11:08 A.M. EST
Real Audio of Briefing
MR. BALLARD: Good morning. Welcome to the Foreign Press Center in Washington. Today we have a very exciting topic to discuss -- diamonds. All of you are familiar with diamonds. All of you probably have some personal experience with diamonds in some way. They are a topic which has interested people for centuries, but, unfortunately, also a subject that has caused a great deal of concern around the world in a lot of different ways over the past couple of decades and even more intensely in the past few years.
With us today to discuss the world's efforts, and particularly the United States position on conflict diamonds going into next week's ministerial in Interlaken, Switzerland on -- and I'm going to have to read this because it's a very long name of the process: The Kimberly Process International Scheme For Trade In Rough Diamonds.
And this effort next week, this meeting, this ministerial meeting, represents the culmination of a great deal of work on the part of representatives from over 40 nations. So today, to have us -- to discuss that with us we have the chief American negotiator, Ambassador J. D. Bindenagel, who is the Special Negotiator for this issue for the United States Government. And we also have Mr. Marc Wall, who is in the Bureau of African Affairs of the Department of State as the head of the Economic Policy staff of that Bureau.
AMBASSADOR BINDENAGEL: Thank you very much. It is a pleasure to meet with you all before the Kimberly Process Ministerial Meeting, which takes place next Monday and Tuesday in Interlaken, Switzerland.
As you have just heard, it is a culmination of several years of work coming from the effort to stem the financing of rebels in Sierra Leone, Angola and Liberia through Security Council -- UN Security Council resolutions and now for the last several, over 20 months, a negotiation with more than 40 countries resulting in a working document to create a system of certification, the Kimberly Process certification process. That certification process will bring the producing countries, trading countries and the consuming countries together in an effort to eliminate conflict diamonds from legitimate trade.
The meeting itself will begin -- well, really has two major portions. One is a presentation by the South African chair of the Kimberly Process, which will present the working document as negotiated over these 20 months and will explain what the Kimberly Process certification process is and will win the approval of the delegates at the ministerial.
The second part of the ministerial meeting will focus on a national implementation. The Kimberly Process working document is a political statement. The implementation falls to individual states to create their Kimberly Process certificates and to implement a system of import and export controls and enforcement.
In the case of the United States, the United States has developed a framework for limiting conflict diamonds, for eliminating conflict diamonds from trade in the United States. The customs regulations will be changed to prohibit the import of diamonds -- conflict diamonds -- and require that importers prove that the diamonds that they are importing into the United States are in compliance with the Kimberly Process.
In the process in the United States, we're talking about not all diamonds, but we're talking about rough diamonds. Rough diamonds are uncut diamonds that begin -- are the basis of the trade. They come from several producing countries, most notably in Southern Africa, in South Africa, Botswana, Namibia and other countries, in the conflict regions of Africa, but also from Russia, from Canada, from Australia, and are produced and traded in major trading centers in Antwerp and London and Bombay and in Tel Aviv, and end up in the process as polished diamonds and jewelry.
The process begins at the mines and the production is around $7.5 or $8 billion of rough diamonds at the beginning of the process. And at the end of the process, the jewelry and finished product represent something like $53 billion worth of finished product, of which the United States is a consumer of about half.
The United States has politically decided that conflict diamonds must be addressed and that the system that we have sketched out, begun to write, should be implemented on January 1, 2003. That is the other half of our commitment and the commitment we will take to Interlaken at the ministerial.
With that, I would like to stop and entertain questions. But before we do, I would like to turn to Marc Wall and ask if Marc would make some comments about the situation in Africa that led us to make the determination that the United States would support the Kimberly Process and implement the Kimberly Process certification system.
Marc.
MR. WALL: Thanks very much, J.D. I do want to underline this point about the importance that the United States attaches to the Kimberly Process. This is really why my boss, Assistant Secretary for African Affairs at the State Department, Walter Kansteiner, is going to Interlaken next week as head of our delegation.
Diamonds are wonderful, wonderful things, both as objects of beauty but also as sources for wealth for the producing countries. Diamond production, diamond exports are an important source of revenue for national development and they provide livelihoods for hundreds of thousands of workers in African mines. But in too many cases, diamonds have also helped fuel conflicts that have exacted a terrible toll in human life, in human sufferings and in lost economic opportunities.
