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DRC: Group Seeks Tighter Leash on Diamond Trade

Emad Mekay

WASHINGTON, Jun 15 2006 (IPS) - The international community should help the new government in the Democratic Republic of Congo (DRC) tighten its surveillance of the diamond mining industry to lift the poor nation out of corruption and conflict, long associated with trade in the precious gem, a rights group said Thursday.

Global Witness, the London-based non-governmental organisation that monitors industry-related corruption, said in a new report that regulations over mining and trade in rough diamonds passed by the transitional government in Kinshasa were woefully inadequate.

The group says that diamonds cannot be tracked from the mine to export, although the country produced 870 million dollars worth of diamond exports in 2005.

“There is little knowledge of where the diamonds originate from, or even whether they were mined in the DRC,” said the report.

The report says that smuggling diamonds in and out of the country was still prevalent, and highlights the fact that the ongoing fighting between the national army and rebel groups in the east of the country has centred on the diamond mines.

Diamond sales have not led to better standards of living for the Congolese people either, it says, despite the fact that at least one million people of the country’s population of 60 million work in the industry.

This is because the gems are undervalued and taxes on diamond exports remain low at an aggregate rate of only 3.7 percent, a minimal amount compared to other African exporters like the Central African Republic and Angola, where the rates are about 11 percent.

“Our point is that there are very weak controls on the diamond sector in DRC which is enabling smuggling of diamonds in and out of the country, but more importantly diamonds are not benefiting the people of the Congo,” Corinna Gilfillan of Global Witness told IPS.

The group urged organisations like the World Bank, the International Monetary Fund and donors such as the European Union and the United States to seize on the election of a new government in the DRC in July this year to push for better management of the gem industry.

“Donor governments have only paid lip service to the problems of corruption in the diamond sector and have not done enough to encourage the transitional government to tackle these problems head on,” said Gilfillan.

The study recommends that international financial institutions make it clear to the new government that non-humanitarian aid, technical assistance and loans could be withheld if a transparent system of accounting for public revenues from natural resources is not in place.

The IMF and the World Bank in particular need to ensure progress on benchmarks set out in loan programmes and devise specific diamond-related indicators to trigger further release of funds to the government.

Bilateral donors to DRC such as Canada, Britain, the United States, Russia and Belgium can press at a high level for improved governance over natural resources, the report advises.

Overall, watchdog groups fault gem mining because revenues from diamond sales have rarely gone to investments in social services – not only in DRC but in other African nations.

Last year, a report on the state of the diamond industry by a group called Partnership Africa Canada claimed that the Angolan government, which earns 900 million dollars in diamond profits every year, has done little to reinvest in gem-producing communities where socio-economic development is at a standstill.

The report followed another study by Global Witness and Amnesty International in Angola that alleged serious abuses by police and diamond company security firms operating there.

The international diamond industry has further built up a bad reputation in Africa by funding militants, rebel activities and civil wars in the poor continent in its pursuit of mines.

In December, the UN Security Council voted unanimously for a ban on diamond exports from Cote d’Ivoire to stop rebels in the war-divided nation from using gems to purchase arms.

Much to the dismay of the diamond industry, the issue has now caught the attention of Hollywood. Conflict diamonds will be the subject of a movie to be released next year, “The Blood Diamond”, set in Sierra Leone – and which prompted Eli Izhakoff, the chairman of the New York-based World Diamond Council (WDC), to send a letter to the film’s producer, Edward Zwick, in hopes of changing his views.

The WDC insists that 99.8 percent of rough diamonds sold to the retail jewelry industry are from conflict-free sources, and are certified as such by the Kimberley Process, an international diamond certification scheme designed to eliminate the trade in conflict diamonds.

But civil society groups dispute that figure. “The statistic is questionable,” Gilfillan told IPS. “We work on the Kimberley Process and we do not have accurate statistics on the percentage of conflict diamonds versus legitimate diamonds. So I’d really question where they got that statistic from.”