliance with his WTO obligations.
As drafted, all efforts have been made to make this bill
responsible and effective. Our colleagues in the industry who
helped draft this legislation were obviously careful to ensure
that our actions and this bill would not hurt the legitimate
trade in diamonds.
Our colleagues in the industry are also aware of the need
for prompt action. The longer this problem persists, the more
damage is done to the industry and its products. I would also
say that we have tried to make this bill as procedurally
correct while remaining as effective as possible.
Input from the Department of State and USTR has been sought
and I must confess has not been met with the same energy and
enthusiasm for detail as we have had here on the Hill.
Unfortunately, that pattern seems to have continued today.
I would just again end by saying that this bill is a
responsible bill. It will make a big difference and there is
certainly no time left for the people in Sierra Leone, Angola,
and the DRC to wait for yet another couple of months while the
negotiations in Kimberley drag on and eventually come to the
same principles and standards that are in H.R. 2722. Thank you.
[The prepared statement of Mr. Akwei follows:]
Adotei Akwei, Africa Advocacy Director, Amnesty International USA \1\
Mr. Chairman, and other distinguished members of the Ways and Means
Committee on behalf of the 380,000 members of Amnesty International USA
and the million members of Amnesty International worldwide I would like
to thank you for holding these hearings and for giving me and my
colleagues the opportunity to testify.
---------------------------------------------------------------------------
\1\ This testimony could not have been prepared without the help of
Amanda Blair, Eileen Welch and Juliana Phillips.
---------------------------------------------------------------------------
I am also here representing a coalition of over 100 organizations
that come from a broad spectrum of society. The Campaign to Eliminate
Conflict Diamonds includes faith-based organizations, unions,
environmental, humanitarian and human rights organizations. These
groups in turn are made up of students, retired persons, young
professionals, recently engaged women and men, newly married couples
and yes, mom and pop jewelry store owners. Over the last year these
individuals have written letters, held vigils and teach-ins and
communicated with their congressional representatives to raise
awareness about the issue of conflict diamonds and to try to push the
United States Government to lead the international community toward
taking effective action against conflict diamonds. On their behalf I
would also like to express our appreciation to you for holding these
hearings. The members of the Campaign understand that in these
difficult and extraordinary times it is not as easy to continue to work
on other issues when so much remains to be done here in the United
States. It is a tribute to you and strong reassurance to the rest of
the global community to see that even in this period the Untied States
will not disengage from international affairs or shirk its
responsibility to be a leader on human rights issues.
I would like to stress this last point, ``to be a leader on human
rights issues'' because this is what the issue of conflict diamonds is
about, an effort by the United States Government, the diamond industry
and the non governmental sector to take on and end one of the most
painful and avoidable human rights abuses being inflicted on millions
of children, women and men in sub-Saharan Africa. The misappropriation
of a valuable natural resource like diamonds, the use of revenues
acquired from the sale of that resource to purchase weapons, drugs and
supplies by armed opposition groups and then commit human rights abuses
is unacceptable and avoidable. The conflict diamond crisis is
unacceptable because in addition to the horrific suffering that
continues to be inflicted to innocent persons in these conflict zones
is the incalculable lost developmental opportunity that the legitimate
and efficient use of this resource represents.
It is avoidable because we sitting here in Washington can make a
difference by helping build an international certification system that
would ensure a clean stream of diamonds from the point of extraction to
retail sale and that would be transparent and independently monitored.
H.R. 2722 which compliments and helps build up to ongoing Kimberley
Process, does this by empowering the U.S. Customs Service to permit
diamond imports only from those countries that have adopted strong and
effective controls on the exportation and importation of rough diamonds
to ensure that conflict diamonds do not enter the international stream
of commerce.
For the last two years, various parties in this initiative have
worked to try to cut off the revenue flows from the illicit sale of
diamonds to armed groups like the Revolutionary United Front (RUF) in
Sierra Leone and break the linkage between the innocent American
consumer, the legitimate diamond industry and RUF atrocities.
