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A valuer counts diamonds at the government diamond export office in Freetown, Sierra Leone Wednesday, June 2, 2004. Lebanon's Hezbollah guerrilla movement is systematically siphoning profits from West Africa's multimillion-dollar diamond trade, by running protection rackets and threatening the Lebanese merchant class that traditionally handles much of the region's diamond business, U.S. diplomats charge.Ben Curtis/The Associated Press

The world's attempt to control blood diamonds is teetering on the brink of collapse as nations squabble over how to regulate the lucrative trade from Zimbabwe's violence-plagued diamond fields.

The sensational Zimbabwe diamond discovery - which could represent up to 25 per cent of the world's supply of rough diamonds within two years - has massive implications for the world's diamond industry, in which Canada is now one of the top producers.

Yet many experts consider that Zimbabwe's gems are blood diamonds, the product of brutal violence, since hundreds of people were killed or assaulted when its military seized control of the diamond fields.

At a meeting in Jerusalem next week, diplomats and civil-society activists will try to hammer out the conditions that Zimbabwe must accept if it wants its diamonds to be certified as "conflict-free." Representatives of Zimbabwe's autocratic president, Robert Mugabe, will fight for complete freedom to export the diamonds, with support from countries such as India and China.

If no agreement is reached, it will further damage the credibility of the Kimberley Process, the global certification scheme that aims to eliminate blood diamonds. Canada was one of the main architects of the Kimberley Process, and its diplomats and activists will be key players in the Jerusalem meetings next week.

This could be a final chance for the seven-year-old Kimberley Process. If its 75 member countries fail to settle the Zimbabwe question - and fail to deal with the growing list of producers that smuggle diamonds to avoid the certification scheme - the process could be doomed. Countries such as the United States are already calling for a tougher new system, involving a smaller core of nations with higher standards.

The Kimberley Process has banned Zimbabwe from exporting diamonds for most of the past year, but it allowed the country to hold two auctions of its diamonds in August and September. During the ban, Zimbabwe built up a stockpile of 4.5 million carats of diamonds with an estimated value of $1.7-billion - nearly equal to the government's entire annual budget. More than 1.2 million carats of diamonds were sold in the two auctions.

Now the question is whether Mr. Mugabe's government will be permitted to keep selling diamonds, despite widespread reports that its military has killed more than 200 people since 2008 in the Marange diamond fields in eastern Zimbabwe.

At the meetings in Jerusalem next week, the Mugabe government will be strongly supported by India, where a diamond consortium has reportedly signed a deal to purchase a guaranteed $100-million a month in rough diamonds from Zimbabwe.

Activists and countries such as Canada will try to prevent the diamond revenue from falling into the hands of Mr. Mugabe's long-ruling political party. Instead they have insisted that the money must flow into the national treasury, where reformers in the coalition government have greater influence. Yet it is widely known that millions of dollars worth of diamonds have already been smuggled out of the Marange diamond fields, with none of the money reaching the treasury.

Because of the smuggling and violence in Zimbabwe, some banks and diamond traders have recently stopped dealing in diamonds from the Marange fields. Those decisions have put further pressure on the Kimberley Process to take action on Zimbabwe.

The Zimbabwe authorities also sparked controversy by arresting an activist, Farai Maguwu, who was researching the diamond fields and providing information to the Kimberley Process. He was charged with endangering national security, but the charges were finally dropped last week.

The battle in Jerusalem over whether to permit Zimbabwe's diamond sales will be "very nasty," said Alan Martin, research director at Partnership Africa Canada, an Ottawa-based organization that has been campaigning against blood diamonds.

Mr. Martin, who will be attending the Jerusalem meetings, noted that the Kimberley Process is already under severe criticism for failing to prevent the widespread smuggling of diamonds by Venezuela and several African countries, along with rampant diamond-related violence in countries such as Angola and Zimbabwe. If it fails to take action on these issues, "potentially the whole system could collapse," he said.

Zimbabwe's allies insist that the Kimberley Process was set up to prevent rebel armies from selling diamonds to finance their insurgencies, as happened in Sierra Leone, Angola and Liberia in the 1990s. Since the Zimbabwe diamonds are not controlled by rebels, the country should be free to export, they say.

But many countries such as Canada and the United States disagree, and Zimbabwe was forced to allow the Kimberley Process to review and monitor its diamond sector in exchange for the two auctions this year.

"If the Kimberley Process softens its stand on Zimbabwe, it will have turned its back on its founding mandate - to cut out human-rights abuses in diamond-producing zones and the use of diamond proceeds to fund conflict, both of which are the case in Zimbabwe," Mr. Martin said.

"Canada has a lot to lose if the KP drops the ball on this. It would sully the entire diamond trade and shake consumer confidence in a system which people believe was set up to end the trade in blood diamonds."

The Jerusalem meetings are crucial because it is the final session before the Democratic Republic of Congo becomes chair of the Kimberley Process next year, replacing Israel, he said. Zimbabwe could gain greater influence when Congo holds the chair. "You're going to see African solidarity trumping decency," Mr. Martin said.

Ian Smillie, an Ottawa-based researcher who was instrumental in helping create the Kimberley Process, quit the process last year to protest against its ineffectiveness. He says Zimbabwe is just one of many examples of the weakness of the certification scheme. "This is a vehicle with at least three flat tires, pretending that it is going somewhere," he said.

"The thought of a return to the chaos and bloodshed of the 1990s is inconceivable. What may be required is a full-bore consumer campaign that targets the governments blocking progress: Zimbabwe; Venezuela; but more importantly their supporters and others who block meaningful progress in the Kimberley Process."

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