TRADE: Venezuelan
Diamonds Under the
Microscope
By Stephen Leahy*
TORONTO, (Tierramérica)
- Venezuela will have to
explain its policies on
mining and exporting
diamonds at the next
annual session of the
Kimberley Process, an
intergovernmental
initiative to halt the
use of the diamond
industry to finance
armed conflicts and
civil wars.
The Venezuelan
government has
recognised that it is
not easy to monitor its
vast border, but assures
that it intends to
comply with the
Kimberley Process (KP),
of which it is one of
the three South American
members, along with
Brazil and Guyana.
Venezuela is not
involved in the
smuggling of the
so-called conflict
diamonds, or "blood
diamonds", gems that in
the past two decades
were mined and
trafficked to finance
civil wars and illegal
armed groups in
countries like Angola,
Cote d'Ivoire,
Democratic Republic of
Congo and Sierra Leone.
But Caracas has not
complied with providing
statistics and reports
for the KP certification
system, which imposes
broad requirements for
its members to ensure
that its diamonds are
outside the illegal
circuit, Karel Kovanda,
current KP chair,
representing the
European Commission,
told Tierramérica from
Brussels.
The Process acknowledges
that there were "serious
indications of
non-compliance" by
Venezuela, Kovanda said.
However, since
participating in at a KP
Intercessional meeting
in June, Venezuela has
initiated steps to
dispel concerns with the
release of trade and
production statistics,
he said.
"Discussions on the
organisation of a review
visit by KP independent
experts are ongoing," he
added.
Regardless, Venezuela's
non-compliance will be
put before the upcoming
KP Plenary meeting,
which will take place on
Nov. 5-8 in Brussels,
Kovanda said.
The reports of
irregularities in
Venezuela came from the
non-governmental
Partnership Africa
Canada (PAC), which was
active in setting up the
Kimberley Process, an
agreement of 47
governments, the
international diamond
industry and civil
society groups, backed
by the United Nations,
with the aim of halting
trafficking of conflict
diamonds.
Venezuelan diamonds are
being openly mined and
smuggled into Guyana and
Brazil, according to
PAC.
"Crooks are taking
Venezuelan diamonds out
of the country and
selling them to other
crooks," said Ian
Smillie, PAC research
coordinator.
For the past two years
Venezuela has reported
no diamond production at
all to the Kimberley
Process, despite an
annual diamond
production estimated at
15 to 30 million
dollars, Smillie told
Tierramérica.
"Meanwhile, diamond
exports from Guyana have
climbed by a comparable
amount in the past two
years," he added.
A 2006 PAC report
detailed how Venezuelan
diamonds are being mined
and smuggled into Guyana
and Brazil in full view
of government
authorities. They are
then laundered as
legitimate KP diamonds,
undermining the entire
system, he said.
"The Venezuelan
government needs to wake
and get a grip on their
diamond industry,"
Smillie said.
The Kimberley Process,
founded in 2002 in the
central South African
city of the same name,
requires diamond
producing and exporting
countries to certify all
sales of these precious
stones, and buyers to
prohibit imports that
are not certified.
The 47 KP participants,
including the European
Union, make up 99.8
percent of the world's
gross diamond
production.
Venezuela is the only
country that has not
invited a KP panel of
experts to review its
procedures for complying
with the KP rules, says
Corinna Gilfillan, head
of the U.S. office of
Global Witness, a group
that tracks the ties
between exploitation of
natural resources and
corruption or conflicts.
"Such a review is
crucial in finding out
how things are operating
on the ground and can
help fix any problems,"
Gilfillan told
Tierramérica.
Though not directly
involved in trading
conflict diamonds,
"Venezuela is sending a
dangerous signal to
other countries that
they can ignore the KP
without consequences,"
she said.
PAC and Global Witness,
observer members and
founders of the Process,
have called on KP chair
Kovanda to expel
Venezuela.
"Why should Dubai or
Canada or South Africa
implement tough
regulations, when
Venezuela is allowed off
the hook without more
than a frown?" asks
Smillie.
For a country with oil
revenues of more than 80
billion dollars a year,
diamond mining is a
minor industry.
Smillie believes the
problem is "likely a
bureaucratic snafu
that's turning into an
international incident."
But Caracas rejects the
accusations.
Venezuela "has been
complying with the
Kimberley Process
requirements, with
periodic delivery of
monthly statistics"
about the country's
diamond production,
Javier Medina, planning
director at the Ministry
of Basic Industry and
Mining, told
Tierramérica.
"There have been
unfavourable reports on
us coming from a
non-governmental
organisation, but not
from the directorate of
the Kimberley Process,
in the hands of the
European Union, to which
we will present a new
report on the situation
at the conference to
take place in November
in Brussels," said
Medina.
Unlike gold production,
which legally must be
sold to Venezuela's
Central Bank, diamonds
"can be traded freely to
any buyer in Venezuela
or abroad, as long as it
carries its Kimberley
Certificate, which we
expedite," he said.
However, "it isn't easy
to prevent any
Venezuelan from
travelling outside the
country with, for
example, three million
dollars in diamonds
inside a matchbox,"
commented the official.
"Nor to control
contraband that could
occur along our
extensive borders in the
south and southeast."
"Unlike Europe, our
borders are not short.
That is why the reports
we send to Brussels
contain not only precise
data from reports, but
also projections based
on historical production
and trade," he added.
Deputy minister for
mining, Iván Hernández,
said the certificates
that his office is
beginning to issue
contain the number of
packages, country of
origin, name and address
of the exporter or
importer, the number of
gems, carats, value in
dollars and signatures
from the issuing
authority, in accordance
with the Kimberley
Process.
(*With reporting by
Humberto Márquez from
Caracas. Originally
published by Latin
American newspapers that
are part of the
Tierramérica network.
Tierramérica is a
specialised news service
produced by IPS with the
backing of the United
Nations Development
Programme and the United
Nations Environment
Programme.)
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