LCongressman Hall, and his staff who more than anyone else
deserve the credit for making this an issue here in Washington and
getting us to where we are today, introduced the CARAT Acts (H.R. 3188
and H.R. 5147) and the Conflict Diamond Elimination Act (H.R. 5564) in
the year 2000. He and Congressman Frank Wolf were also key architects
in building the blocs of support on the Hill for H.R. 918, the Clean
Diamonds Act, the Clean Diamonds Act of 2001 in the Senate (S. 1084),
which was introduced by Senators Durbin, DeWine and Feingold, and
finally the bill we are discussing here today H.R. 2722, the Clean
Diamonds Trade Act which was introduced by Congressmen Houghton,
Rangel, Hall and Wolf.
LIn the spring of 2000, the NGO community here in the
United States launched a grassroots campaign to pass legislation in
Congress that would help end the trade in conflict diamond and support
the Kimberley Process.
LIn July of 2000 the international diamond industry
meeting in Antwerp to try and address the problem of conflict diamonds
launched the World Diamond Council and presented its Antwerp
Resolution. Following the United Nations Security Council and General
Assembly Resolutions # on conflict diamonds, the diamond producing
countries, led by South Africa, initiated the Kimberley Process to
develop a global system to regulate and prevent the trade in conflict
diamonds.
In other words Mr. Chairman this bill, H.R. 2722, represents the
coming together of a broad variety of groups, individuals and companies
all with the same goal: ending the brutal and avoidable human rights
abuses that are linked to conflict diamonds. This is why I am sitting
here before you today along with my colleagues from the diamond
industry, and with Members of Congress, to urge you to take this
legislation and the energy and support of all of the actors I have
mentioned and make a difference: pass H.R. 2722 before you go out on
recess.
As there are other persons on this panel who I know will address
both the international Kimberley Process and some of the technicalities
of the bill, I would like to take this opportunity to review why we are
here and why this legislation is needed now.
The Cost of Conflict Diamonds
The conflict diamonds crisis has been linked to wars in three
African states, Sierra Leone, Angola and the Democratic Republic of the
Congo. My testimony will focus on the conditions in those countries in
an effort to show the impact of the unfettered trade in diamonds. I
would like to add that while these may be the most visible casualties
of conflict diamonds, the negative impact of this trade is much
broader: it affects other countries that act as transshipment centers,
many of which outside of Africa. As the following details highlight the
damage done by conflict diamonds in these three countries alone is
justification enough to pass this legislation.
Sierra Leone
The ten year war in Sierra Leone has been waged through extremely
brutal tactics by the opposition Revolutionary United Front (RUF) that
has yet to communicate a cause beyond securing control over the
country's diamond producing areas. The RUF has both fought for and been
able to continue fighting because of diamonds. The link has been
documented by a number of groups apart from AI including the UN panel
of experts (detail).
Amnesty International has been monitoring and trying to protect
fundamental human rights in Sierra Leone from well before the current
10 year civil war began. All armed groups have committed war crimes and
crimes against humanity, including RUF forces, the Armed Forces
Revolutionary Council (AFRC), government forces, including the Sierra
Leone Army and the Civil Defense Forces (CDF), and international peace-
keeping forces of the Economic Community of West African States, ECOWAS
referred to as ECOMOG.
The RUF forces have been responsible for war crimes and crimes
against humanity throughout a conflict during which civilians have
borne the brunt of the violence. According to the U.S. Committee for
Refugees (USCR) that as of August 1, between 900,000-1.4 million Sierra
Leoneans had been uprooted, a figure that included both refugees and
internally displaced persons.
AI estimates that thousands of men, women and children have been
deliberately and arbitrarily killed or had their hands, arms or other
limbs brutally cut off. Rape and other forms of sexual violence against
girls and women have been widespread and systematic. Most of the 10,000
children--both boys and girls--estimated to have been associated with
fighting forces in Sierra Leone have been abducted by the RUF and more
than half of those have been used as combatants. The RUF sustained and
continues to sustain itself through the sale of conflict diamonds,
using the revenues from those sales to purchase weapons, supplies and
drugs, despite UN sanctions diamond exports from areas of Sierra Leone
not controlled by the government.