This has been particularly been the case in Sierra Leone and Angola, but also in other places -- in Liberia, in the Democratic Republic of the Congo and elsewhere in the region. Conflict diamonds have undermined stability and prolonged wars that have terrorized communities and destroyed societies. While conflict at long last is coming to an end in Sierra Leone and Angola, nonetheless, peace there remains fragile. And also elsewhere in the region, in Liberia and Congo and elsewhere, these countries remain vulnerable to instability that is exacerbated by trade in conflict diamonds.
The United States has a strong interest in bringing a lasting peace to these war-torn nations. And we join with other nations in the United Nations to restrict trade in conflict diamonds from Angola and Sierra Leone, and to ban trade in diamonds from Liberia. And to support these Security Council resolutions, we also joined with diamond producing and importing nations in the Kimberly process. And we have worked to achieve an understanding on an arrangement that breaks this link between diamonds and conflict but while also making sure that the many billions of dollars in legitimate trade in diamonds can continue.
We think we have achieved an agreement on that kind of arrangement. We think we have achieved these goals. Thus, we are looking forward to going to Interlaken next week to join with others in endorsing the outcome of the Kimberly Process, and we are committed to implementing it.
MR. BALLARD: Okay. So why don't we open it up for any questions from all of you. I ask you once again to wait for the microphone and to please identify your news organization when you ask your question.
QUESTION: Julie Ziegler with Bloomberg News. A lot of NGO groups have been critical and the GAO, too, of the proposal as it's put forth, saying that it's relying heavily on the industry to regulate the diamonds and to certify that they are not from conflict countries. How can you be sure, or can you address, I guess, the allegation this has weakened since the process began, and how do you feel confident that this will actually help curb the flow of conflict diamonds?
AMBASSADOR BINDENAGEL: There are two elements that are critical to understand the system. One is the system of the Kimberly Process certificate. Those certificates are, in effect, certificates of origin at the -- in the mines and brings in not the industry alone, but brings in governments together with the industry. By creating those certificates at the beginning, in the mines and particularly in the producing countries, you will then begin the process that certifies that these diamonds came from legitimate sources.
That system then goes into the trading side, where the trading companies bring these certificates of origin to the trade in, for instance, in Antwerp, where the processing begins and the re-certification of the exports from the trading countries go into the consuming countries, if you will.
In the process, in addition to the governments issuing and working to ensure that the certificates are created and monitored and validated, you have the trade between companies using what the World Diamond Congress agreed to do on the 29th this week in London -- a system of warrants so that the trade inside the process would ensure that the traders would guarantee to themselves that the trade that they are engaged in is only conflict free -- it's legitimate trade.
So you have really two parts to this. The governments are heavily involved. It is not something that is a industry self-regulation in the first instance. This industry self-regulation, the warrants that you ask about that the NGOs have questioned, is an additional part of this process.
For the United States, as an example, the United States Government will restrict, ban the trade, in conflict diamonds at the border; then, inside the United States, as the rough diamonds are processed, the certificates of the warrants between trading companies will maintain a chain of custody so that any of the remaining rough diamonds that would be exported will be connected to the legitimate trade so that you don't insert into the process conflict diamonds inside the country.
So you have a concern by the NGOs, and a legitimate concern that this process be as tight and as difficult for conflict diamonds to enter, but it is something that has brought together the industry, the nongovernmental organizations and governments to launch the process. And it's very important that the process begin.
QUESTION: Just to follow up, how do you enforce, or what guarantees do you have in place that these warrants aren't going to be forged, or, you know, what steps of enforcement are there in place? And how does what the US is going to do -- can you distinguish -- there's legislation that was, I think, passed in the House and has languished in the Senate. What would that have done? What extra measures would that have added in addition to what the US is going to do now in enforcing the Kimberly Process?
AMBASSADOR BINDENAGEL: The legislation that passed in the House was giving us the authority to do what we are doing. It didn't pass in the Senate so there was -- there were, in the Senate, other issues. But what we have done is taken the existing legislation and taken a system of existing customs controls and added prohibition of diamonds, of rough diamonds, from conflict areas -- conflict diamonds from being imported into the United States.
So the enforcement is the same as it would be for any other customs activity; that is, a risk assessment management process where you would inspect imports into the United States and you would also use investigatory methods, the normal enforcement method. In the process, the warrants from inside the country, those warrants will be available for -- also for enforcement procedures that would be done in any case.
QUESTION: Edward Alden from The Financial Times. I know at some point early in this process -- I haven't followed it as much recently -- there was a question of whether to include finished diamonds in jewelry in the whole certification scheme. That would have involved the US, I imagine, much more actively since the US is not a big importer of rough diamonds. Can you take us through the process by which that was ultimately excluded from the agreement that you've got here?
