Regulating conflict and crisis – Antwerp’s diamond trade

By Naomi Conrad

The first-time visitor arriving by train in Antwerp is dazed by its monumental railway station: An echoing, bustling dome under which travelers with take-away coffees and shopping bags stream to the many platforms, indifferent to the secular cathedral built as a marble tribute to capitalism and transport. The monument, inspired by St Peter’s Cathedral in the Vatican, to befit for the newly founded Belgian state, rests on funds brutally extracted from the Belgian colony of Congo. - Dubious foundations, like those of many a European monument.

The narrow streets leading away from Antwerp’s railway station are quiet, their small shops, easily overlooked, shuttered up; On Saturdays, Antwerp’s diamond district, where 80 percent of the world’s rough diamonds are traded behind the shabby closed doors of the alleyways, remain closed. The traders, many of them orthodox Jews, observe the Sabbath. The European Union is the biggest destination for rough diamonds, taking more than a third of the worlds legitimately produced diamonds. Most pass through Antwerp, Europe’s leading trading centre for rough, uncut diamonds; roughly 70 per cent of the EU diamond imports pass through the port.

Yet things have changed in the diamond capital, which used to house 30,000 Jewish craftsmen, polishing and trading their valuable glittering goods. Today, even on non-Sabbath days, many doors remain shuttered up; Europe’s diamond trade has been hard hit by the financial crisis, with diamond sales down 15-20 percent in 2009. And so, roughly 250 diamond polishers of the around 1,000 craftsmen have been laid off. Some big mining companies, such as De Beers, have even shut down production. 

However, it is not only the financial turmoil which is affecting Antwerp. India has risen to become the largest diamond manufacturing centre, taking the lion’s share of the diamond cutting business: Mumbai employs some 600,000 diamond cutters; and the Chinese dragon is also involved in the luxurious trade with roughly 25,000 workers. Yet both countries have been equally hard hit by the recession, roughly half of the Indian diamond workers have lost their job so far.

Yet, like the railway station, Antwerp’s glittering trade is said to rest on dark foundations: Diamonds are small and valuable, and can be easily smuggled across porous borders. And so diamonds have been used by governments, legitimate or otherwise, rebels and many others, to finance bloody civil wars in Africa. They have fuelled the turmoil and blood-shed of Angola, Sierra Leone or the Democratic Republic of Congo; Conflict diamonds steeped in blood.

Faced with rising consumer pressure for blood-free diamonds, a certification system, called the Kimberley Process (KP), was instituted by a coalition of governments, NGOs and the diamond in industry in 2002. The participating states agreed to implement controls and to certify all rough diamonds destined for export. In order to ensure an entry barrier to conflict diamonds, rough diamonds are required to be sealed in tamper-resistant containers and certificates guaranteeing their conflict-free origin each time diamonds cross an international border.

The European Union, one of the signatories, in the language that is typical of its bureaucracy “considers the KP to be a useful tool to stabilize fragile states and support their sustainable development”. It believes the KP to support the integration of the shadow economy into the formal one, thereby generating fiscal revenues which governments can channel towards development: Thus, according to the Democratic Republic of Congo, it exported 900 US Dollars worth of non-conflict diamonds in 2007, thanks in part to the KP.

However, not every country has signed up to the KP. Rather than being a legally binding international law, the KP is a commitment undertaken by participating states whose implementation depends on national actions of the participating states. Ghana, the Ivory Coast, Venezuela and Zimbabwe for example still operate outside Kimberley.

And so conflict diamonds continue to make their way to Europe, smuggled from uncertified countries and bribed across borders to neighbouring countries that operate under the KP, from where they emerge washed glitteringly clean with a KP certificate.  Furthermore, Antwerp dealers routinely settle their transaction in cash in hand with no receipts offered. Accordingly, legitimate enterprises could unknowingly be trading in blood diamonds, although the percentage of blood diamonds entering the European Union is estimated to have fallen. 

Nevertheless, until conflict-free diamonds can be genuinely guaranteed, Antwerp’s diamond trade, like its echoing station, continues to be built on dubious foundations.