Human rights abuses linked to the fighting with the RUF go back to
the period of rule by the National Provisional Ruling Council (NPRC),
headed by Captain Valentine Strasser, which came to power following a
military coup in April 1992 and ruled until parliamentary and
presidential elections and the return of a civilian government in March
1996. Government forces were responsible for extrajudicial killings,
torture and ill-treatment of captured or suspected rebel forces. They
were also implicated in serious abuses against civilians, including
deliberate amputations of hands, in the period leading up to the
elections in February 1996. No one--from either government or rebel
forces--alleged to have committed serious violations of international
humanitarian law during the period of NPRC rule has yet been brought to
justice.
Abuses were committed by the Armed Forces Revolutionary Council,
headed by Johnny-Paul Koroma, who overthrew the elected government of
President Ahmad Tejan Kabbah in a military coup in May 1997 and ruled
until February 1998 when it was removed from power by forces of the
Economic Community of West African (ECOWAS) Ceasefire Monitoring Group
(ECOMOG) and the government of President Kabbah was restored. Shortly
after the military coup, the RUF joined forces with the AFRC. The rule
of law collapsed completely. Hundreds of people were arbitrarily
arrested and detained; many were tortured and ill-treated. Physical
assault, amounting to torture or ill-treatment, of civilians by AFRC
soldiers and RUF members was routine. There were also reports of
extrajudicial executions of those suspected of opposing the AFRC.
Victims of human rights violations included people associated with the
government of President Kabbah, journalists, students and human rights
activists.
Following the removal of the AFRC and RUF from power, their forces
unleashed a campaign of terror against civilians. War crimes and crimes
against humanity reached unprecedented levels. Several thousand
civilians were brutally killed or mutilated. Hundreds of others,
including children, were abducted from their villages and forced to
join their attackers as either combatants or laborers, in conditions
amounting to cruel, inhuman or degrading treatment. Hundreds of
abducted girls and women were forced into sexual slavery.
An incursion by rebel forces into Freetown in January 1999, which
the RUF termed ``Operation no living thing'', brought to the capital
the crimes that had been committed in the north and east of the country
inthe previous eight years. Although it was impossible to ascertain the
exact numbers of civilian deaths during the incursion, the UN body
UNOMSIL (the predecessor of UNAMSIL) estimated that up to 5,000 people,
at least 2,000 of them civilians were killed. Medical authorities in
Freetown later put the figure of those killed at over 6,000.
Several hundred civilians, including children, were admitted to
hospitals in Freetown after having their limbs cut off or suffering
from other forms of mutilation. In February 1999 medical staff at
hospitals in Freetown were reported to be treating some 500 victims of
amputation and mutilation who required surgery. There were likely to be
many other victims who did not reach medical help and who died from
their injuries.
Rape and other forms of sexual violence were systematic and
widespread during the incursion. Women and girls were rounded up and
gang-raped by rebel forces. Rebel forces abducted large numbers of
civilians, including children, from Freetown. Some were selected for
training as fighters, others used as porters to carry looted goods from
Freetown to other parts of the country. Women and girls were used for
sexual purposes. Some 4,000 children were reported missing after the
rebel incursion. In the eastern part of Freetown, about 90 percent of
buildings were destroyed.
ECOMOG forces, together with the CDF, also committed human rights
violations, including war crimes, during the incursion by rebel forces
into Freetown. There were reports of large numbers of extrajudicial
executions by ECOMOG forces and the Civil Defense Forces (CDF) of
captured or suspected rebels, often after the most cursory
interrogation and without any real attempt to establish whether the
captive was guilty or innocent of any crime. In mid-January 1999 at
least 10 Sierra Leonean staff of humanitarian aid organizations and the
International Committee of the Red Cross (ICRC) were arrested and
detained by ECOMOG forces. They were accused of cooperating with rebel
forces although there was no evidence to substantiate these
allegations. Most were reported to have been beaten. Aid organizations'
communications equipment was also confiscated. Ill-treatment or
torture, including by being beaten, whipped, tied extremely tightly and
subjected to various forms of public humiliation, was common at ECOMOG
and CDF checkpoints in Freetown.
