[Congressional Record Volume 146, Number 78 (Tuesday, June 20, 2000)]
[Extensions of Remarks]
[Pages E1057-E1058]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            AFRICAN DIAMONDS

                                 ______
                                 

                          HON. JERROLD NADLER

                              of new york

                    in the house of representatives

                         Tuesday, June 20, 2000

  Mr. NADLER. Mr. Speaker, I submit the enclosed statement into the 
Record.


[[Page E1058]]



         Statement of Eli Haas, President, Diamond Dealers Club

 (For the hearing on Africa's Diamonds: Precious, Perilous Too? By the 
  Subcommittee on Africa, Committee on International Relations, U.S. 
                 House of Representatives, May 9, 2000)

       On behalf of the Diamond Dealers Club we welcome this 
     opportunity to present this statement on ``Africa's Diamonds: 
     Precious, Perilous Too?''
       The Diamond Dealers Club is a trade association of close to 
     2,000 diamond dealers, brokers and manufacturers. Conceived 
     in 1931, we have since our beginning been located in New York 
     City. Our members come from more than 30 different countries 
     and import the overwhelming percentage of diamonds that enter 
     the United States. Pursuant to our By-Laws, we early 
     recognized that a key goal of our organization is ``to 
     cooperate with governmental agencies.'' This statement is 
     presented with that goal in mind.
       The tragic consequences of the use of diamonds to finance 
     civil wars in Africa, particularly Angola, have in recent 
     months received considerable public and private attention 
     both in the United States and worldwide. The focus of the 
     articles, discussions and meetings on this subject is that 
     diamonds have been used by rebels to pay for weapons in 
     Angola, Sierra Leone and Congo, weapons that have led to the 
     deaths and amputations of limbs of tens of thousands of 
     innocent victims of these conflicts.
       Two years ago the United Nations Security Council adopted a 
     resolution that prohibited the purchase of diamonds from 
     UNITA forces in Angola. Endorsed by the United States, these 
     sanctions prohibit nations from the ``direct or indirect 
     import from Angola'' to their territory of all diamonds that 
     are not controlled through certificates provided by Angola's 
     recognized government.
       The resolution's basic objective was that without funds 
     generated by such sales the rebel forces led by Jonas Savimbi 
     would no longer be able to continue the campaign of terror 
     and rebellion against Angola's government. Since then, the UN 
     Security Council Committee on Angola, chaired by Canadian 
     Ambassador Robert Fowler, issued a report in March 2000 which 
     found that the UN sanctions are frequently violated.
       According to the UN report, UNITA's military activities are 
     sustained by its ``ability to sell rough diamonds for cash 
     and to exchange rough diamonds for weapons.'' The 
     investigation of UNITA'S diamond sales led by the former 
     Swedish ambassador to Angola implicated the presidents of 
     Togo and Burkina Faso as involved in the illegal trading 
     operations with Mr. Savimbi's forces. It also concluded that 
     Bulgarians were shipping arms to UNITA and that the Antwerp 
     diamond industry played a role in the illegal trade.
       Several months before the March report, Ohio Congressman 
     Tony Hall, a person long devoted to human rights causes and 
     combating world hunger, introduced in the U.S. House of 
     Representatives the ``Consumer Access to a Responsible 
     Accounting of Trade Act (CARAT)'' a bill mandating that any 
     diamond ``sold in the United States'' that retails for more 
     than $100 be accompanied by a certificate stating the name of 
     the country in which the diamond was mined. According to the 
     Congressman this would encourage consumers to ``participate 
     in a global human rights campaign'' thus removing the 
     financial support for some of Africa's civil wars.
       We feel that Congressman Hall's bill has the worthwhile 
     purpose of protecting innocent people caught in brutal 
     internal conflicts. Each of us has seen photos of the 
     frightened victims of these conflicts, victims who may have 
     been killed or had limbs amputated simply because they were 
     in the path of maniacal, well-armed thugs (often teenagers). 
     All of us deplore these acts of terrorism.
       Unfortunately for the innocent victims of these ongoing 
     conflicts, the Hall proposal, however well-intentioned, would 
     neither lead to the successful implementation of the UN 
     sanctions nor end the ongoing civil wars and the concomitant 
     deaths of innocent civilians. Rather, it would harm the 
     diamond industry worldwide and have serious negative 
     implications for stable and developing countries in southern 
     Africa.
       Even if enacted and implemented, the Congressman's proposal 
     would have but negligible impact on the UN sanctions. 
     Diamonds are fungible and tens of millions of them are mined 
     annually. No organization in existence today is qualified to 
     certify that a stone sold in Rwanda was not mined in Angola, 
     two nations which share a porous border several hundred miles 
     long. Furthermore, rampant corruption and fraud easily leads 
     to the fraudulent certification of stones from rebel areas--
     something which Ambassador Fowler's report documents.
       Moreover, mandating that certificates accompany all 
     diamonds ``retailing'' for more than $100 would mean that 
     tens of millions of certificates would have to be issued 
     annually. The record keeping for this task would be 
