Diamond industry told to cut war ties or risk 'catastrophe'

ANTWERP, Belgium - Diamond traders must sever the link between war and the diamond trade or face a consumer backlash, Canada's ambassador to the United Nations told industry leaders Tuesday.

The diamond industry risks courting a ''commercial catastrophe'' if it fails to clean up the diamond trade, Ambassador Robert Fowler said, noting consumers are becoming increasingly aware that diamonds are funding wars in Africa.

''Young men will require proof that the diamonds they place on their fiancees' fingers have not been the cause of the amputation of a finger, or an arm, of a person in Sierra Leone,'' Fowler told the World Diamond Congress.

The industry is considering tightening certification rules so the origin of diamonds can be tracked and banning traders who break U.N. embargoes on the sales of diamonds by rebels fighting the elected governments of Angola and Sierra Leone.

Fowler commended the industry for the ''imaginative'' proposals under consideration, but warned that more was needed.

''The onus is on you, the people most closely involved in the mining, cutting, polishing and selling of diamonds, to end irrevocably any linkage between diamonds and armed conflict,'' he told the roughly 350 leaders in the diamond trade meeting in Antwerp, the world's largest diamond-trading center.

Fowler presented a U.N. report in March detailing the trail of diamonds stretching from Angola's UNITA rebels to international trading centers such as Antwerp.

Proposals under discussion at the Antwerp meeting include the ''electronic coding'' of sealed diamond shipments, along with installing permanent monitoring in Sierra Leone and Angola to ensure that only government-certified diamonds are being shipped.

A further ''chain of warranties'' that would trace the origin of the diamond from mine-to-consumer by invoice would be used to reassure customers.

Anyone found exporting ''conflict diamonds'' would lose their license and face expulsion from their diamond trading group, said Gary Ralfe, managing director of De Beers, the world's largest diamond trader.

Delegates were also encouraged pursue setting up a multimillion-dollar aid fund to help war victims who suffered as result of the conflict diamond trade.

Fowler warned that the industry risks a backlash similar to that which all but killed off the fur industry in Canada in the 1970s.

''The diamond industry must take the lead ... in demonstrating publicly that its products are conflict-free,'' he said.

Many delegates are worried the image of their $6 billion-a-year diamond industry is already damaged, but are afraid their industry has been made the scapegoat for problems beyond its control.

''Not everyone is on board,'' admitted South African Minerals and Energy Minister Phumzile Mlambo-Ngenka, who added that implementing the new rules would be cumbersome.

''It is very important we enhance regulation and policing. ... If we do not stop it, we will compromise the industry,'' she said. South Africa, which has many of the world's largest diamond mines, employs hundreds of thousands of miners and cutters.

Industry officials have stressed the problems of imposing controls.

Diamonds are easy to smuggle since their great value is concentrated in small stones that are not picked up by metal detectors or sniffer dogs. Also, guerrillas in Angola and Sierra Leone have received help from other African nations that pass rebel gems off as diamonds of their own production.

Some delegates also raised the difficulties of installing sophisticated control measures in nations devastated by civil war and rife with corruption.