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Little Retail Impact Expected From Conflict Diamond Rules

NEW YORK — Now that plans are in place for diamonds to be rescued from the hands of illicit traders and mines, will jewelry customers breathe a sigh of relief? Will they even notice?<br><br>As reported, certification guidelines, called the...

NEW YORK — Now that plans are in place for diamonds to be rescued from the hands of illicit traders and mines, will jewelry customers breathe a sigh of relief? Will they even notice?

As reported, certification guidelines, called the Kimberley Process Scheme, were adopted last week during a meeting of the Kimberley group in Interlaken, Switzerland. Ministers from more than 50 countries endorsed intergovernmental measures to create tougher regulations to protect diamonds and put an end to the trade in so-called conflict diamonds. That term refers to diamonds and proceeds from diamonds that are used to support armed conflict in countries such as Angola and Sierra Leone. While diamond industry executives and governments, including the U.S. and Britain, are cheering the new regulations, it is still unclear how much impact they will have in the minds of the final consumer.

Most companies interviewed said consumers don’t usually ask questions about illegal diamond trading when they’re buying baubles. “In the past, they’ve never asked questions. They don’t seem to care,” said Eric Jacolliot, international marketing and communications director at Van Cleef & Arpels. He conceded, however, that concern may grow if the issues continue to be publicized. In the U.S., stories about conflict diamonds have appeared in many major newspapers, as well as on “Dateline NBC,” “60 Minutes” and other television shows, in the past two years.

“If you’re a reputable company, customers don’t really ask those questions. They assume your resources are legitimate,” said a spokeswoman for Mouawad, the diamond and jewelry firm. “Maybe if you walk off the street into just any shop, you might feel compelled to ask, but I don’t think it’s an issue with the big companies.”

The issue has been a prickly thorn in the industry’s side in the last few years, fueled in large part by the efforts of nongovernmental organizations to direct attention toward the issue.

Per the Kimberley agreement, starting Jan. 1, batches of rough diamonds must be accompanied by government certification that they do come from territory held by rebels. The onus is then on the importing nation to acknowledge the receipt and reject shipments that do not meet requirements. The regulations will have the biggest impact on 3 percent of the world’s rough diamonds that are mined and traded illegally — often in exchange for arms. Conflict diamonds are estimated to account for about 3 percent of the annual global production of rough diamonds, which totaled close to $8 billion last year. The other 97 percent of diamonds are understood by the industry to be conflict-free.

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While it seems consumers aren’t always aware of conflict diamonds, industry executives said the measures have a number of benefits for the jewelry trade.

Matt Runci, president of trade group Jewelers of America, said the new regulations are beneficial since jewelers can now offer complete assurance to their customers that all the diamonds they sell after Jan. 1 have come from “clean” sources.

“It’s not just the jeweler’s word, but it’s backed by the U.S. government,” Runci noted.

Sean Cohen, president of International Diamond Manufacturers Association, said that the new guidelines also improve the actual exporting process.

“It requires governments in all participating countries to follow certain procedures about mining and how diamonds are exported, which brings a lot of first-world standards to third-world countries,” he said.

And Andrew Coxon, executive vice president of De Beers LV, the retail joint venture formed last year by De Beers Group and LVMH Moët Hennessy Louis Vuitton, said: “The Kimberley Process will ensure that legitimate diamonds will be sold through all retail chains with more confidence than ever before. Even though the civil wars in the African diamond areas have now ended, the diamond industry has acted to ensure that the consumer can always be protected from conflict diamonds.”

In an unrelated development, the De Beers Group issued a statement Friday in support of comments by Festus Mogae, president of the Republic of Botswana, that said the relocation of Basarwa bushmen was not related to diamond mining in the region. An NGO recently held a protest in London near the site of the soon-to-open De Beers LV store accusing the company of evicting bushmen. De Beers LV, the joint jewelry venture, does not have diamond mining operations. The De Beers Group has two small diamond mines in Botswana that are not inside the reserve, and the firm has denied that diamond mining is related to the relocation of bushmen.