Some substances in the world have a very important value for human beings. These materials, which attract attention in every region of the world with their valuable structure, have a very high material value. One of the most important materials is diamond. Although diamond is a natural stone, it is shown by most people as the most precious stone on earth. Diamond is traded all over the world in the context of diamond exchange. However, there are serious problems related to diamond exchange.
Diamond exchange refers to the trade of diamonds worldwide. The major problem with diamond exchange is the working conditions of workers in diamond mines, as well as in the transportation of diamonds. Such that, some diamonds are called conflict zone diamonds, where there is war and violence around the excavation sites. The Kimberley Process is all about this major problem. Let’s check out the diamond exchange worldwide and the related problems together!
General Information About Diamond as an Exchange Goods
It was first discovered by the French chemist Lavoisier that diamond is pure carbon. Lavoisier burned the diamond and when he saw that the combustion gas was only carbon dioxide, he concluded that the diamond was carbon. Diamond melts at 3547 degrees. The diamond was originally only found in Kimberlite Chimneys. Other types of diamond formations were probably formed by erosion from Kimberlite or by the metamorphosis of sediments. Sometimes diamonds may not be found in kimberlite rock. The rate of being found is only one in forty million.
Kimberlite is a volcanic rock residue containing a high percentage of magnesium and iron. Many other minerals are also found in these rocks. Calcite, olivine, ilmenite, mica, etc. Kimberlite is found in the form of channels in the deep layers of the earth’s crust. It is accepted that the diamond goes up with some earth crust movements. It is partially mixed with river sands in some areas. Australia, South Africa (in Kimberley), South America, Indonesia, and India can be counted as the places where the diamond is most abundant.
The mining of diamonds is like the processing of other minerals. Crystals alone are not that abundant. They are very scattered and even hard to detect. As there are ores close to the earth, there are also ores that are 300 meters deep. Ore rocks are broken by dipping pipes. The extracted muddy, sandy ore is passed through two processes. Minerals that are too heavy sink to the bottom. Then, the sandy-muddy mixture is vibrated up and down in a kind of sieve, and the diamond is precipitated to the bottom.
The only mineral that can be both cut and polished with a separate system is diamond. Many diamond crystals are self-made diamonds. But some of it has to be cut. Cutting it requires attention and meticulousness. The value of diamonds is related to four factors: cut, color, size (carat), and clarity. It is also very important whether there are cracks or not. Because the crack makes it difficult for light to enter. Yellow and brown diamonds are undesirable. Pink, violet, and green diamonds are very popular. The way it is cut is perhaps the most important factor, and its value increases with piece size. De Beers is a British company that is the world’s largest producer.
Pay attention to the EGL Certificate! Many diamonds certified with EGL (European Gemology Laboratory) are offered to the market at low prices. Be sure to find out how much the diamond quality values specified in the EGL certificate are charged in the IGI, HRD, and GIA certificates. In African countries, especially in Sierra Leone, and in a few underdeveloped countries, the poor people of the country are forced to work under very difficult health conditions. Worse still, civil war reigns in these countries, these civil wars are known to be supported by big diamond companies.
In these countries, the hands of those who do not accept to work under difficult conditions or to be a soldier and fight are cut off, and the rate of disability in these countries is quite high compared to the population. In recent years, a new classification definition has emerged for diamonds against this human tragedy. According to this classification, there are 2 types of diamonds, these are conflict-free and conflict-free diamonds.
As the name suggests, conflict diamonds are obtained by starting a civil war in the country with the support of diamond companies and by making the people of the country forced to work under very difficult health conditions. On the other hand, while the diamonds called “Conflict-free” are mined, the people employed are employed in healthy conditions and for wages, and at the same time, no conflict or civil war is caused in the country.
Conflict Zone Diamond Exchange
Concerning the diamond trade, conflict diamonds (also referred to as transformed diamonds, blood diamonds, hot diamonds, or war diamonds) are used in the war zone or to finance rebels, and are very commonly found in Africa, where world diamonds are usually found. Although ‘Certificate of Origin’ is used as the method to distinguish blood diamonds from legitimate diamonds, countries are required to resort to additional checks and more stringent controls.