Angola
The linkage between the sale of diamonds and the ability of the
National Union for the Total Independence of Angola (UNITA) to wage its
brutal insurrections has been extensively documented by numerous
sources. In 1998 Global Witness released its report entitled Rough
Trade: The Role of Companies and Governments in the Angolan Conflict.
In 2000, the Fatal Transactions: An investigation into the Illicit
Diamond Trade report was released by experts linked with Global
Witness. On March 10, 2000 the Report of the Panel of Experts on
Violations of Security Council Sanctions Against UNITA was released by
the UN. All of the reports documented UNITA's use of revenues from
diamond sales to purchase weapons, wage war and commit systematic human
rights abuses. The cost to the Angolan people has been enormous and
sadly has not ended yet.
Since gaining independence in 1975, there has been conflict between
government forces of the MPLA and UNITA. Both government forces and
UNITA have been responsible for large-scale human rights violations
including killings of civilians, torture and the use of landmines.
LIn 1991 AI reported that violations occurred against
prisoners, including captured combatants and others suspected of
political opposition. In 1993 we estimated that 1,000 people were dying
every day as a result of the conflict. The 1993 report also stated that
there were reports of targeted killings on both sides and that
prisoners were ``disappearing'' from their cells.
LWhile no universally accepted figure has been presented,
it is estimated that tens of thousands of people have died as a result
of fighting.
LIn our 2000 report we found that UNITA was responsible
for mutilating and abducting hundreds of civilians including women and
children.
LIn its 2001 World Refugee Survey report, the USCR noted
that ``anywhere from 1 to 3.5 million Angolans had been displaced as a
result of the war. In 2000 alone 300,000 persons were uprooted.
Thousands of people were displaced by the armed conflict and increased
insecurity.''
The Democratic Republic of the Congo
Amnesty International is continuing to investigate details of the
linkages between conflict diamonds and the conflict in the DRC. In our
September 2001 report entitled Democratic Republic of Congo: Rwandese-
controlled east: Devastating human toll, AI stated that
``Many of the killings are occurring in areas rich in
minerals, where economic exploitation of minerals and other
natural resources continues. While this economic exploitation
has directly enriched and motivated some individual RPA
commanders, it is also financing the Rwandese war effort and
sustaining the Rwandese military presence in the region. Such
exploitation is allowing the Rwandese to continue a war in
which human rights are dramatically violated.''
In the same report we also state that:
``During the first year of the war, many influential
governments, including the UK, the U.S., and Belgium, supported
the Rwandese government's stance. However, fighting between
Rwanda and Uganda in Kisangani exposed to the international
community that the illegal exploitation of DRC resources was a
significant objective of the war. Since then, Rwanda's motives
for the continuing occupation of part of DRC are increasingly
being questioned.''
If natural resources such as diamonds and coltan and timber (those
that are mentioned most often) are in any way involved in fueling or
facilitating the military efforts of the warring parties, then the
details on human rights abuses listed below underscores the critical
need for this legislation to be enacted.
AI has reported on the serious and systematic human rights
violations in the Democratic Republic of the Congo prior to the
outbreak of the war that started in 1996. However we would agree the
conflict has caused a dramatic deterioration in the protection of human
rights. While we continue to investigate the details of role played by
diamonds and other natural resources in the DRC conflict we can already
report on the scale of the abuses that the conflict has caused.
According to our colleagues at the USCR at the end of 2000, 2.1
million persons had been displaced. Of these 1.8 were internally
displaced and 350,000 had been forced in to refugee status. USCR also
estimates that 200,000 civilian deaths had been caused by violence and
that another 1.5 million deaths had been caused by war-induced
malnutrition and diseases.
AI has detailed information about torture and other forms of cruel,
inhuman or degrading treatment committed by all warring parties. Human
rights abuses included:
Ltorture by the DRC government forces--security forces
routinely used torture against known or suspected government opponents,
particularly those thought to threaten the authorities' hold on power,
government critics, journalist--who have been particularly targeted to
intimidate and prevent them from writing or publishing articles that
criticize the government, its senior officials or its policies, human
rights defenders in an attempt to intimidate them and cause them to
desist from carrying out their work.
Lrape by security forces--many women in the DRC have been
subjected to rape and other forms of sexual violence by members of the
security forces. Details on the number of incidences of rape are
thought to be seriously under-reported as investigations into cases of
rape are extremely difficult particularly because of the social stigma
associated with it.