AMBASSADOR BINDENAGEL: The question of polished and finished diamonds in jewelry was considered but rejected by the Kimberly Process as really unworkable. But in its place the concept is that you deal with rough diamonds from this point forward. You deal with all rough diamonds and you make them conflict free in the trade. And all the trade becomes conflict free from this point forward. That is, you begin the certification process, the rough diamonds are certified conflict free, they are processed, and as they are processed the system of warrants that are establishing a chain of custody ensure that those diamonds that are being polished now and put into jewelry now are conflict free and that you move forward from this point on.
The problem in the history, of course, is that there are 2,000 years of polished diamonds and jewelry that exist. Those are not the subjects of the conflicts that we're talking about. We're talking about the conflicts are being fueled by rough diamonds in Africa, in particular, that are not in the existing stock of polished diamonds. That was the differentiation that was made.
What we're trying to do now is to ensure that this rough diamond process, this certification process begins now so that as it moves through the trade and the polishing and the jewelry manufacture that you can assure the consumer that the finished products are conflict free from this point forward.
QUESTION: Just to follow that quickly. So we're then relying very heavily on the importers of rough diamonds, the cutting centers, to do their part of this properly. I mean, is there any scope for US action if we believe that rough diamonds are entering certain cutting centers improperly and are making their way into the stream of finished jewelry?
AMBASSADOR BINDENAGEL: Certainly. The United States, as other countries, are developing national systems. What we have in the United States is the customs system that we have in the United States, so that if you have an importer who is lying or not -- or is accused of engaging in conflict diamonds, then the enforcement procedures that exist in the United States will be brought to bear to ensure that that trade stops.
QUESTION: Japan Broadcasting Corporation. The Chief of Staff of the Diamond High Council in Antwerp mentioned that despite the measurement taken by the industry and international organizations, as well as the government of the producing countries, there is always leakage or smuggles and that the flow of conflict diamonds could be limited, but not be diminished. Do you agree with him, or any comment on that?
AMBASSADOR BINDENAGEL: In any system, we strive to be perfect, but we choose not to have the perfect become the enemy of the good. There is always a risk that some diamonds will leak into the system. That should not, however, condemn us to inaction. We need to take the action that we have in this international discussion and implement it on a national basis in order to eliminate as many diamonds, conflict diamonds, as we can from the legitimate trade.
And as we find places of leakages, places of risk, then we will focus on those areas even more intensely because we have covered other areas through the certification process.
MR. BALLARD: Any questions from our African, particularly Angolan, journalists today?
QUESTION: My question is, it has to deal with the fact that Angola, for a long time, exported what we call blood diamonds, and at the end of the conflict these diamonds are still being sold in the international markets. The question is: Are these diamonds still being sold in the international markets?
AMBASSADOR BINDENAGEL: When the system begins, all of the importers and exporters of diamonds must be in compliance with the Kimberly process; that is, any known diamonds that were conflict diamonds cannot be traded legally. The effort, then, becomes one of enforcement. So if there are diamonds that are identified as conflict diamonds, whether that is in the rumor stage or through the police agencies, then they must be taken out of the system -- cannot be traded.
QUESTION: Well, now that the conflict is ended in Angola, can diamonds coming out of Angola be legally sold, or are they still going, then, to be considered conflict diamonds?
AMBASSADOR BINDENAGEL: On Angolan diamonds, under the Security Council resolutions in place, rough diamonds coming in under -- that have been certified by the Angolan Government are allowed to be imported. Those diamonds that aren't certified are banned from import.
While we are very grateful that the peace process has moved forward in Angolan, there are still reports that, you know, not all the diamond-producing areas are under control, under government control. Those diamonds coming out and being exported without certifications, under the Kimberly process, would not be allowed in.
MR. BALLARD: Okay, any other questions?
QUESTION: Can you tell us what percentage of rough diamonds are imported by the US?
MR. WALL: The United States imports a small number of rough diamonds. We primarily import half of the finished diamonds, something like $26 billion annually, in finished diamonds and jewelry. The rough diamonds that come in are very small. It's --
QUESTION: But some do come in?
MR. WALL: Yes, we do have trade in rough diamonds. They are -- rough diamonds are brought into the United Nations, are polished in New York and some traded in New York, and in particular, and there are some other polishing centers.
MR. BALLARD: Okay. If there are no further questions, thank you very much. And we have a document for you, which is the draft text of what will -- that serves the basis of the initial discussion next week in Interlaken.
###