The United Nations defines conflict zone diamonds as ‘force against legitimate and international governments, or those extracted from Nizip areas used to fund military action against those governments, or in violation of Security Council resolutions.
Conflict diamonds came to the world’s attention during the brutal conflict in Sierra Leone in the late 1990s. During this time, it is estimated that around 4% of the world’s diamond production represented conflict zone. Illegal rough diamonds were also used as funds by insurgents during conflicts in Angola, Liberia, Ivory Coast, and the Democratic Republic of Congo. Today the flow of conflict diamonds has dropped significantly and is less than 1% of world diamond production.
Angola, a Portuguese colony, gained its independence on 11 November 1975. Although it gained independence, from 1974 to 2001 the People’s Liberation Front of Angola, the Collective Liberation Front of Angola, and the National Unity and the National Liberation Front of Angola organized Popular Movements. Between 1992 and 1998, after the breach of the 1991 Bicesse Agreements, UNITA sold $3.72 billion worth of diamonds to finance its war with the government.
They explain that in UN Security Council resolutions 1173 and 1176, the role of diamonds in financing rebel groups in Angola is great and it was decided to stop diamond purchases from Angola. Resolution 1173 was the first UN resolution to specifically disclose the diamonds that were financing the war. Despite the efforts of the UN, UNITA continued to sell or trade diamonds to finance the war. The creation of war had been by blood diamonds.
- Liberia and Sierra Leone
Between 1989 and 2001, Liberia was in a state of civil war. In 2000, the UN accused Liberia president Charles G. Taylor of supplying arms and training to the Revolutionary United Front (RUF) in neighboring Sierra Leone in exchange for diamonds. The UN sanctioned the Liberian diamond trade, in 2001. Taylor, on the other hand, was exiled after resigning from the presidency in 2003, first to Nigeria and then to The Hague. More recently, Liberia is now working for a won peace and legitimate diamond business.
- Ivory Coast
Ivory Coast began to develop in the diamond sector in the early 1990s. After the government was overthrown with the coup in 1999, civil war broke out. The country became a route for diamond exports for Liberia and war-torn Sierra Leone. Thus, foreign investors began to come to Ivory Coast. The UN Security Council banned all diamond trade in Ivory Coast in 2005 to restrict the illegal diamond trade. Despite all the UN sanctions, the illegal diamond trade still exists in the country.
Kimberley Process and Diamond Exchange
In 1998, Global Witness launched an extensive campaign to uncover the role of diamonds in natural resources and financial conflicts. With increasing pressure from Global Witness and other NGOs, the main diamond producing and trading countries, representatives of the diamond industry, and NGOs came together in the Kimbers (South Africa) to identify and resolve the blood diamond problem.
The meeting, hosted by the South African government, resulted in the establishment of the international diamond certification program as a result of 3-year negotiations, which caused frequent discussions. Thus, the Kimberley Process was accepted by the United Nations General Assembly and the United Nations Security Council and entered into force in January 2003. The Kimberley process started when the diamond-producing states of South Africa met in Kimberley in May 2000. The purpose of the meeting was to stop the trade of “conflict diamonds” and to discuss that those who sell diamonds do not fund the violence.
In December 2000, the United Nations General Assembly adopted a landmark resolution supporting the establishment of an international certification program for the rough diamond trade. This document sets out the conditions for controlling the production and trade of rough diamonds. The KSCS came into force in 2003, when participating countries began to implement the rules.
The Kimberley Process is open to any country that can meet its rules and requirements. As of November 2008, it has 49 members representing 75 countries, including the European Union and individual member states. KP members account for approximately 99.8% of rough diamond production on a global scale. In addition, the World Diamond Council, which represents the international diamond industry, and non-governmental organizations such as Global Witness and Partnership-Africa Canada, played a major role in the creation and continuation of the Kimberley Process.
