Surat black market

Diamonds' sparkle still has heavy price

SURAT, INDIA - Such is its standing in the international diamond industry, India is expected to be chosen by the United Nations to take over the Kimberley Process - an initiative to stop the trade in African blood diamonds - from the European Union.

Monday January 22, 2007 By Dan McDougall found at nzherald.co.nz

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If you buy a diamond anywhere, it has most likely passed through the abominably polluted port of Surat.

As the centre of the diamond polishing trade, this industrial inferno processes 92 per cent of the world's stones in foul sweatshops and state-of-the-art factories.

India's diamond industry is the fastest growing in the world, employing more than a million people and turning over US$8 billion ($11.5 billion) a year. But there is evidence of the sale of blood diamonds on the black market from the Ivory Coast and Liberia, both banned from trading by the UN.

In a thriving corner of Surat's bazaar, Samir Shah's fat Rolex and impressive girth provide testament to his flourishing business. "These stones are from Africa," he said, holding up two knuckle-sized murky brown diamonds. "We can't always tell where they are from, but they aren't legitimate. But here business is done with cash and no questions."

Around Shah, rows of gem traders trickle rough diamonds into ancient brass scales. Behind them, hundreds of black-market dealers huddle over briefcases full of illegal raw and polished stones.

"Look at this diamond," Shah said. "It's not small, but is easy to smuggle. What can be done to stop that being smuggled to India? I will get a buyer, an agent for a polisher, who will give me a good price, and then sell it out of a reputable firm for export. There is no way it can ever be traced."

The stones brought in through the shallow waters of Gujarat's ungovernable west coast make a laughing stock of attempts to stem the global flow of blood diamonds. In 2000, the UN responded to outrage over the trade with the Kimberley Process Certification Scheme requiring all exporters to register diamonds with their respective governments before any can be certified and shipped.

Since then, largely through clever marketing by the industry, the issue has fallen off the political agenda. But concerns have been revived following the release of the film Blood Diamond, starring Leonardo DiCaprio as a diamond smuggler in 1990s Sierra Leone.

The World Diamond Council, representing De Beers among others, hired Sitrick and Co, a leading Hollywood image consultant. So far, the move seems to have worked - Christmas sales of diamonds reached record levels.

Alex Yearsley, a founder of Global Witness, the UK charity leading the campaign against blood diamonds, said: "Many within the diamond industry are paying little more than lip-service to the Kimberley Process. Despite this, power brokers are more concerned about the bad publicity that could stem from the DiCaprio film."

Amnesty International agrees that the industry is funding bloody conflicts in Africa. "The sparkle of diamonds still comes at a heavy price," a spokeswoman said.

"The Kimberley Process is being systematically bypassed and the reality is that conflict diamonds from Liberia are being smuggled into neighbouring countries for export, and stones from strife-torn Ivory Coast are also finding their way to the Middle East, to India for processing and ultimately into European markets."

Blood diamonds are not the only issue threatening the Indian Government's credibility. Campaigners say it continues to ignore Dickensian working conditions and the use of child labour. India's Save the Childhood Foundation estimates that diamond workshops employ up to 30,000 children.

Surat is an abysmal scene of row upon row of decrepit factories and red brick chimneys spewing yellow toxins into a discoloured sky.

Every morning more than 500,000 diamond cutters, most earning less than US$2 a day, trudge into its factories to slice, polish and facet the rough stones into sparkling gems.

This, economists say, is the true genius of India. It takes in the "garbage" from mines in Australia, Canada and Africa, slaps 58 facets on them, sets them in gold and sells them on at a vast profit.

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