India's diamond trade under
fire By Sudha Ramachandran
BANGALORE - A passage through India is
giving Africa's blood diamonds a respectable
polish. According to reports, blood diamonds are
being smuggled into the city of Surat, where they
are cut and polished, then sold to respectable
firms which go on to easing these illegal stones
into the legitimate diamond supply chain.
Surat is the center of the world's diamond
cutting and polishing industry. Ninety-two percent
of the world's diamonds are crafted here. Located
250 kilometers north of Mumbai, the city earned
India US$11 billion in
exports last year. According to media reports, a
sizeable number of rough diamonds entering Surat
for cutting and polishing might in fact be blood
diamonds.
Blood diamonds or conflict
diamonds are those mined in war-torn African
countries such as Liberia, the Ivory Coast, Sierra
Leone and the Republic of Congo by warlords and
rebels to finance arms purchases and other illegal
activities.
Blood diamonds account for a
small fraction of the diamond trade. At the height
of the problem in the mid-1990s, about 4% of the
global diamond trade was blood diamonds, according
to the diamond industry. Global Witness, an
international non-governmental organization that
has drawn attention to human-rights abuse in
resource-linked conflicts, puts the figure at 15%.
The role of blood diamonds in funding and
prolonging wars and in devastating communities in
west and southwest Africa has been immense. An
international campaign highlighting this prompted
the United Nations to pass a resolution calling
for the creation of an international certification
scheme to break the link between the illicit trade
in rough diamonds and mass human-rights abuses
associated with armed conflict.
This put
pressure on the international community and the
diamond industry to act. The Kimberly Process
Certification Scheme was put in place in 2003 to
regulate the trade in rough diamonds, that is, to
prevent trade in blood diamonds while protecting
the legitimate trade in diamonds. It is aimed at
assuring buyers of diamonds that their stones have
not contributed to bloodshed. It involves
monitoring of diamonds at every point of the
diamond pipeline, from mining through to retail,
to ensure that diamonds from areas that the UN
calls "conflict zones" do not slip into the
legitimate supply chain.
The diamond
industry maintains that the Kimberley process has
solved the problem and that less than 1% of the
diamonds in the market today are from conflict
zones. However, a 2006 UN report drew attention to
blood diamonds from rebel-held areas in the Ivory
Coast skirting a UN diamond embargo and being
smuggled out through neighboring Ghana and Mali.
According to investigative media reports,
blood diamonds are smuggled into Surat in fishing
boats. These are cut and polished in the diamond
bazaars of this town, sold to reputed firms who
then export the stones with a certification that
they were not imported from conflict areas.
Officials of the Surat Diamond
Association, an industry organization which has
about 3,000 diamond establishments in Surat as its
members, insist that the industry is scrupulously
observing international norms and respects the ban
on dealing with blood diamonds.
"We are
aware of the implications [of dealing in blood
diamonds] internationally and we are very
careful," insists Umesh Shah of the Mumbai-based
Shrenuj and Company, a leading diamond and jewelry
manufacturer and exporter.
"Our customers
in the US and Europe compel us to follow the
processes, and we in turn ensure that the rough
diamonds that we get are 100% conflict-free,"
points out Sohil Kothari, director, Fine Jewelry
(India) Pvt Ltd, a leading exporter of diamond
studded jewelry.
But a diamond exporter
from Surat who spoke on condition of anonymity
told Asia Times Online that there might be a
handful of diamond merchants who are dealing in
conflict diamonds. These are mainly owners of
smaller diamond establishments. "The larger
establishments are wary of tarnishing their
reputation and reliability," he pointed out.
Indian intelligence officials say that
blood diamonds will have to be identified before
they enter Surat as once a rough diamond is
polished it is impossible to trace its place of
origin. "If we have to catch blood diamonds it has
to be at the very point of their entry, that is,
at the airports and seaports," says an official of
the Department of Revenue Intelligence (DRI).
DRI officials say that the diamond cutting
establishments are under their scanner and that
they are keeping an eye on them. But they are wary
of acting without adequate evidence, given the
impact it will have on the industry. Diamond
polishing is a major foreign exchange earner. It
consists of about 6,000 small and large diamond
cutting and polishing units and employs over
700,000 people.
The officials insist that
if evidence is found, they will act because the
stain of dealing with blood diamonds will damage
the industry's reputation.
A diamond
exporter from Mumbai described the allegations
against Surat's diamond dealings as "a motivated
campaign" by competitors in the international
arena. The growth of India's diamond industry has
been "phenomenal", he said, and has triggered envy
among communities that have traditionally
dominated the business, and this might be behind
their "disinformation campaign", he said.
Indians account for about 65% of the $26
billion in diamond trade revenues, up from about
25% two decades ago. The share of Jewish
businessmen has apparently fallen from 70% to 25%
in the same period as Indian businessmen make
inroads into the traditional Jewish-dominated hub
of Antwerp in Belgium and Tel Aviv.
Indian
merchants say that given the fierce competition
overseas they are anxious to ensure that their
credibility and image remain good; hence they are
keen that the "government cracks down on those
dealing in blood diamonds, if there are any".
Sudha Ramachandran is an
independent journalist/researcher based in
Bangalore.
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