Blood, bullets and ice

Observations on diamonds

The river, wider than the Thames in London, had been dammed and diverted, leaving the river bed a brown scar across a landscape of endless scrub and bush. Bulldozers, excavators and trucks roared back and forth through a haze of red dust and smoke. At the bottom of the river bed a small crowd, whites and blacks, waited in the shadows, intently watching a few Africans stripped to the waist digging gently with picks and shovels. Around them stood eight or nine soldiers, guns at the ready.

Eastern Angola in 1983 was a strange place. This was a government mine but the mining company was Mining and Technical Services, based in Luxembourg, a front for De Beers, the South African company controlling the diamond cartel. The supervisors were Brits and South Africans, the miners and soldiers were Angolans and Cubans, with Russian advisers.

So, here in the heart of Africa, Marxist Russian and Cuban troops protected the ultimate capitalist organisation - the diamond monopolist - from the Unita rebel movement, which was backed by the US and South Africa. Cold war Angola. A very strange place.

The miners were about to hit the jackpot. At a fault-line on a river such as this one, alluvial diamonds, being the heaviest stones, sink into the pools and crevices. Dam the river, dig out the bed and you may find $1bn-worth of diamonds in a day. A few months later the rebels hit the area, rounded up the white miners and marched them to their camp some 600 miles away, where they were set free to return to South Africa or Britain.

Fast-forward to the same river ten years later. De Beers has gone, replaced by a small company working with heavy government protection. The area further up river has been invaded by thousands of men. They work in chain gangs, passing buckets from a huge pit to spoil heaps on the river bank guarded by men with guns. Occasionally you spot a flashy 4x4 under the trees and a truckload of gunmen nearby, but it is too dangerous to approach or make inquiries.

The area has been taken over by the Unita rebels, and they have brought in slaves to dig for them at gunpoint. Unita, no longer supported by the US or South Africa, needs the diamond revenues to buy weapons. So many diamonds are coming out of this war zone that De Beers, desperate to soak up the excess on the open market, is spending $40m a month to buy them and stockpile them. Similar operations are fuelling wars in Sierra Leone, Liberia and Congo. This is the era of the "blood diamond".

Fast-forward again to today. Blood diamonds have sent shock waves through the industry. Fear that diamonds will become the new fur - shunned because of their bloody origins - makes De Beers reform and become ultra clean.

It no longer buys diamonds from war zones or off the street. It has driven the Kimberley Process that demands that all diamonds have to be certified by the country of origin. Most producers and dealers have signed up to it. And De Beers has given up trying to run a cartel and instead sells "clean" diamonds directly. But, the company points out, even at the height of the Sierra Leone war, dramatised in the newly released film Blood Diamond, less than 5 per cent of total world diamond production came from conflict areas. The other 95 per cent was mined peacefully, producing wealth for poor countries such as Botswana.

Today that figure is, according to the World Diamond Council, 99.8 per cent. Since 1983, Botswana's per-capita income has risen from $600 a year to $11,400. That is largely due to well-spent diamond revenues. Such revenues have also helped Tanzania, South Africa and Namibia.

In Angola, the government has passed laws and signed up to the Kimberley Process and the Extractive Industries Transparency Initiative, promising accountability in all transactions. The laws prohibit any economic activity - not just mining - in the diamond areas where only licensed companies can operate. But go anywhere in Angola's diamond area today and hundreds of people are still scrabbling at the river terraces. According to the government, there are about a million illegal immigrants working there, too. "In most places, you get a semi-slave situation, where investors - call them supervisors, call them traders; they call them supporters in most countries - will put a gang together and give them a little bit [of] money in advance, and they have to work for him, because they are indebted to him," says Chaim Even-Zohar, an Israeli diamond dealer there.

And who are the local buyers and "supervisors"? Angola's top generals and politicians and their partners; the international diamond dealers - all technically breaking Angola's own laws. There is no war here now, so the diamonds are not, technically, blood diamonds, and they can be traded internationally. But the conditions of those digging the ground has hardly changed.

Similar conditions prevail in Sierra Leone, Liberia and Congo. In all three countries the wars have virtually ended but millions of pounds' worth of diamonds are still dug under conditions of slavery and fear. Private firms with close links to security companies and political bosses operate a mafia system.

The challenge for the industry now is to push governments to impose the law and accept and regulate artisanal mining, so that local miners, their communities and their countries can benefit from the little translucent stones that lie beneath their land.

Richard Dowden is director of the Royal African Society

This article first appeared in the 29 January 2007 issue of the New Statesman, Climate change