What are “blood diamonds” and how the world is trying to fight them

On January 1, the decisions of the EU and G7 to ban the import, purchase and transportation of non-industrial rough diamonds from Russia came into effect. Restrictions will be tightened in March. Thus, Russian diamonds were equated to the so-called “blood diamonds” – stones from war zones, the trade of which is strictly prohibited. Kommersant looked into the history of the “blood diamonds” phenomenon and the effectiveness of the efforts of the world community to squeeze them out of the world market.

Cold War Stones

The world began to pay attention to “blood diamonds” – stones that are mined in zones of armed conflicts and used to finance them – at the end of the 20th century. The Cold War is over, the confrontation between the two systems has been replaced by a desire to cooperate. Civil wars or rebel activities in developing countries are no longer perceived as proxy wars between blocs. The efforts of the world were now aimed at stopping them.

Political pressure on the parties to the conflicts was accompanied by economic and financial pressure. Governments, under the threat of sanctions, were recommended to meet the rebels halfway, but the latter were stopped funding, forcing them to meet the authorities halfway. This approach worked in many states, but in mineral-rich countries the rebels quickly discovered that they had their own source of funding.

It is difficult to find a better option for illegal trade than rough diamonds: they do not take up much space, are highly liquid, and are expensive.

So the world community now has one more problem, and the political vocabulary has been replenished with a new term – “conflict diamonds,” which the press and public organizations began to call “blood diamonds” to make it more colorful. At first, however, the problem did not seem too serious.

First battle

The first target for the fighters against “blood diamonds” was the Angolan group UNITA (Movement for the Total Liberation of Angola). It was created back in the 1960s to fight the Portuguese colonialists, but was mainly engaged in fighting another anti-colonial movement, the MPLA (People’s Movement for the Liberation of Angola), which was supported by the Soviet Union.

After the declaration of independence and the coming to power of the MPLA, a classic civil war began in Angola between the pro-Soviet government and anti-Soviet rebels supported by the United States and China. Foreign funding was a serious help for UNITA, but hardly the main source of funds.

Those areas of the country where diamond deposits were located came under the control of the organization. The brutality with which the militants sought control of the diamond mines, and the fact that the funds received from their sale were used to continue the war, in fact, gave rise to the term “blood diamonds.”

In 1998, the UN Security Council first introduced an embargo on the trade in blood diamonds.

Corresponding resolution prohibited the purchase of stones from Angola without a certificate of origin issued by the country’s internationally recognized government.

It seemed the problem was solved. After all, both states and leading players in the diamond market came out in support of the resolution. Mining companies, diamond exchanges and retailers have created World Diamond Council (YOU), whose task was precisely the fight against “blood diamonds”. And the leading countries of the world have adopted national acts prohibiting the trade in such stones.

At first glance, the measures taken helped achieve the desired result. According to the BAC, by the early 1990s, up to 19% of diamonds on the world market were “blood diamonds.” And in 1999, a year after sanctions against UNITA came into force and the global fight against illegal stones began, their share in global trade dropped to 4%

Victory can be paper

Subsequent events showed, however, that the successes achieved in the struggle may have existed only on paper. “Blood diamonds” are mined not just in conflict zones, but where corruption is rampant, human rights are not considered at all, and the demands of the international community are treated without any respect.

The rebels (and those to whom they sold the goods) easily bribed local officials to obtain the necessary documents to legalize the diamonds. Corruption captured the highest levels of government. In 2001, the UN imposed sanctions against the authorities of Liberia: the regime there almost openly bought diamonds from rebels from neighboring Sierra Leone, issued the necessary documents, and in exchange supplied weapons to the militants.

Liberian President Charles Taylor was later tried as an international criminal in The Hague and sent to serve a 50-year sentence in a British prison. However, rebels from Sierra Leone have found new buyers in another neighboring country, Cote D’Ivoire, against which sanctions were imposed in 2005.

Manufacturers have also made an attempt to solve the problem. With the assistance of the UN, the so-called Kimberley Process (KP) was created – an international diamond certification system. Its members are states (including Russia), and leading manufacturers, wholesalers and retailers of diamonds actively cooperate with it.

Since it is impossible to sell diamonds without documents that meet the requirements of the KP on legal platforms, it is believed that by now the share of “blood” diamonds has decreased on the world market to less than 1%.

However, the Communist Party immediately had critics who argued that the system was not protected from fraud. They were listened to. Paper certificates have been complemented by the inclusion of shipments in a database running on the blockchain, which makes counterfeiting, if not completely impossible, then so difficult that the game that is smuggling “blood diamonds” is not worth the candle.

Nevertheless, skeptics say, the share of “blood diamonds” on the world market is now 15%, having decreased only slightly since the international community declared war on such stones.

Will foreign countries help them?

Sanctions by the EU and G7 countries against Russian diamonds actually equate them to “blood diamonds.” Which, experts say, takes the situation to a new level.

Formally, however, nothing changes. The UN definition of conflict diamonds remains. These are considered to be stones mined in areas controlled by forces fighting the legitimate and internationally recognized government of a country and sold to finance such a fight.

And, as in the case of blood diamonds, the sanctions were publicly supported by prominent market participants. In particular, the head of De Beers, Al Cook, declared his support for the imposed sanctions. True, in the same statement he carefully expressed those doubts that less influential market participants speak about much more openly.

“The answer to the question of why we should (impose sanctions.— “Kommersant”), simple. The answer to the question of how we will do this is complex,” it says. open letter Cook, which he sent to the G7.

We are talking about identifying and tracking Russian diamonds. In theory, everyone in the chain linking diamond producers and retailers has the technical means to do this. Diamonds, or more precisely their batches, can be assigned unique QR codes supported by the blockchain. There is equipment for more or less accurately determining the origin of stones based on the characteristics of their composition. Finally, there are technologies that make it possible to mark even the smallest rough and polished diamonds.

Such markings will not damage the appearance, will be completely invisible to the end buyer, but will remain in stone forever. But any of these methods are extremely expensive, and therefore may simply be unaffordable for most processors.

The world’s largest diamond processing center is India. This is where labor is cheapest in this industry. And the processing of small diamonds, a labor-intensive task, becomes profitable only with minimal labor costs.

“The smaller and cheaper the stone, the more people you need to cut and process it,” says Anup Mehta, president of the Mumbai Diamond Exchange, one of the largest in the world. Therefore, in India, diamond processing is a handicraft and almost home-based industry. And the owners of such enterprises cannot afford expensive inspection and labeling methods.

There is, of course, the option to abandon Russian diamonds altogether. But in this case, a purely technical problem becomes almost political. 60% of jobs in the Indian diamond processing industry rely exclusively on Russian stones. Which are exactly the kind that are most convenient to process in India—small and inexpensive. Failure to do so could leave hundreds of thousands of people unemployed. Whether the government of the country, which, by the way, is quite friendly towards Russia, is ready for this is an open question.

But even if we assume that India agrees to participate in the sanctions, production will most likely simply move to another country that is very friendly to Russia – the United Arab Emirates. Where the same problems will arise again.

That is, whether the scheme laid down in the EU and G7 restrictions will work depends not only on these countries, but also on the goodwill of third parties – India, the UAE, etc. In the meantime, experts say, what will happen with the supply of Russian diamonds abroad is that is already happening with the export of Russian energy resources. The streams will disperse. Some will continue to trade with Russia and China, others will refuse Russian diamonds. And in some places they will simply divide the capacities, supplying some stones to the West, some to those countries that are not ready to consider Russian diamonds “blood”.

Victor Buk