Abuses have also been committed by the forces opposing the DRC
government.
Rwandese and Ugandan government forces have committed:
Ltorture--scores of people were subjected to severe forms
of torture to dissuade the disgruntled population from joining an armed
uprising against Congolese armed political groups and the governments
of Burundi, Rwanda and Uganda seeking to overthrow the DRC government.
Congolese armed opposition groups are also guilty of:
Ltorture--like the DRC government, its armed Congolese
opponents, particularly the RCD-Goma and the RCD-ML, have used torture
as a weapon against their critics or those suspected of or known to
support their opponents. In the same way that human rights abuses such
as deliberate and arbitrary killings have been carried out with their
allies from Rwanda and Uganda, torture is also reported to be carried
out together with or even at times ordered by the allies.
Lrape and other forms of sexual violence by armed
opposition groups--girls and women of all ages has been extensively
used by armed opposition groups and foreign government forces
supporting them in eastern and other parts of the DRC. Rape has
effectively been used as a weapon of war against sections of the
population that are known for or suspected of supporting their
opponents, including by humiliating them. Women and girls of all ages
are the most vulnerable to this form of torture, but it is also used by
the armed groups as a reprisal against their male opponents, as well as
a demonstration of their military superiority over their opponents who
are shown to be unable to protect the women.
Conclusions
Mr. Chairman, legislation before you would require the Customs
Service to permit diamond imports only from those countries that have
adopted strong and effective controls on the exportation and
importation of rough diamonds to ensure that conflict diamonds do not
enter the international stream of commerce. We believe that this bill,
H.R. 2722, will buttress and encourage the international Kimberley
Process along in its efforts to create an international certification
system. The Kimberley system would remove conflict diamonds from
legitimate channels of commerce by ensuring a clean stream of diamonds
from the point of extraction to retail sale. The system would be
transparent and independently monitored.
I will end by saying that both the non-governmental groups and the
diamond industry share the view that the U.S. legislation should be
drawn as tightly as possible, so as to exclude every possible conduit
for the entry of conflict diamonds into the United States and prevent
any group like UNITA, rebel groups in the DRC or the RUF from
benefiting from diamond sales made here in the U.S. market. This can
only happen if H.R. 2722 is passed. On behalf of Amnesty International
USA and the Campaign to Eliminate Conflict Diamonds I urge this
Committee to support H.R. 2722.
Thank you.
Chairman Crane. Thank you. I would like to put a question
to all of you and get your responses, and I know you jointly
support legislation to create control systems to prevent the
import of conflict diamonds. But there have been many versions
by either the industry NGOs or members, and can you comment on
why the divided sides, on the same issue, though, do not
support earlier versions offered by either side?
Mr. Runci. Mr. Chairman, I think that from the outset all
parties involved, from our perspective certainly, shared a
commitment to find a solution. But the approaches we took to
devising solutions I think were defined largely by the
directions from which we came, the context in which we operate.
Our concern as industry from the outset was in supporting a
solution which would, as was said earlier, not harm the
legitimate diamond trade, the economies of those countries with
legitimate diamond industries.
I think from the perspective of civil society, the
superseding goal was to stop the--from the outset--was to stop
the trade and end the connection between diamonds and violence,
to stop the violence. I think we reached common ground when we
found the technical means in June to accomplish that and agreed
to terms.
Commitments I think were strong from all sides from the
outset. I think our approach is different given the various
directions from which we came, but I think we found common
ground because of our desire to effect a solution this year,
and our strong commitment not to allow technical differences,
which were really what separated us before, technical
differences, from standing in the way of getting behind a
consensus solution that Congress could enact this year because
we are united in our commitment not to allow this issue to
linger and drift in the international community any longer than
it has to date.
Chairman Crane. Ms. Gardner.
Ms. Gardner. I would only add to that that part of the
process was an educational one on both sides. The diamond
industry and the pipeline for diamond trading is extremely
complex. The goal was to create an effective system that was
credible and would be practical and would not present
obstruction to legitimate trade, and the varying competing and
differing approaches were ultimately brought to consensus, I
think, through a process of mutual education on both sides.
