Angry rallies. Scorching TV shows. Even threats of a boycott. The jewelry industry has never been faced with a crisis like the conflict diamond issue. While it has not yet affected jewelers on the grassroots level (see following story), it still could blow up in the industry’s face.

Certainly, the issue is morally troubling. And for those not familiar with African politics, it’s also confusing. How are diamonds tied to war and amputations? And if there’s no way to pinpoint the origin of a diamond, can the problem ever be resolved?

All good questions. To help you answer them, JCK has compiled a primer outlining the basics of the issue. Let’s start at the beginning …

We hear about conflict diamonds. What is the connection between diamonds and conflict?

The relationship is simple: Diamonds mean money.

Rebel factions in Angola, the Democratic Republic of Congo, and Sierra Leone feed their arms-buying and army-building wholly or in part through diamond sales. In some instances, the insurgencies might have fizzled out if not for diamonds and other resources.

One reason diamonds are attractive to these movements—and so hard to control—is because they are “portable wealth,” valuable but easy to conceal and difficult to track. Since there’s no scientifically reliable way to tell where a diamond comes from, the diamond industry historically never gave much thought to a stone’s origin. Until recently, importing centers logged the stone’s last point of departure, not where it was mined.

So why is this all the industry’s fault?

Whether the industry is “responsible” for this is a complex question. Since there’s no way to determine a stone’s birthplace—although some experts can tell the origin of parcels—jewelers had no way of knowing a stone’s origin. But it’s likely that some in the industry knowingly bought conflict diamonds. Today, however, with the controversy over the issue, most big players avoid such stones.

Still, it’s too simplistic to say “diamonds equal war.” They also have played a vital role in the economic development of Botswana, Namibia, and South Africa and may one day help rebuild the countries embroiled in conflict. Remember, too, that there have been plenty of conflicts—in Africa and elsewhere—that have nothing to do with diamonds or any other commodity.

Diamonds are not the only natural resource fueling these wars. In Angola, the rebel group UNITA is funded primarily by revenue from oil as well as diamonds. In Congo, several resources are involved, including copper, oil, gold, and “col-tan” (colombo-tantalite), a mixture of rare ores that has immense economic and strategic importance.

Even putting the atrocities aside, it’s hard to argue with the principle that the industry shouldn’t deal in diamonds that are stolen in violation of both international edicts and local laws. Not many industries are allowed to handle what are, in effect, smuggled goods.

What percentage of diamonds are conflict diamonds?

According to De Beers, they represent less than 4% of overall production by value—3.7% to be exact. Conflict diamonds from Sierra Leone make up only 1%. While these numbers are small from a percentage standpoint, 4% of the world’s diamond supply is a lot of diamonds … and a lot of money.

Even though it’s an industry-generated number, the 4% figure is widely accepted. Even human rights group Global Witness doesn’t quarrel with it, although they peg the number at a slightly higher 7%.

The skeptics are mostly politicians like Rep. Frank Wolf (R-Va.), who regularly proclaims that conflict diamonds represent “10% to 15%” of overall production. In the 1990s, when Angolan diggers were flooding the market with illicit rough, the number may have topped 10%. Today, however, few authorities believe the number is anywhere near that figure. JCK also was unable to substantiate Congressman Tony Hall’s (D-Ohio) repeated assertion that these stones “represent 30% of the industry’s profits”—since, in an industry of mostly private companies, determining trade profits is impossible.

In any case, there will never be solid data—diamond smugglers don’t publish numbers. It’s also possible that the media attention has driven the numbers down: De Beers recently said that conflict stones were fetching 30% less on the open market.

What countries are involved?

The country spotlighted on both 60 Minutes and PrimeTime Live is Sierra Leone, a small African country of nearly 5 million people that’s been torn apart by war for over a decade.

News reports on conflict diamonds focus on Sierra Leone for two reasons. First, the Revolutionary United Front (RUF) rebel group, which controls virtually all of the country’s diamond fields, is particularly brutal and has made amputations its signature method of intimidating local populations. The estimated 20,000 amputations began as a terror tactic to prevent people from voting—which doesn’t explain why the RUF has also amputated the limbs of many children. The group has also been accused of rape, kidnapping, enlisting child soldiers—even cannibalism.

Second, while other conflicts involve other commodities, the war in Sierra Leone is fueled almost entirely by diamonds. Many believe the war is a cover for the systematic plundering of the country’s diamond resources by neighboring Liberia. Once again, the stones are not entirely to blame—if the region didn’t have problems, the country would be prospering from its resources instead of fighting over them.

A lot of the responsibility can be laid at the feet of Liberian president Charles Taylor, a former rebel who until recently had high-powered friends in Congress (including some currently backing conflict diamond bills). Taylor is said to be not only in cahoots with the RUF but also profiting from the group’s control of the diamond fields. Many conflict stones from Sierra Leone are reportedly funneled (“transshipped”) through Liberia. Although Liberia denies the accusation, the United Nations has slapped sanctions on Liberia’s gem exports for just this reason. (Sanctions also have been imposed on “non-official” Sierra Leone gems.) The problem is that, in the past, diamonds have slipped out from several transshipment points. Nearly all of Sierra Leone’s neighbors have been accused of being transshipment points—one reason the problem is so hard to control.

At present, Sierra Leone is under a cease-fire agreement, but it’s a shaky one. The RUF promised to vacate the country’s diamond fields but hasn’t honored its pledge. The war also has spilled over into neighboring Guinea (which also has diamond fields), as many Sierra Leone refugees—including RUF soldiers—pour over the border.

