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Text: U.S. Lawmaker Blasts Trade in Conflict Diamonds

Rep. Tony Hall says more must be done
"American consumers simply will not be a party to this blood trade" in
conflict diamonds, which is fueling fighting in West Africa,
Congressman Tony P. Hall (Democrat of Ohio) has told a House of
Representatives subcommittee.
Speaking before the Ways and Means Committee's Subcommittee on Trade
September 13, Hall said, "Once advertisements showing diamond
bracelets on Sierra Leone amputees start to run" on television,
Americans will show their distaste for illegal conflict diamonds by
not buying them.
Hall said he has been "encouraged to see the diamond industry finally
do something to end its assistance to this blood trade," but the
lawmaker added that more must be done.
He also discussed aspects of the Carat Act that he is sponsoring. The
bill seeks to impose further controls on illegal trade in conflict
diamonds, so-called because they are mined in conflict zones in West
Africa, including Sierra Leone, the Democratic Republic of Congo, and
Angola; they have played "a particularly pernicious role" in fueling
fighting in those countries and elsewhere in Africa, Hall said.
1999 was a "very good year" for the diamond industry, Hall told the
subcommittee. DeBeers, the monopoly that controls 65 percent of the
market, posted profits nearly 90 percent higher than in 1998.
Lazare-Kaplan, the largest American player in the industry, earned
nearly 40 percent more.
"As a rule, 30 percent of these profits come from conflict diamonds
(even though these stones make up between 5 and 15 percent of the
total supply) because they tend to be large and disproportionately
valuable stones. In Sierra Leone, diamonds average two carats in
size."
But for the people of Sierra Leone, and to a lesser degree for many in
Angola and the Democratic Republic of Congo, 1999 was an "unspeakably
bad year."
"The billion-plus dollars brought in by these countries' diamonds last
year was used to buy the machetes that severed their limbs, and the
weapons that have turned rag-tag gangs into serious military forces
their neighbors and international troops will reckon with for years to
come," he said.
Following is the text of Representative Hall's testimony: 
(begin text)
(Note:  In the text, "billion" means 1,000 million.)
Statement of the Honorable Tony P. Hall, M.C., Ohio
Testimony Before the Subcommittee on Trade
of the House Committee on Ways and Means
Hearing on Trade in African Diamonds
September 13, 2000
Mr. Chairman, Mr. Levin, and Members of the Subcommittee: I appreciate
your focus today, and the opportunity to testify to you.
My focus is on the human cost of the trade in conflict diamonds. I
have seen it in Angola, in Liberia, and in the Democratic Republic of
Congo (DRC) -- but it has never been clearer or sadder than in Sierra
Leone, where Congressman Wolf and I traveled last December.
Frank Wolf speaks eloquently about the people who lost their arms, and
ears, and lives to machetes wielded by rebels trying to overthrow this
small country's democratic government, so I'll let him tell that
story. And Cynthia McKinney can tell you what she and other members of
the International Relations Committee are trying to do to stop the
diamond wars and repair the damage they have caused.
What I want to focus on is the role diamonds play in butchery of
people whose nations are blessed with a resource that has become a
grotesque curse.
Industry and People
1999 was a very good year for the diamond industry. DeBeers, the
monopoly which controls 65% of the market, posted profits nearly 90%
higher than in 1998. Lazare-Kaplan, the largest American player in the
industry, earned nearly 40% more.
As a rule, 30% of these profits come from conflict diamonds (even
though these stones make up between five and 15% of the total supply)
because they tend to be large and disproportionately valuable stones.
In Sierra Leone, diamonds average two carats in size.
1999 was an unspeakably bad year for the people of Sierra Leone, and
little better for many in Angola and the Democratic Republic of Congo.
The billion-plus dollars brought in by these countries' diamonds last
year was used to buy the machetes that severed their limbs, and the
weapons that have turned rag-tag gangs into serious military forces
their neighbors and international troops will reckon with for years to
come.
The year 2000 hasn't changed the equation much -- except in Sierra
Leone. Now U.N. peacekeepers, whose deployment is costing $1.5 million
per day, have joined on the misery side of the equation. In May, 500
were kidnapped and held for weeks.
Today, 13,000 are virtually holed up in fortified areas -- unable to
open the country's main road, much less protect civilians. The force's
commander blames diamond profiteering both for rebels' broken promise
to disarm, and for in-fighting that has paralyzed his peacekeepers.
