New code of conduct on diamond trade could be meaningless, warns minister

The chorus of concern over the trade in "conflict diamonds" mounted yesterday when the British government called for closure of a loophole in a proposed new code of conduct for the industry.

The chorus of concern over the trade in "conflict diamonds" mounted yesterday when the British government called for closure of a loophole in a proposed new code of conduct for the industry.

Peter Hain, the Foreign Office minister for Africa, said a United Nations-inspired move to curb the trade in illicit gems which is fuelling conflict on the continent could be meaningless unless the measures are tightened. The UN imposed a worldwide ban on trade in diamonds from rebel-held areas in Sierra Leone and Angola to stop the source of guerrilla funding.

Mr Hain's intervention came at a meeting of the World Diamond Congress in Antwerp which reflected the strength of the outcry over disclosures that the carnage has been funded by the trade in diamonds. While the approach of producers in trying to resolve the issue was broadly welcomed, one organisation accused an association representing the diamond bourses of "living in the past".

Despite the evidence of suffering in Africa, campaigners have been careful not to suggest a consumer boycott, aware that it would destroy legitimate trade in Africa. However, Tony Hall, an American congressman, said the US market, which accounts for 70 per cent of global diamond consumption, could dry up if strong measures were not taken. "If consumers find out nothing is being done about it, there will be a boycott - not just on conflict diamonds, but on all diamonds," he said. "We've got to find a way to take the profit out of [conflict] diamonds."

By contrast, Mr Hain sought to build on the progress made with the producers, describing their plan as "excellent", only to qualify his support later in his speech. He said it "makes no sense to disrupt the normal pattern of the trade and the way that companies add value" and that "we must go for workable ways forward". But he added that "the 21st-century consumer increasingly demands the right to know. The voice of civil society cannot be ignored. If NGOs [non-governmental organisations] are demanding greater transparency and accountability, we should all welcome their wake up call."

The International Diamond Manufacturers Association (IDMA), which represents the 10 leading world centres, proposes to certify all rough diamonds through an office in every exporting country which seals and registers every package of stones.

Every country involved in the trade would have to set out penalties against individuals or companies involved in illegal trade under a programme monitored by an international council. Under the proposal anyone found breaching the conditions would be expelled from the manufacturing association. That, said Mr Hain, "has little meaning if you can carry on trading regardless". He added: "The industry needs to decide that only licensed manufacturers and dealers can trade. In that way the threat of expulsion can be given meaning."

The World Federation of Diamond Bourses (WFDB), meeting in parallel with the IDMA, would have power to close the loophole but campaigners were sceptical about its commitment. Charmian Gooch, director of the Global Witness pressure group, praised the manufacturers but added: "Unfortunately the WFDB has failed to understand the need for reform and is allowing personality and power politics to get in the way of ending the trade in conflict diamonds." Global Witness, which says "the eyes of the world are on the diamond trade", has called for a swift agreement to be implemented so that consumers will have the confidence to buy in the run-up to Christmas.