The Kimberley Process is an international control system initiated to prevent the entry of conflict diamonds in African countries, to protect the legal diamond industry, and to prevent the import and export of rough diamonds from countries that are not included in this process. The illegal trade of rough diamonds, especially in some African countries where diamond production is intense, has provided significant financing to the activities of insurgent movements aimed at supporting armed conflicts, weakening or overthrowing legitimate governments, has had devastating effects on public safety, and has led to human rights violations. For this reason, the diamond, which is a precious gemstone, has begun to be referred to as blood diamond, dirty diamond, or conflict zone diamond.
In this regard, in the first resolution numbered 1173 taken by the United Nations in 1998, it was mentioned that rough diamonds were used to finance the activities of rebel groups. According to the reports on the subject, it has been determined that approximately 20% of the diamond production in the 1990s was for illegal purposes, and approximately 15% was under the control of conflict groups. However, according to the estimates of the World Diamond Council, this rate decreases to 1% as of 2004.
Two years after the decision taken by the United Nations in 1998, the diamond-producing states held a meeting in the town of Kimberley, South Africa in May 2000, and discussed solutions to prevent the diamond trade by conflict groups. After two years of conflict and negotiations, the Ministers of 37 countries met in Switzerland on November 5, 2002, and decided to apply the Kimberley Process Certification System on the rough diamond trade as of January 1, 2003.
Kimberley Process Certification System
The Kimberley Process basically aims to carry out the rough diamond trade between member countries and is accompanied by certificates. Thus, production and trade activities by illegitimate groups and individuals are prevented. All participating countries are required to provide a Kimberley Process Certificate with each shipment of rough diamonds for export, and the Certificates must meet the specified minimum standards.
Each participant is required to request that each such shipment be accompanied by a duly validated Certificate in the shipment of rough diamonds to be exported to another participant, and request a duly validated certificate from a participant in the shipment of rough diamonds to be imported. At the same time, it is necessary to ensure that the confirmation of receipt is sent immediately to the relevant Export Authority. It is essential that countries ensure that no rough diamonds are exported to a non-participating party and no rough diamonds are imported from a non-participating party.
The Kimberley Process Certification System has been introduced to put an end to the phenomenon of ‘blood diamonds’ or ‘conflict diamonds, in which the Kimberley Process was initiated. The Kimberley Process negotiations started in 2000 and the Kimberley Process Certification System started to be implemented in 2003. The system, which worked irregularly in the first 6 months of the application, started to work much better than imagined towards the middle of 2003.
In the 1990s and over the next 10 years, diamond fields in Angola, Sierra Leone, and the Democratic Republic of Congo began to be exploited to finance insurgent wars, respectively. The diamond soils here, unlike those in Russia, Canada and Botswana, are only a few centimeters below the soil surface. Even from colonial times, such diamonded lands are difficult to manage and regulate.
Conflicts in the diamond trade began with Jonas Savimbi in Angola in the early 1990s and quickly spread to Sierra Leone. It was later copied by rebel armies in the Democratic Republic of the Congo, from where it spread to Guinea, Liberia, and Ivory Coast, respectively. More than 15% of the $10 billion diamonds produced worldwide in the 1990s are recorded as conflict zone diamonds. Hundreds of people died directly due to these wars, and many were lost from indirect causes.
Certain Problematic Regions in Diamond Exchange
Many problems arise as to how rough diamonds should be arranged. Although the diamonds first mined from different regions and countries have different properties and values, it is not possible for even the best diamond dealers to distinguish them by eye when mixed. Even if it is possible to tell from which region a diamond was extracted in terms of properties, it is impossible to determine its exact location.
Since fingerprint technology on diamonds has not been developed much, it is possible to determine the origin of the extracted diamonds by using the marking or marking technique. However, no rebel army went to diamond marking in this way, and it was difficult to determine the places where the diamonds were removed, as the markings on the rough diamond were removed very easily. It is proof that even the tracking systems placed on diamonds did not work historically, even in Europe and Israel. Thus, diamonds were used to finance money laundering and other illegal activities.
In Africa, where more than 70% of the world’s diamonds were mined during the twentieth century, diamonds were used to export capital and finance weak economies. In Angola, Sierra Leone, and the Democratic Republic of the Congo, the diamond trade has gone even deeper. In addition, the much more legitimate diamond trade is operated largely as a cash need, without formal contracts or auditable paperwork. The diamonds were in almost the most ideal environment for the rebels who came to use them.