Incentives All Wrong
Unfortunately, until very recently, the diamond industry hasn't
considered any of this to be its problem. For most manufacturers, war
threatens their workers and factories. For oil companies, war
jeopardizes their pipelines and equipment. For the diamond industry,
though, the economic incentives are backwards. War favors traders who
can deliver weapons and supplies, and war increases the supply of
diamonds available. In recent years, war has been great for the
diamond business.
The niceties of international law haven't been much of a deterrent to
the diamond industry's participation in these wars either. For eight
years, traders dealt gladly with rebels who tried to overthrow Sierra
Leone's elected government, and briefly succeeded.
The business partners of a generally respectable industry there were
rebels who used the profits from their trade to turn children into
their parents' murderers, and then into soldiers and sex slaves ...
rebels who spent their earnings on drugs to make their young fighters
fearless, and to buy the weapons that make this one of history's
uniquely brutal wars on civilians. Traders reported these as Liberian
diamonds - six million carats a year worth, when they knew full well
that Liberian mines can produce just 2% of that.
There are similar stories in the Congo and in Angola, whose people are
now beginning to starve and whose land has been turned into a
minefield. In Angola, DeBeers bragged in a recent annual report about
its prowess in being profitable enough to buy enough rebel diamonds to
keep prices from collapsing.
Consumer Opinion
So economic and legal incentives for peace failed. For most
businesses, a third factor often is reason enough to do the right
thing: customer opinion. The diamond industry would seem to be
particularly sensitive to any link between its product and savage wars
that might stain its glittering image.
Industrial diamonds (most of which are man-made) have a real value --
but diamond gemstones' worth is in what they symbolize: love and
commitment. This image was created and is sustained by an advertising
campaign worth hundreds of millions of dollars a year. . . but it is
only an image. Fur, another luxury product with an image problem, does
keep you warm. Diamonds have no intrinsic value: their worth depends
wholly on consumer sentiment.
American consumers -- who buy two-thirds of all the world's diamonds
-- have a very different understanding of diamonds than Sierra
Leonean, or Angolan, or Congolese people. And with the increase in
media focus on the horrors of the diamond wars, reality is almost
certain to reveal these conflicting views.
As the situation now stands, though, there isn't much American
consumers can do to cut off their support for the diamond wars. Most
diamonds are mined in South Africa, Botswana, and other countries that
-- aided by a geological quirk of nature that makes it easier to
control their diamonds -- have used these resources for their people's
benefit. And most diamonds are cut in India, a poor country with a
long history of democracy, or Israel - two more places we would be
loath to hurt.
The people of these countries should not have to pay for the diamond
industry's greed, its arrogance, or its refusal to follow accepted
norms of responsible behavior. But in fact, they probably will be the
ones who will get burned once any spark ignites this tinderbox.
Whether Congress likes it or not, American consumers simply will not
be a party to this blood trade once the Benetton ads showing diamond
bracelets on Sierra Leone amputees start to run. That is the challenge
we face. That -- and not the industry-backed Antwerp plan, or other
approaches -- is the real threat. Just ask the fur industry.
Industry Response
I was encouraged to see the diamond industry finally do something to
end its assistance to this blood trade two months ago. Last year, when
I came up with a more traditional approach -- giving consumers
information to make their own decisions -- I urged the industry to
either support my approach or counter with something better. I had
hoped to introduce legislation implementing their counterproposal, but
the industry has not yet finalized its approach.
The CARAT Act
To encourage this process, I have joined Mr. Wolf and Ms. McKinney in
introducing the CARAT Act, HR 5147. With your permission, I'm going to
talk about it a little out of order.
Title III
Title III expresses the Sense of the Congress that our government
should do all it can to implement the industry's Antwerp proposal, or
something like it. I believe it is critical that Congress weigh in on
this early, because key countries and segments of the industry are
dragging their feet. The United States is the largest market for
diamonds; we have a moral obligation to speak out, and what we say
will make a difference.
It is my understanding that some Members of this Subcommittee question
the wisdom of this approach, and have particular concerns about its
compliance with the WTO. I have a few qualms of my own, but I've been
persuaded that -- until technology advances -- we need the industry's
cooperation to make any system work. This is what the industry's
leaders have agreed to; unless we have a better idea, I think we
should support it.
Title II
Title II aims to add some encouragement to the Antwerp process, by
requiring diamonds' origin be certified as soon as that is
technologically feasible and cost-effective. It permits the Treasury
Secretary to waive this if the system Title III envisions is up and
running.
