Diamond Industry Makes Proposals

Friday, September 8th 2000, 12:00 am

By: News On 6

RAMAT GAN, Israel (AP) â€” Consumers have begun to ask where their diamonds come from, prodding the industry to start certifying that it does not finance civil wars, merchants said Thursday.

At a conference here, the World Diamond Council started work on ways to stop trade in ``conflict diamonds'' â€” precious stones sold by warring factions, particularly in Africa.

It isn't easy, merchants admit. Once they're out of the ground, diamonds look pretty much alike.

Discussing the issues at Israel's diamond exchange, one of the world's top cutting and trading centers, members of the council decided on a new certification system for an industry worth about $6 billion a year.

Up to now, certificates have stated the country where the gems were sold. The council is aiming for certificates that list the country of origin as well. Used together with lists of forbidden mines and regions, the system would cut into the conflict diamond trade.

The diamond merchants say they are working under pressure from their customers.

Michael Kowalsky, director of Tiffany's, a leading jewelry retailer, said consumers are increasingly asking for assurances that their gems are ``conflict-free.'' He said quick implementation of the resolutions is a ``cardinal issue of conscience'' for the industry.

In addition to an international chain of warranties, the council called on individual governments to pass legislation banning the import and export of undocumented diamonds. The council threatened to expel banks, insurance companies and shippers from industry guilds if they are caught dealing in conflict gems.

The diamond trade has been tarnished by disclosure that rebel groups in Sierra Leone and Angola have used proceeds from diamond sales to buy weapons for struggles against elected governments during which the rebels have committed atrocities.

Industry officials say that conflict diamonds account for only 4 per cent of their trade but they fear that protests could damage their reputations.

Alex Yearsly of the British-based Global Witness group warned that activists around the world, especially in the United States, are ``itching'' to begin protests such as a boycott.

Andrew Coxon, director of DeBeers, said smugglers have lowered their prices by at least 30 percent in the two months since the industry first expressed its determination to stop trade in conflict diamonds. DeBeers is the huge South African mining and marketing company that controls much of the global diamond supply.

Nchaka Moloi, advisor to South Africa's Ministry of Minerals and Energy, welcomed the council's action, although it is just the beginning.

``Finally the whole range of industry is taking responsibility for the role diamonds play in conflicts in Africa and agree we all have to come up with a solution,'' Moloi said.