The diamond trade hasn’t exactly enjoyed a great reputation over the past years. Not least thanks to Hollywood movies like Blood Diamond, these gems are inextricably percieved as covered with the blood spilt in civil wars all over Africa.

But diamonds are also a key export of many poor African nations.

Despite some initial progress being achieved by the Kimberly Process certification scheme, diamonds’ persisting bloody reputation isn’t exactly undeserved. Many still find their way into the world market, dominated by De Beers, from appalling sources.

Groups like Amnesty International and One Sky have criticised the certification scheme as lacking impartial, obligatory monitoring. Global Witness, an NGO specialising on the link between natural resource exploitation and violence reported the scheme to be failing to address issues of non-compliance, smuggling, money laundering and human rights: “The clock is running out on Kimberley Process credibility.”

Other problems include that diamonds from conflict-ridden Zimbabwe are still considered legitimate under the Kimberly Process; and the mind boggles as to what real effects membership of countries like the Democratic Republic of Congo may have on the ground. Several civil wars currently rage within the Congo’s boundaries.

Rise and fall of a dodgy trade

It seems that neither the movie, nor rising civil society awareness, nor the certification scheme seem to have effectively dampened demand for this luxury commodity. Private consumers among the world’s elite class, in fact kept pushing up diamond prices throughout the boom years, with prices rising by 16 percent even in the crisis year of 2008. And this was despite the fact that diamonds’ their industrial use is increasingly satisfied with synthetic diamonds.

Maybe diamond buyers are simply too callous to care about conditions in Africa and elsewhere? If so, this is a case of failed industry self-regulation, because the much-tumpeted discerning consumers aren’t discerning.

Now on comes the recession, and the plot thickens: less and less money to splurge on mineral jewelry, which often costs more than an African family’s lifetime earnings. This month the BBC reported a dramatic fall in worldwide demand (video link), and just last week, a fall in the profits of De Beers, the former world monopolist in the diamond trade, from 316 to just 3 million US Dollars.

As a result of this, De Beers is now cutting back production in its mines in Namibia, Botswana and South Africa through “production holidays”. Workers will be laid off next. Presumably, many unofficial and illegal producers and suppliers to De Beers are even harder-hit, having to absorb the full brunt of the shock.

Does this mean more hunger and poverty for many Africans? Certainly. Despite all its drawbacks, the diamond trade was feeding many miners, traders and their families, even if at miserable levels. Without having significantly benefited from decades of prosperity elsewhere, African countries are now amongst the hardest-hit by the economic slump. Does this mean that at least the violence and civil wars will stop? Probably not, for as the cake shrinks, struggles for its distribution will likely intensify.

Gloomy prospects. Yet, so long as Africa depends on exporting raw materials via foreign corporations under conditions of exploitation through which the exporters keep most of the surplus, the grim picture is likely to remain.

Glimmers of hope in Zimbabwe

However, some very small signs of hope are visible in Africa, too; for instance in Zimbabwe, a country still suffering horribly under its colonial legacy from Rhodesia, which was a fascist state even by apartheid-era standards. Interestingly, Rhodesia was named after precisely that British imperialist, Cecil Rhodes, who founded De Beers. Zimbabwe is one of the world’s major diamond exporters.

The BBC has recently been allowed into the country for the first time in almost a decade. It reports from a country slowly getting a grip on itself (see the 3 minute video, link below). Maybe the power-sharing agreement between Mugabe and Tsvangirai is allowing the most pressing problems to be addressed. – BBC editor Jon Williams calls what he saw, “a surge of optimism”.