Like Sierra Leone, Angola has an abundance of diamonds. It’s the world’s seventh largest diamond producer by value. The Angolan government and Jonas Savimbi’s UNITA rebels have been battling for nearly a quarter-century. In 1992, UNITA torpedoed a cease-fire when country-wide elections didn’t go its way. The resulting war killed up to 1,000 people a day. Another cease-fire was imposed in 1994—and collapsed three years later.

Lately, the Angolan government has made impressive strides against UNITA, although there is some disagreement over whether UNITA controls the country’s diamond fields. The government says “no”; outside nongovernmental organizations (NGOs) say “yes.”

The situation in the Democratic Republic of Congo is quieter, a result of the ascension of Joseph Kabila to the presidency following his father’s assassination. As in Sierra Leone, the battle for the DRC is largely a proxy battle for area nations. Uganda and Rwanda support the rebels, which currently control one-third of the country; Angola, Namibia, and Zimbabwe back the government. But in contrast to the other countries profiled here, many diamond fields in the DRC are under government control.

The nations of the world have been as guilty as the diamond industry—if not more so—in closing their eyes to Africa’s woes. Even today, no political will exists to stop these conflicts with military action. So the idea is to stop the rebel groups by choking off their income, which is why the world has thrown such a harsh spotlight on the diamond trade, which has been fingered in three African conflicts.

In 1998, the United Nations placed an embargo on diamonds from UNITA. At first, the industry greeted the news with shrugs—arguing there was no way to determine the origin of a diamond. However, the head of the U.N. Sanctions Committee, Canadian ambassador Robert Fowler, and a small London-based NGO, Global Witness, were determined to make the sanctions stick.

In October 1999, Global Witness and four other NGOs organized “Fatal Transactions,” a campaign to publicize the link between diamonds and war. The campaign led to media coverage throughout the world, and its organizers raised the specter of a consumer boycott if the situation wasn’t resolved. The U.S. and British governments also leaned on the industry to find a solution.

This led to the “Kimberley Process,” named for the South African city where the first meeting took place in June 2000. At the first meeting, participants—representing the industry, governments, and NGOs—discarded proposals to scientifically determine a diamond’s origin and “tag” diamonds through the pipeline. Participants united behind a worldwide certification system, under which every diamond-producing country would issue an “origin certificate” for every diamond. To prevent tampering, all diamonds would be sealed in tamper-proof containers, and all imports and exports entered into a worldwide computer database.

A month later, the diamond industry endorsed this approach at the World Diamond Congress in Antwerp. The industry also created the World Diamond Council to tackle the problem.

Many hoped the certification system would quickly be enacted and the issue put to rest. In the six months since the Antwerp meeting, the industry has made important strides. It’s developed the outlines of a workable certification scheme, and the world’s major diamond producers have agreed—in principle—to the control system.

But the industry misread the international will for a more transparent trade. Countries like Russia and Namibia openly balked at having international monitors peer over their shoulders. The computer database idea has already been dramatically scaled back. Both the World Diamond Council and NGOs hope U.S. legislation will speed the pace. They have brought forth proposals that will allow U.S. imports only from countries that are part of the rough control mechanism. The thinking is that this will goad the fence-sitters to sign on, since the United States accounts for 65% of the diamond market.

Will the industry’s solution work?

It’s not foolproof. Past certification schemes—particularly in Angola—disintegrated when government officials allowed rebel stones to slip in with “official” ones. While the current trial systems in Angola and Sierra Leone are considered technologically flawless, it’s still up to local authorities to ensure that no rebel stones leak into official channels—but those authorities have not always proved reliable in the past.

In addition, these stones could still be smuggled via cutting centers. Many feel this issue will be resolved only when there’s a way to track diamonds from the mine to the jewelry store, and such a solution may not be found for several years, if ever.

Even so, certification will yield certain benefits. It will hike the cost of diamond smuggling, give authorities tools to track those who are dealing in these stones, and give those who want to obey the laws a way to do so. It is also designed to halt transshipping: If a country is suspected of letting another country’s gems slip through its borders, it will be disqualified from the system.

So far, certification is the only solution on which all sides can agree. Now, the only cause of disagreement is how quickly the system can be implemented.

If everyone agrees on a solution, why are the rallies and demonstrations still being held?

Like the wars themselves, each cease-fire between the industry and the NGO community has fallen apart, leading to new and nastier battles.

The source of the current friction is the industry’s failure to support two prior pieces of legislation sponsored by Congressman Hall. The World Diamond Council vetoed both as unenforceable, and some in government agreed. Even so, the falling-out led the NGOs to launch a “consumer education campaign” in February of this year—the campaign they had been threatening to implement since last October.

The basic problem seems to be a mutual lack of trust. The NGOs, along with Congressman Hall and his partner, Rep. Frank Wolf, feel that the industry is dragging its feet and responds only when pressured. They are also disappointed with the slow pace of progress in enacting the certification system. But many on the industry side suspect that the NGO-Hall-Wolf coalition is more interested in making political hay from the issue than in solving it.

Currently, the two sides have dueling pieces of legislation they hope to eventually meld into one. The debates are largely over details, such as whether diamond jewelry imports should be certified in a manner similar to that used for rough diamonds. The industry hopes that, if a bill emerges that all sides can support, the NGOs’ consumer campaign will be quieted.

Until then, the conflict battle rages on … and the possibility remains that these brutal faraway wars will claim the industry among their casualties.