The place for effective, administrable import/export controls is at the rough level. We believe that the system of proposed controls adopted at the World Diamond Congress in July and now being brought forward by the World Diamond Council is the most practical and most effective means to filter out from the pipeline the less than four percent of worldwide rough production which is being misused to fund conflict. By effectively placing this filter at the rough level, all resulting polished will comply with conflict-free status and it will do it at no cost to American taxpayers.

We are practical, realistic, ethical business people. We seek support from Congress to sever the link between diamonds and brutality without delay. We hope to actively participate in the creation of the best possible legislation, legislation that will not do serious damage to the legitimate Southern African economies so dependent on diamonds, that will not wreak havoc with U.S. customs procedures, and will not harm the livelihoods of millions of people worldwide directly employed by or benefitting from the diamond industry.

It would be a shame if this precedent-setting constructive collaboration of government, the U.N., private industry, and the NGOS results in anything less than the best possible solution. We implore Congress to consider the World Diamond Council proposals before taking action. We reiterate our desire to contribute whatever assistance and expertise we can provide. Thank you. [The prepared statement follows:]

Statement of Jeffrey Fischer, President, Diamond Manufacturers and Importers Association of America, New York, New York

Mr. Chairman and members of the subcommittee, my name is Jeffrey Fischer and I thank you for inviting me to address you today in my capacity as president of the Diamond Manufacturers and Importers Association of America. Our association includes within its membership virtually all of the United States' major diamond cutting firms. Our membership is unanimous in its revulsion of any connection between diamonds and human suffering, and is dedicated to helping solve the problems, which we address today. I also serve on the steering committee of the Would Diamond Council and have been actively involved in its creation.

I have been invited to give a brief overview of how diamonds flow from mine to consumer through what we refer to as the Diamond Pipeline and how diamonds are merchandised along the way.

Please refer to the chart we have provided titled "Simplified Schematic of Diamond Pipeline."

A single diamond can be sold and re-sold numerous times before it ultimately adorns a retail consumer. Diamonds are frequently traded "upstream" and "downstream" between dealers at marginal price differences in the normal course of business. As the diagram illustrates, while it is not a significant part of the picture, even the consumer can eventually become the seller-after all the diamond "is for

ever.

From the outside, the diamond market may appear confusing, fragmented, perhaps even inefficient, but it exemplifies the free market ideals that our American economic system extols.

What is most important to note from the diagram is the line drawn between rough and polished diamonds. Most of the polished dealing, jewelry manufacturing, and retailing is done by people who have had no more exposure to rough diamonds then the typical member of Congress. All polished starts as rough, and once polished, remains polished forever. That transformation is the only irreversible "transaction" in our pipeline.

A single rough stone is commonly polished into two polished diamonds. Often, a piece of rough yields only one stone, sometimes it yields multiple stones, or it may never be polished and sold for industrial purposes.

As we proceed down the pipeline, the frequency of transactions and the number of small businesses involved increases dramatically, while the average size of a typ

ical transaction diminishes in monetary terms. Throughout the pipeline diamonds are constantly assorted, mixed and re-assorted to fit differing commercial require

ments.

To complicate matters further, already polished diamonds are frequently “re-cut” for improvement or repair, altering their characteristics to varying degrees. Moreover, polished diamonds are frequently unset and re-set in different jewelry sometimes alone, sometimes with other diamonds.

The place for effective administerable import/export controls is at the rough level. We believe that the system of proposed controls adopted at the World Diamond Congress in July and now being brought forward by the World Diamond Council is the most practical and most effective means to filter out from the pipeline the less than four percent of world-wide rough production which is being misused to fund conflict. By effectively placing this "filter" at the rough level, all resulting polished will comply with "conflict-free" status.

We are practical, realistic, business people and as such are tackling the conflict diamond problem with idealism strengthened by realism.

We do anticipate seeking assistance from Congress in severing the link between diamonds and brutality without delay-but not simply legislation-the best possible legislation. Legislation that will be most effective and enforceable, that will not do serious damage to the legitimate southern African economies so dependent on diamonds, that will not wreak havoc with US Customs procedures, and will not harm the livelihoods of millions of people world wide directly employed by or benefiting from the diamond industry. This legislation must be fully consistent with an international inter-governmental agreement backed by industry.

It would be a shame if this precedent setting constructive collaboration of government, the United Nations, private industry, and the non-governmental organizations result in anything less than the best possible solution. We implore Congress to consider the World Diamond Council's proposal before taking action. We reiterate our desire to contribute whatever assistance and expertise we can provide.

Thank you.

We welcome the international process that my friend and colleague come the diamond industry's remarkable action taken at Antwerp. Human Rights welcomes your interest in this issue and we welMs. BURKHALTER. Thank you, Chairman Crane. Physicians for

PHYSICIANS FOR HUMAN RIGHTS STATEMENT OF HOLLY BURKHALTER, ADVOCACY DIRECTOR,

SIMPLIFIED SCHEMATIC DIAGRAM OF THE DIAMOND PIPELINE

Alex has described to create an international system for legitimizing an industry. And we welcome Tony Hall's legislation. But I have a concern about all of these various developments. All of them are too slow to impact what is going on in Sierra Leone right

now.