Chairman Crane. Ms. Anderson.
Ms. Anderson. I would just resound with what my two
colleagues have said here, that I think the more communication
we had and the greater understanding we had of our differing
constituencies, we were able to work out the technical details
and come to consensus. Thank you.
Chairman Crane. Mr. Akwei.
Mr. Akwei. I would agree that we not only had an
educational process, which basically improved the content of
the bill, and I think all of us would agree that H.R. 2722 is
the strongest of all of the different legislative initiatives
that we worked on individually, but also as part of our
educational process got beyond some misconceptions and
suspicions of each other, and I think that has been extremely
important.
Chairman Crane. Mr. Rangel.
Mr. Rangel. Thank you, Mr. Chairman. I am extremely
impressed not only with your testimony but the process that you
went through to get this consensus. It is very unusual for an
industry to be coming to the Congress asking for control
guidelines, but none of the testimony that I have heard this
morning has given me any reasons why we should not legislate,
and certainly if anything, it should be considered as impetus
for the administration and our negotiators to move forward.
I assume all of you heard the testimony of the State
Department and the Trade Representative. Are you fearful that
legislation would interfere with their ability to try to
negotiate this thing out? Anybody? Ms. Gardner.
Ms. Gardner. If I may, Congressman. I have been intimately
involved with the Kimberley Process from the first point after
the December resolution in the U.N. that asked for the
international conference to produce a result, and I intend to
be a participant both in Luanda in Botswana and come up with
the ultimate results.
I have no doubt in my mind that indeed this legislation
will serve as a catalyst to that process, not at all as any
kind of complicating or interfering factor whatsoever.
Mr. Rangel. What do you think the main reason is as to why
they have not been able to resolve this diplomatically?
Ms. Gardner. I am not sure that I would say that it has not
been resolved. It is a process. We have a work plan so to
speak; we have dates and deadlines to meet and so far we have
met them all. I have no reason to doubt that by the deadline
that has been provided by the road map which is the December
meeting in Botswana, we will produce a product for
consideration by the U.N. which will address all of the
elements that are necessary to provide the control of this
trade.
Mr. Rangel. But you are not satisfied that that is enough;
you still believe that the Congress should enact legislation?
Ms. Gardner. Yes, I do, and part of that is because of the
fact that the U.S. is the largest consuming nation of this
product. I think that while all of the delegations to the
Kimberley Process are mindful and are concerned with the
humanitarian rights violations that exist here, there are also
people involved in the diamond industry and in this trade and
they want to continue that trade in the most propitious manner
possible and I think that that includes concluding this
international agreement and getting on with the business of
trading diamonds.
Mr. Rangel. Does any member of the panel disagree with Ms.
Gardner's observations?
Ms. Anderson. Mr. Rangel, I would just like to add with Ms.
Gardner's observations that I think that in our meetings, NGOs
meeting with the various members of the U.S. delegation who are
connected to the international process, they themselves have
told us privately as well as when we have attended the meetings
that U.S. legislation has been the strongest impetus for the
administration taking the international process seriously as
well as other governments taking the process seriously because
once this bill is passed, they won't be able to get their
diamonds in here, which we are the largest market. So we feel
very strongly that U.S. legislation is really necessary to
invigorating the process. Thank you.
Mr. Rangel. Thank you, Mr. Chairman.
Chairman Crane. I have got a question that I failed to ask
to maybe Mr. Runci, but it may be any of the rest of you, too.
The Kimberley Process is designed to help countries identify
the source of diamonds, but they recommend that forgery-proof
certificates of origin be issued by exporting State
authorities. How do you create a forgery-proof certificate?
Ms. Gardner. Mr. Chairman, I think that every effort is
being undertaken by the Kimberley Process to research the most
technologically advanced processes by which documentation can
be made forgery proof. We have had presentations by companies
who have been involved in the printing of currency and those
techniques are being contemplated to be used in connection with
the formulation of the documentation here as well.
Chairman Crane. Yeah. But I mean currency is not forgery
proof.
