For much of last year, the diamond industry was rocked by a wave of bad publicity concerning "conflict diamonds"--smuggled gems whose sale allows African governments and rebel groups to finance their wars. In addition to several United Nations reports and hearings in the US Congress on conflict diamonds, the media devoted considerable space to the topic. Particularly damaging was a PrimeTime Live segment that included dramatic footage from Sierra Leone, where rebels known as the Revolutionary United Front--best known for cutting off the limbs of civilians who oppose it--fund themselves primarily through diamond sales. Meanwhile, groups such as Global Witness, World Vision, Physicians for Human Rights and Amnesty International threatened to launch a consumer boycott until the industry changed its buying practices so as to insure that conflict diamonds are eliminated from international markets.

Fearful that diamonds might become to this decade what fur was to the last, industry leaders in the United States (such as Lazare Kaplan International) and abroad (especially De Beers of South Africa) vowed to take action. To address the issue of conflict diamonds--which account for 4 percent of the world's $7-billion-a-year trade according to industry and at least 15 percent according to human rights groups--the companies formed the World Diamond Council last July. The WDC pledged to support the campaign for reform, including efforts to halt imports of conflict diamonds into the critical US market, where about two-thirds of diamonds are sold.

Instead, diamond companies and trade groups have launched a lavishly funded lobbying and public relations campaign aimed at burnishing the industry's reputation while protecting its profits. The centerpiece of the industry effort is a bill called the Conflict Diamonds Act of 2001, which was written by one of the Beltway's most well-connected lobby shops. Representative Tony Hall, an Ohio Democrat who has spoken at rallies against conflict diamonds at jewelry stores in New York City and Chevy Chase, Maryland, calls the act "mushy, fishy and full of loopholes." "The industry is completely untrustworthy," says Hall, who along with Republican Representative Frank Wolf and Democratic Representative Cynthia McKinney has introduced an opposing bill to crack down on conflict diamonds. "The fact that they've hired so many of the top lobbyists in town shows that they don't want any serious legislation to get passed."

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