Inside The Trade

Judging the color of a diamond is such subtle work that experts in Antwerp do it only 20 minutes a day. After that, even under powerful lights they have trouble distinguishing the four categories of white that are whiter than "white." Then, some diamonds are yellow or blue, even black. They're studiously classified, too. Such grading and sorting has been central to the trade in the Belgian city for more than 300 years. It's only in the last few months, however, that anyone worried about what British officials call "blood diamonds." They may be any color, in fact. But they carry the invisible stain of Africa's carnage.

Such stones account for about 4 percent of the 860 million diamonds polished last year. But precisely because blood diamonds cannot be distinguished from clean ones, the industry faces the task of proving its stones are not tainted. Otherwise, gem-quality diamonds could become as politically and morally unacceptable for many consumers as banned ivory and boycotted furs. Largely to prevent that, the business is changing. "By the end of this year, we will be looking at a completely different industry," says Mark Van Bockstael, director of international affairs for Antwerp's High Diamond Council.

In Antwerp, which has four of the world's 21 diamond exchanges and does a turnover of $23 billion a year, the old ways are not easily forsaken. Diamond traders love to talk about trust: how they do million-dollar deals with a handshake and the oath mazel u'bracha, good luck. But the other side of the diamond fellowship is secrecy that verges on omerta. Organized crime also loves handshake deals. In the mid-'90s a Pakistani allegedly used a diamond business to launder huge quantities of drug money. Russian bureaucrats charged with embezzling $180 million worth of gold and gems went to Antwerp to cash in their diamonds. With the shadow of Africa's corruption, it's not only fortunes and reputations at risk.

On the three dreary pedestrian streets at the heart of the Antwerp gem district the "diamantaires" who've made a life in the business are a little shellshocked. "Today we're being criticized for things that yesterday were not a problem," says Charles Bornstein, president of the High Diamond Council. "What was permitted, today is not permitted, and just in the last one or two months." That's why he won't name someone he knows who was in the Sierra Leone trade as recently as last year, he says: "Last year he was a kosher guy."

The industry's leader, South Africa's De Beers, has already radically changed its business plan. Its mines and partnerships produce about 50 percent of the world's diamonds, and De Beers used to try to buy up most of the rest--whatever their source--to control prices. But the system started to break down in the 1990s as producers in Canada, Australia, Russia and elsewhere refused to go along. About two years ago, De Beers quit buying on the "outside market." On July 12 it's set to announce sweeping changes in the way it operates. In the meantime it's been shoring up the reputation of the stones it still does control by aggressively distancing itself from the conflict diamond trade.

The rest of the industry may soon follow. There are still no international sanctions against Sierra Leone's conflict diamonds, although the U.N. Security Council is expected to act soon. Last week representatives from Antwerp, New York, Tel Aviv and Bombay--the major diamond centers--met in London for an unprecedented attempt to set standards and isolate illicit trade in conflict diamonds. In mid-July the biannual World Diamond Congress in Antwerp is sure to take further measures. But as international pressure grows, handshakes are less common than finger-pointing among diamond's big players.