Venezuelan Diamonds Under the Microscope

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.

TORONTO, Oct 27 (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

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

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

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

"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

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.)