It’s often said that perception is more important than reality. So when the World Diamond Council met recently in Catania, Sicily, the event’s host, CIBJO president Gaetano Cavalieri, joked that attendees probably expected to see bullets fly by.

None did, of course, but the jest wasn’t lost on attendees reeling from yet another spate of bad industry publicity.

The World Diamond Council, chaired by Eli Izhakoff, is the industry entity set up to deal with the conflict-diamond issue. It’s won some impressive victories, and it’s hard to imagine a Kimberley Process without it.

And yet perception hasn’t always kept up. The bad press has continued. Hollywood has traditionally been friendly to the industry, but now the trade is taking blows from everyone from rapper Kanye West to actor Leonardo DiCaprio. And for all the progress that’s been made, conflict diamonds are still around—and the industry has to cope with the equally thorny problem of African diggers.

So in Sicily, the WDC discussed ways to deal with these negative perceptions, and equally unpleasant realities.

THE GOOD

Most of the meeting discussed the Kimberley Process, and, on most fronts, the news was positive. Three years after implementation, the Kimberley Process has proven itself surprisingly effective and a genuine accomplishment.

The good feelings were shared by the nongovernmental organizations involved in the conflict-diamond issue—persistent critics at past meetings. “The Kimberley Process has made an enormous amount of progress in a short time,” said Harrison Mitchell, a campaigner for Global Witness. “We feel very positive about the Kimberley Process.”

Among Kimberley veterans, there was a sense of achievement. It was a process that once seemed on the verge of imploding, particularly at one notorious meeting where delegates bickered for hours over one word in the press release—whether the meeting had made “substantial” progress.

But Kimberley eventually came together, and it’s shown considerable muscle. “Just getting the Kimberley Process was one thing,” notes Ian Smillie of nongovernmental organization Partnership Africa Canada. “Turning it to something with teeth was another. When it came on stream, anyone could raise their hand and be a member of the list.”

But by establishing official monitoring, the Process has been able to bar problematic countries like Burkina Faso and Congo Brazzaville from the system. Today none of them can legally export diamonds to the cutting centers—and won’t be able to until they demonstrate to Kimberley officials that they have better internal controls. “There isn’t an international agreement like the Kimberley Process anywhere that has this level of monitoring,” said Smillie.

Kimberley has also led to an unexpected—but welcome—increase in official exports in countries like Sierra Leone. WDC general counsel Cecilia Gardner notes that the country’s official diamond exports increased 160 million carats in 2004, a value of $10.3 billion—meaning those stones now benefit their country of origin, not just smugglers. Smillie even thinks the Process hastened the end of Sierra Leone’s civil war.

THE BAD

But the good news has not always penetrated to the rest of the world. The end of 2005 and the beginning of 2006 have seen the most sustained run of bad press since the industry battled NGOs over conflict-diamond legislation in 2001.

It started with the Kanye West single “Diamonds From Sierra Leone” and its graphic video. That seemed to spur negative articles in the Wall Street Journal and elsewhere. This June will see the publication of a new book, The Heartless Stone, which bills itself as a look into “deceit and desire” in the diamond industry. There is also the minidocumentary Bling: Consequences and Repercussions, narrated by rapper Chuck D, which is trying to turn itself into a feature. And finally—and perhaps most importantly—there is the upcoming Leonardo DiCaprio movie, The Blood Diamond (see sidebar, p. 112)

“Every time I read about diamonds, there is a little dig about us,” complained WDC member Harry Levy of the London bourse, who brandished a story from a local London newspaper headlined “Is it okay to buy diamonds?” (The answer: not really.) “People used to buy diamonds with happiness and joy,” Levy said. “But now we are being tainted at every possible level.”

All this led to calls that the industry had to get its public relations house in order.

“Do we all have a series of talking points when the media calls?” asked Dr. Martin Hochbaum, managing director of the Diamond Dealers Club. “We all know what the questions are going to be. It’s a failure on our part if we don’t have talking points prepared.”

The thought used to be that, if the industry got the conflict-diamond issue under control, the unfriendly press would go away. But that hasn’t happened. “We have to not only do the right thing,” Izhakoff said, “but we also should be seen to be doing the right thing.”

THE UGLY

Much of the Sicily event had an upbeat, festive, and often self-congratulatory feel, but conflict-diamond issues still exist. That’s because, sadly, conflict diamonds still exist.

Originally, three countries were known for conflict diamonds—Sierra Leone, Angola, and the Democratic Republic of Congo. Now the wars in those three countries are mostly over, except in the DRC (where there is little fighting in the diamond areas). But in their stead, diamonds are being mined in conflict areas in Liberia and Ivory Coast (aka Cote d’Ivoire).

Ivory Coast is considered the most serious problem. Diamonds are not as central to its conflict as they were to, say, Sierra Leone (cocoa/chocolate is much more of a factor). But they are putting money in rebels’ pockets, Global Witness’s Mitchell noted.

“There are significant diamond-mining operations occurring in rebel-controlled areas in Cote d’Ivoire,” Mitchell said. “Diamonds from Cote d’Ivoire are crossing the borders into Mali, into Guinea, and into Sierra Leone. A United Nations panel of experts that studied the extent of diamond mining in Cote d’Ivoire estimated the production in a November 2005 report to be around 300,000 cts. per year. In interviews with local fixers in Mali, we were told that they arrange for dealers from the U.K., Russia, the United States, and South Africa to come and buy diamonds from Cote d’Ivoire. … [This] is not just illegal, but trading in these diamonds is fueling conflict and instability.”

“These are conflict diamonds,” agreed Mark van Bockstael, WDC’s technical director, “and they are getting into the mainstream of our industry. We need to stop them and be proactive.”

On the second day, WDC turned its attention to another pressing human rights problem and potential public relations nightmare: alluvial diamonds.

“If a CNN crew would go today to Sierra Leone, they would see a 14-year-old kid prospecting for a cup of rice, that would hurt our image,” said WDC member Martin Rapaport. “Now that kid’s parents may have died of AIDS and that rice might be feeding him and his sister. So it’s not all terrible.”

It’s not all good, either. Smillie noted that many alluvial diggers earn a dollar a day. “That’s regarded by the U.N. as putting you in absolutely poverty,” he said. “The safety conditions are terrible, and they are vulnerable to every kind of predator.”

To tackle this problem, De Beers, Rapaport, and the two main diamond NGOs—PAC and Global Witness—have created the Diamond Development Initiative, which held its first meeting last year in Ghana. The group is studying the problem and has drawn up a list of possible remedies. But it’s a big job, affecting an estimated 1 million diggers.

“There aren’t a lot of obvious recommendations or solutions,” said Smillie. “This is a problem that has nagged the industry from colonial times, and is basically behind the entire conflict-diamond issue. If you could do something about 1.3 million African diggers, it would be one of the biggest development projects on the continent.”

It will be a big job—and another reminder that for all the success of the Kimberley Process, the industry isn’t through cleaning itself up yet.