Statement of the Hon. Frank R. Wolf, a Representative in Congress from the State of Virginia

Testimony Before the Subcommittee on Trade
of the House Committee on Ways and Means

Hearing on Conflict Diamonds

October 10, 2001

For nearly two years now, I have been supporting the efforts of my friend and colleague, Tony Hall, who has truly been the champion in bringing Congress's attention to the severe consequences of diamonds that fuel civil conflict in several of Africa's most troubled areas including Sierra Leone, Angola and the Democratic Republic of the Congo. His efforts have brought the world's attention to people blessed to live in areas rich in diamond resources, but who have been cursed by the violent conflict that these diamonds have caused.

I also want to recognize and thank the Bush Administration for working with us on developing effective legislation to address this problem, specifically the State Department and the Office of the United States Trade Representative. I especially appreciate their efforts in light of recent circumstances, and the attention that the Administration is dedicating to the critical needs of our nation's security matters, both at home and overseas.

In the interest of allowing the Committee and the Administration to have as much time as possible at this hearing, I will be brief. I just want to emphasize why I believe we need legislation such as H.R. 2722, introduced by Congressmen Houghton and Rangel with support of Congressman Hall and myself, before Congress adjourns this year.

As this committee is aware, the U.S. is involved in multilateral negotiations with over 40 other nations at what is known as the "Kimberly process." While it is undoubtedly difficult to have so many nations agree on a system of such a complex nature, our passage of legislation facilitates this international system. We import almost 70 percent of the world's jewelry diamonds. We therefore have a unique responsibility to address this issue and take steps to only import clean diamonds, untainted by the blood of innocent victims. Legislation that requires clean diamonds will spur the many nations interested in maintaining their imports to the U.S. into making such a system a reality.

At the same time, the legislation has the necessary flexibility for the Administration to meet its international trade requirements under the WTO and more importantly, enough flexibility for the Administration to delay its implementation as the global system becomes a reality. Our staffs are ready to continue working with the Office of USTR to meet their concerns.

A second reason why this legislation is so important is for the diamond industry itself. While I do not purport to speak for the NGOs on their future plans, I do believe that failure to pass legislation will result in a significant consumer backlash in the near future. This will be especially true as new conflicts develop or old ones resurface. For instance, Angola's conflict rages on and recently the UNITA rebel group has shown signs of again heightening the violence. Given the importance of diamonds for places such as South Africa, Namibia and Botswana, it is critical that we act to protect the legitimate trade before it is too late and the image of a diamond is tarnished forever.

Finally, I would like to address the issue of conflict diamonds in relation to recent events. As President Bush has stated so eloquently, the scope and reach of global terror networks such as Al Qaeda will require our fighting them on all fronts. One of these will be on the financial front and the Treasury Department has already taken steps in this direction.

Diamonds are easy to launder and court testimony after the World Trade Center bombing in 1993 indicates that Al Qaeda has financial interests in the diamond trade. While it is impossible to know how closely tied in this group or other groups are to those who trade in conflict diamonds, it is significant that such connections may exist.

According to the State Department, the RUF rebel leaders in Sierra Leone are a terrorist group. Many of their leaders have connections to traders of conflict diamonds in Lebanon and, of course, were very closely connected to Liberian President Charles Taylor. In short, there is a global network of "bad guys" out there. Passage of this legislation will at least impart some accountability to a highly launderable item and make it more difficult for any criminal or terrorist organization to use it as a financing mechanism.

 I would like to end with one closing thought. Members of this committee are some of the strongest and most eloquent advocates for free trade, globalization and international commerce. You point to the great economic opportunity that increased commerce offers for both our country and developing nations as well. I share and understand this basic principle.

However, too often the argument of free trade and globalization is framed too simplistically --you are either for or you are against. Rather, I believe that cleaning up the diamond trade offers unique opportunity to address the issue in more realistic terms -- international commerce with accountability. The benefits of the diamond trade need to reach the people on the ground that live in these regions. If we can successfully address the issue of conflict diamonds, human rights, labor conditions and the general welfare of people living in these conflict areas will improve.

Again, thank you for giving me the opportunity to testify here today. With the Chairman's permission, I will submit my entire written testimony for the record.