Conflict diamonds were first identified by Global Witness in Angola in 1998. Later in 2000, Partnership Canada Africa published a report on the role diamonds played in the 9-year war in Sierra Leone. Until then, the diamond industry was largely in denial of the problems: only in the mid-2000s, the problems began to be challenged. Various factors caused the situation to change. The few quality rough diamonds obtained in the world usually pass through two funnels. One is De Beers, where until recently 80% of all rough diamond production was under control. The second funnel is Antwerp. It served as a crossroads, dominating about 90% of the world’s diamond trade for more than two centuries.
Later, the South African country became another high-stakes player in the diamond industry. In May 2000, the South African Minister of Minerals and Energy held a meeting in Kimberley, the place where diamonds were first mined in South Africa. Industry leaders, governments, and non-governmental organizations attended the meeting. Based on a decision planned by Angola in 1998, a new decision was taken at the meeting. Angola has stated that, based on the Security Council Agreement, it will not trade in diamonds without the required certification by the Angolan government that the diamonds are ‘clean’.
The certification system was largely ineffective, as diamonds imported from Angola continued to be smuggled out of neighboring countries. In the 1990s, Belgium recorded billions of diamonds in most customs archives as countries where no diamonds were actually mined—such as Liberia, Gambia, and Zambia. Angola’s certification system alone was not beneficial, but the participation of all countries in this system would result in increased inspection and control, both internally and externally.
After the first meeting in South Africa, many more technical meetings were held to develop a detailed implementation of this problem. Many countries were cautious about the talks and were worried that such a process would emerge. The USA (the first country in the world to use diamonds), Russia (the second country to produce diamonds in the world), and China were the biggest enemies of the process. For them, the crux of the problem was the workload and costs in regulating trade. After meetings held in many parts of Africa and Europe, a final agreement was signed in Interlaken in November 2002.
Functioning of the Certificate
Kimberley Process participants – governments, the diamond exchange industry, and non-governmental organizations – meet annually to discuss the implementation of the plan. Working groups also attend meetings to discuss and evaluate statistical analyzes and technical issues. Global Witness, Partnership Africa Canada, and other non-governmental organizations played an active role and supported the writing, negotiation, and evaluation of the Kimberley Process White Papers.
A formal 3-year review was committed in 2006 to evaluate the effectiveness of the participants in the Kimberley Process and to ensure that proposals to eliminate blood diamonds meet the target. In this review, the Kimberley Process was seen as a crucial opportunity to close the gaps and to prove that the process is reliable and effective in practice.
Participating countries are required to establish an internal control system designed to prevent the circulation of conflict diamonds in shipments of imported and exported rough diamonds. Again, it is essential to appoint an Export and Import Authority or Authorities. Import and export of rough diamonds must be done in containers that will not be interfered with from the outside. It is essential to make the necessary legislative arrangements in order to implement and sanction the Certificate System and to foresee deterrent and proportional penalties for violations. Relevant official institutions or organizations are required to collect, store and report production, import, and export data.
Participating countries will provide for the self-regulation of the sector, which consists of companies operating in all relevant fields such as production, import, export, transportation, based on the control of companies from independent auditors and helping to facilitate full traceability of the rough diamond trade by the relevant government authorities and with intra-industry penalties to be determined by the sector. have to implement a system to be supported.
Information identifying the designated authorities and institutions responsible for the implementation of the provisions of the Certificate System of the participating countries is provided to each other through the Presidency. Each participant, as he/she wishes, conveys information about the relevant laws, regulations, rules, procedures, practices, and updates to the other participants, preferably in electronic format, through the Presidency. It is of great importance that member states regularly share their experiences and other relevant information.
The creation and sharing of reliable and comparable data on rough diamond production and international trade are of great importance for the effective implementation of the Certification System, it is a necessary tool to produce statistics at the required standards and to identify irregularities and abnormal situations that indicate the involvement of conflict diamonds in legal trade.
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