     monumental and costly and would inevitably harm the retail 
     jewelry industry which is dominated by small businesses. It 
     is also important to understand that De Beers, the company 
     that sells most of the world's rough diamonds reported that 
     it no longer purchases any from conflict areas. In March it 
     announced that it would henceforth provide written guarantees 
     that its diamonds do not originate with African rebels.
       While there is some discussion of the development of a 
     technology to come up with identifying marks or fingerprints 
     to determine particular countries of origin of diamonds, no 
     such technology is currently available. Indeed, even those 
     involved in this research and development report that at best 
     success is years away. Furthermore, even if country of origin 
     was determinable, it would still not indicate whether a 
     diamond comes from mines in government-held territory or from 
     rebel-held mines.
       In fact the proposed legislation would penalize and have a 
     harmful impact on legitimate and responsible African 
     producers of diamonds such as Botswana, Namibia and South 
     Africa. In these countries diamonds provide the engine for 
     economic growth and account for a substantial percentage of 
     the gross domestic product. Diamond production has been so 
     successful for Botswana that it now has one of the most 
     rapidly growing economies in the world.
       In South Africa, former President Nelson Mandela has 
     expressed concern that his nation's vital diamond industry is 
     not damaged by ``an international campaign.'' Surely, the 
     U.S. Congress does not wish to retard economic development in 
     friendly developing countries because it is fueled by 
     diamonds. In fact, this ``unintended consequence'' would 
     follow from this legislation.
       The American diamond and jewelry industry is united in both 
     its abhorrence of terrorism in the Congo, Sierra Leone and 
     Angola and in support of the UN sanctions regarding the 
     latter. To successfully keep conflict diamonds out of the 
     world diamond market we believe the problem must be attacked 
     at the source. We feel that the efforts of the international 
     community should be concentrated on the small number of firms 
     and individuals who are actively engaged in helping illicit 
     diamonds enter the mainstream of the legitimate diamond 
     commerce. The international community has already achieved 
     significant positive results with its efforts to cast light 
     on firms, individuals and countries involved in trading with 
     the rebel forces. While the portability of diamonds means 
     that some stones from conflict areas will continue to enter 
     the world economy, a greater international effort can reduce 
     this to a minimum.
       Members of the organized diamond community, including the 
     close to 2000 member Diamond Dealers Club in the United 
     States, strongly oppose the sale of diamonds that do not 
     comply with the UN resolution. Indeed, in July 1999, months 
     before the current media attention, the DDC's Board of 
     Directors went on record in support of the UN sanctions 
     prohibiting our members from trading in diamonds which do not 
     comply with the position taken by the UN and the U.S. 
     government.
       While the above is important in preventing the sale of 
     unlicensed diamonds, to be truly effective we believe it is 
     necessary to initiate a proactive approach, one that will 
     encourage stability, accountability and transparency. More 
     specifically, we must establish a direct relationship between 
     African diamond mining nations and the American diamond 
     cutting industry. This means that the American diamond 
     industry should be able to deal directly on a business-to-
     business basis with African diamond producing nations to 
     purchase stones that have been licensed for export by 
     legitimate governments. In doing so we would pay the world 
     market price, a price which is substantially above the 
     payments received for diamonds that are now being used to 
     contribute to the internal conflicts.
       One other major advantage of this proposal is that the 
     transparency and accountability which is the hallmark of the 
     American industry's style of operation surely would lead to a 
     decline in corruption and other illegal activities. This 
     would result in fewer stones sold through either ``leakage'' 
     or other unauthorized sources as well as reduce the 
     corruption that is often associated with diamond commerce in 
     several producing nations.
       The benefit to African diamond producing nations is clear. 
     With U.S. government involvement, the American diamond 
     industry would also benefit since the establishment of a 
     direct pipeline would play a significant role in overcoming 
     the current shortage of rough diamonds. In turn, this would 
     revitalize our cutting and polishing industry.
       Ultimately, we believe that our proposal represents a win-
     win situation for the American diamond industry and the 
     diamond producing nations of Africa. Instead of diamonds 
     being used to finance internal conflicts and the death and 
     destruction of innocent civilians, they would become--as is 
     already the case in the other African nations--a major 
     opportunity for gainful employment for tens of thousands of 
     people and a major source for economic development in the 
     diamond producing nations of Africa. At the same time, 
     diamonds would strengthen the American industry, thereby 
     providing new opportunities for employment, and tax revenues.

     

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