Ms. Gardner. Well, Mr. Chairman, in my former life as a
Federal prosecutor with the Department of Justice, I myself
prosecuted a number of people for counterfeiting American
currency.
Chairman Crane. Oh, I am sure that----
Ms. Gardner. Despite efforts to the contrary, this system
is going to make every effort to confront and prevent any
possibility of contravention of the system including using the
latest technology on documents. We will certainly do what we
can. Any system to interdict contraband goods is only as good
as the anticipated problems that it seeks to resolve.
We are trying to make the system as effective as possible
including elements of developing documentation that is forgery
proof.
Chairman Crane. Forgery proof.
Ms. Gardner. To the best of our ability.
Chairman Crane. To the best of the ability. I was going to
say there is a qualifier in there.
Ms. Anderson. Mr. Chairman, to add to Ms. Gardner's
comments, I think some of the checks that are built into the
system is independent monitoring. So if somebody is able to
make or plagiarize or make a phony certificate, you have got
statistics as well as independent monitoring to back up what is
being produced in the certification process.
So if you see statistics are inconsistent with the amount
that is come out of, say, Sierra Leone or Liberia, that will be
a red flag for independent monitors to see that there is
something going wrong. So even though you might have problems
with the certificate, you also have independent monitoring and
statistics to back up what is coming out of a country. Thank
you.
Chairman Crane. Very good. All right. Mr. Houghton.
Mr. Houghton. I just have one question. First of all, thank
you very much for your testimony. Let us just assume that the
things we are doing work out. Kimberley Process is in effect.
We have legislation. Other countries buy into this. What is the
big worry 5 years out?
Mr. Runci. Mr. Houghton, I think the worry that we would
have is that without such a system in place, this traffic in
illicit conflict diamonds could recur.
Mr. Houghton. No, but you got the system in place now. Let
us just make that assumption. What is the big worry on top of
all these things which we are doing now?
Mr. Runci. The only component, sir, that I believe has not
yet been fully contemplated is a supporting international law
enforcement authority to ensure that not only that we have
monitoring but that we have enforcement and consequences
associated with violations.
So I would say looking further out from this immediate
structure that we are talking about this morning, from my
perspective and the perspective of my colleagues, I think that
component is an additional feature, not yet fully addressed by
the process.
Ms. Gardner. I would add to those comments that the
participants in the Kimberley Process are fully aware that once
the process is put in place that experience will be a teacher
and that we might have to further refine enforcement mechanisms
based on experience, and the Kimberley Process is already
contemplating a mechanism to fulfill that obligation as
experience shows is necessary during the implementation of the
system as designed.
Mr. Houghton. But the enforcement mechanism that you
foresee at the moment when these immediate pieces are in place,
you feel is adequate?
Ms. Gardner. I think it has been designed and it is not
fully formed yet. We are still in the process of fleshing out
the details. We feel strongly that the enforcement mechanism
that is contemplated by the system will be effective, will be
credible, and will be practical as well.
Mr. Houghton. Yes?
Mr. Akwei. I would just like to add also that there is no
system currently in place and so this will represent a major
step forward not only in terms of the enforcement mechanisms
that are there now, but also in the data, and I think that is
one of the things that the industry itself has been very
forthcoming in admitting, that the transparency of the diamond
industry will be significantly enhanced and improved because
you will have statistics on geographical output, you will have
statistics on how many carats or how many stones are supposed
to be coming from sources. And that in itself is going to be a
major leap forward.
Mr. Houghton. Thank you very much.
Chairman Crane. Mr. Herger.
Mr. Herger. Thank you, Mr. Chairman. I really do not have
any questions. I just want to thank our panelists and everyone
who is involved on working in this area that is having such
horrendous results in the lives of so many victims in Africa,
and everything it is doing as far as terrorism all over the
world. Again, I want to thank you for you efforts and certainly
I as one want to work with you and the entire community and
everyone to further your goals. Thank you very much.
Chairman Crane. Well, I want to express appreciation to all
of you for your participation today, too, and we look forward
to continuing to work with you and to get legislation that
hopefully will address this problem in a meaningful way. And
with that, the Committee stands adjourned.
[Whereupon, at 11:50 a.m., the hearing was adjourned.]
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