IPS-English TRADE: Venezuelan Diamonds Under the Microscope Date: Mon, 29 Oct 2007 14:01:28 -0800 Stephen Leahy* - Tierramérica TORONTO, Oct 27 (IPS) - 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.) ***** + Tierramérica (http://www.tierramerica.info/index_en.php) + Kimberley Process (http://www.kimberleyprocess.com/) + Partnership Africa Canada (http://www.pacweb.org/) + Global Witness (http://www.globalwitness.org/) + TRADE: U.S. Watchdog Urges Tighter Rein on Conflict Gems (http://ipsnews.net/news.asp?idnews=35048) (END/IPS/LA/IF IP CU/TRASP-LD/SL-HM/TA/07) = 10271728 ORP003 NNNN