Sierra Leone is controlled by the RUF, about half of its territory, including 90 percent of the diamond-producing areas. The presence of 16,000 U.N. troops has not made a difference in the RUF's ability to control and abuse the civilian population. Recently, I heard a report from the foremost human rights activist in Sierra Leone, a wonderful woman named Zainab Bangura, who had just received the word about the RUF's youngest rape victim, who was 12 months old. So long as the RUF is in place in Sierra Leone, it will continue to commit abuses like this, and the key to the RUF maintaining its power and authority and military supremacy in Sierra Leone is diamond revenues.

Last year, Liberia, precisely the year that the region was under the closest international scrutiny and there were the most protestations about conflict diamonds including a host of international meetings, Liberia had a boom year for sales, exporting $290 million worth of stones. So any action that is taken has to happen very quickly to deprive the RUF by depriving Liberia and others who transship Sierra Leonean stones of resources and revenues with which they are buying weapons to abuse the civilian population.

When you consider, for example, that the Swiss government released figures that the Liberian sales doubled last year to $30 million just to Switzerland, that buys a lot of rifles. The RUF is not buying aircraft carriers. They are not buying cruise missiles. They are buying guns, and with those guns, particularly when their adversaries tend to be about five years old, they can do a great deal of damage.

Thus, I am concerned that the legislation you are considering right now has a two-year waiver. The RUF can be in place for two years without seeing a dent in the resources it gains through the illicit transfer of diamonds through Burkina Faso, Liberia, Togo, and other countries.

Similarly, with the RUF controls regimen proposed in Antwerp, which we strongly support, even under the most optimistic scenario, a global regimen under U.N. auspices that requires a treaty, that requires every exporting and importing country in the world to take legislative action, that requires consistent packaging in every producing country, understandably, is going to take some months, if not years, to put in place, and in the meantime, Liberia and others continue to export diamonds in huge amounts.

My own view is that the United States Congress should take action immediately to put in place an import regimen that says the U.S. will not import any cut and finished stones from any country that does not have an embargo in place on the importation of rough stones from Liberia.

Basically, this is the kind of legislation that is going to be required once the Antwerp system is in place. I am simply urging you to put it in place early and put it in place now. It is not a substitute for the Antwerp system and it is not a substitute for the international regimen, but it would allow the United States to push

very hard at the major importing nations of rough stones, that is to say Israel, India, and Belgium, that they must themselves throw up import restrictions on the importation of the principal countries that are transshipping Sierra Leonean gems.

It does not do any good for Belgium to say solemnly, we are not importing any stones exported from Sierra Leone when everybody knows that Sierra Leone is not officially exporting any stones. Sierra Leonean stones are going almost exclusively through Liberia, through Burkina, through Togo, through Guinea, and through other countries. So saying you are not handling conflict stones while you are allowing a boom number of stones to come in from Liberia is simply disingenuous.

So my view is that the United States cannot control the diamond industry. It cannot control the import and export policies of its allies and those that are the principal players in the diamond industry, but we can control what we are importing and we can put import controls in place tomorrow that would make it impossible for Belgium, India, and Israel to continue handling rough stones and expect to export the finished product here.

I would allow you a six-month waiting period if you asked, because these things cannot be done overnight. But I think the twoyear waiting period in the Hall bill and the "however long it takes" for the Antwerp system is simply too long given the urgency of the problem in Sierra Leone today. Thank you very much.

[The prepared statement follows:]

Statement of Holly Burkhalter, Advocacy Director, Physicians for Human Rights

Introduction:

Good morning, Chairman Crane and Members of the Committee. My name is Holly Burkhalter, and I am the advocacy director of Physicians for Human Rights. I am honored to appear at this hearing; thank you for conducting it. Physicians for Human Rights is a human rights organization that utilizes the skills of the medical and scientific professions to investigate and prevent human rights abuses around the world.

My organization, which conducted an investigation of rape and sexual violence in Sierra Leone last March, has organized in collaboration with InterAction and the Africa Advocacy Network an informal coalition of some seventy U.S.-based human rights, humanitarian, and religious groups to promote protection of human rights in Sierra Leone. As a part of that effort, we have called upon the diamond industry to take specific action to deprive the Revolutionary United Front (RUF) of revenues from their control of Sierra Leone's diamond resources, as a way of denying them access to weapons and ending their control of and abuses against the civilian population. It goes without saying that if diamond revenues were not being used to purchase weapons that are used against the unarmed_population, Physicians for Human Rights would not be concerned about the RUF's control of Sierra Leone's diamonds. For it is the link between diamonds, weapons, and abuses that is of concern, not diamonds in and of themselves. My remarks today focus on diamonds and violence in Sierra Leone, but the observations about the need for reforming the diamond industry apply to Angola as well, and to future conflicts that may arise in other diamond-producing countries.

Summary:

Physicians for Human Rights is deeply concerned about the continued sale of diamonds by insurgent forces in Sierra Leone and Angola, and the flow of weapons to the combatants in return. We welcome the diamond industry's recent commitment to developing a global certification regimen that eventually will marginalize the trade in conflict diamonds, and we urge all governments to diplomatically support the initiative. In the meantime, however, it is vitally important that the world's principal importers of rough diamonds-Belgium, Israel, and India-immediately enact unilateral prohibitions on the import of rough diamonds laundered through