I know the industry doesn't like Title II; I hope that including it
will motivate them to be sure it's never needed. I also hope it will
spur technologies that will let us determine the origin of a cut
diamond because I sincerely believe that consumers have the right to
know that. We know where our cars are from, and the parts in them; we
know where our clothes and our cheese were made. Why can't we know
where a diamond, which represents a significant investment of money,
was mined?
Title IV
Title IV requires the Administration to work more coherently on this
problem. Under Ambassador Halperin's leadership, more attention has
been paid to it, and Ambassador Holbrooke's focus probably has added
momentum to this work. But, as your Subcommittee has learned, Mr.
Chairman, there is apparently not the sustained commitment from senior
Administration officials this issue merits.
And much more effort is needed: over the past decade, our government
has sent more than $3 billion in humanitarian aid to Angola, Liberia,
the DRC, and Sierra Leone. Over the same period, $10 billion in
diamonds was smuggled out of these countries, turned into weapons, and
turned against their suffering civilians.
As long as any criminal can capture diamond mines that generate that
kind of money, we will be stuck in this vicious cycle. It is above all
a human crisis; but it is a diplomatic and a financial one as well,
and the Administration's attention needs to be sustained.
Title I
Finally, Title I implements two United Nations embargoes, on Sierra
Leone and Angolan rebels' diamonds, and expands them to countries
involved in the transshipment of diamonds banned by the United
Nations. Congressman Wolf has taken the lead on this provision, so
I'll let him explain it fully.
Because the United States imports very few rough diamonds, Title I's
embargoes will only become as tough as they sound when either Title
II, or the system Title III encourages, is implemented. But we have an
obligation as members of the United Nations to enact legislation to
enforce these UN embargoes; doing so in the context of a system for
targeting the roots of this problem signals our seriousness. And since
more than ample waivers are included, this provision can remain
current and fair.
Congress Needs to Act
The CARAT Act does not bind the legitimate diamond industry, but it
does send a strong message that is urgently needed. Hopefully, it also
will spur the technology needed to empower consumers if the industry
fails to control this blood trade.
I am pleased this bill has won the support of the NGO
(non-governmental organization) community. I will look to the industry
to demonstrate its sincerity by helping me to win your support for it.
And I urge this Committee to mark it up in time for a vote by the
House and Senate before we leave town. Time is short, but this is an
unusual opportunity to make a difference. The media spotlight is on
this problem; and human rights activists and the legitimate industry
are on the same side -- for now. We won't have this happy situation if
we wait.
NGO Response
Which brings me to the human rights community. Several months ago,
more than 70 respected American organizations -- led by Physicians for
Human Rights -- formed a coalition to press the industry to address
the problem of conflict diamonds. I was not surprised to see
activists' enthusiasm for this work: this would make great TV, and it
is one of the few straightforward ways to connect American consumers
to a problem in Africa.
I am pleased to see that activists are proceeding in a responsible
manner, though, and working out of the limelight for a lasting
solution. Launching a boycott of diamonds would be the easiest thing
in the world to do on this issue; this coalition has not done that.
Instead, they are waiting to see whether the diamond industry will
implement its ambitious proposal -- which it promised to have in place
later this month.
I don't expect the coalition to wait forever, though. Christmas is
coming, and with it a golden opportunity to educate consumers about
where the money they spend on tokens of love goes. Before then, two
networks are planning exposes of conflict diamonds that will be seen
by tens of millions of Americans. It will be increasingly difficult
for these thoughtful but powerful organizations to continue to wait
for industry and congressional action.
Congressional Response
I appreciate that time for the 106th Congress to act is short; that is
why I tried to make the CARAT Act as flexible as possible. If the
industry fulfills its promise to devise a workable system, there will
be time next year to come back to debate how to implement that without
running afoul of the WTO or prudence.
But this Committee and this Congress need to do something before we go
home next month.
I do not want to face constituents who've just seen 20/20 or 60
Minutes if we haven't done something. I do not want to face my local
jewelers, who may be trying to explain the human rights activists'
pickets to their customers, with the excuse that we need to study the
problem a little more.
And I do not want to tell taxpayers that we would rather spend
billions of dollars to treat the symptoms of the diamond wars, rather
than try to get to the root of the problem.
Thank you for your time, Mr. Chairman, and for your Committee's work
on this issue. I particularly appreciate the efforts Savitri Singh has
devoted to this matter, and want to commend you for her diligence.
I would be happy to answer any questions.
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)