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A blood diamond (also called a conflict diamond, converted diamond, hot diamond, or war diamond) is a diamond mined in a war zone and sold to finance an insurgency, invading army's war efforts, or a warlord's activity. These terms are particularly used in the context of diamond trading to indicate the negative effects of their sale. These diamonds are mined particularly in Africa where around two-thirds of the world's diamonds are extracted. The phenomenon of conflict minerals has the same nature.
Angola, a colony of Portugal, gained independence on November 11, 1975. Although independent, the Popular Movement for the Liberation of Angola (MPLA), the National Union for the Total Independence of Angola (UNITA), and the National Liberation Front of Angola (FNLA) fought in a civil war from 1974 to 2001. Between 1992 and 1998, in violation of the 1991 Bicesse Accords, UNITA sold diamonds, valued at US$3.72 billion, to finance its war with the government. The UN recognized the role that diamonds played in funding the UNITA rebels and in 1998 passed United Nations Security Council Resolution 1173 and United Nations Security Council Resolution 1176, banning the purchase of Blood diamonds from Angola. Resolution 1173 was the first resolution by the UN which specifically mentioned diamonds in the context of funding a war. Reports estimated that as much as 20% of the total production in the 1980s was being sold for illegal purposes and 19% was specifically conflict in nature. By 1999, the illegal diamond trade was estimated by the World Diamond Council to have been reduced to 3.06% of the world's diamond production. The World Diamond Council reported that by 2004 this percentage had fallen to approximately 1%, where it has remained.
Despite the UN Resolution, UNITA was able to continue to sell or trade some diamonds in order to finance its war effort. The UN set out to find how this remaining illicit trade was being conducted and appointed Canadian ambassador Robert Fowler to investigate. In 2000, he produced the Fowler Report, which named those countries, organizations and individuals involved in the trade. The report is credited with establishing the link between diamonds and third world conflicts, and led directly to United Nations Security Council Resolution 1295, as well as the Kimberley Process Certification Scheme.
From 1989 to 2003, Liberia was engaged in a civil war. In 2000, the UN accused Liberian president Charles G. Taylor of supporting the Revolutionary United Front (RUF) insurgency in neighboring Sierra Leone with weapons and training in exchange for diamonds. In 2001, the UN applied sanctions on the Liberian diamond trade. In August 2003, Taylor stepped down as president and, after being exiled to Nigeria, faced trial in The Hague. On July 21, 2006 he pleaded not guilty to crimes against humanity and war crimes, of which he was found guilty in April 2012 and on May 30th 2012, he was sent to Jail for a 50yr sentence in a high security prison in Great Britain.
Côte d'Ivoire began to develop a fledgling diamond mining industry in the early 1990s. A coup overthrew the government in 1999, starting a civil war. The country became a route for exporting diamonds from Liberia and war-torn Sierra Leone. Foreign investment began to withdraw from Côte d'Ivoire. To curtail the illegal trade, the nation stopped all diamond mining and the UN Security Council banned all exports of diamonds from Côte d'Ivoire in December 2005. Despite UN sanctions, however, the illicit diamond trade still exists in Côte d'Ivoire. Rough diamonds are exported out of the country to neighboring states and international trading centers through the northern, Forces Nouvelles controlled section of the country, a group which is reported to be using these funds to re-arm.
The Democratic Republic of the Congo (formerly Zaire) has suffered numerous civil wars in the 1990s, but has become a member of the Kimberley Process and now exports about 8% of the world's diamonds. One of De Beers' most celebrated and priceless diamonds, the D-colour 200 carats (40 g) Millennium Star was discovered in the DRC and sold to De Beers during the height of the Civil War that took place in the early to mid-nineties.
The Republic of Congo (Congo-Brazzaville) was expelled from the Kimberley Process in 2004 because, despite having no official diamond mining industry, the country was exporting large quantities of diamonds, the origin of which it could not detail. It was also accused of falsifying certificates of origin. The Republic of Congo was readmitted in 2007.
In July 2010, the Kimberley Process Certification Scheme agreed that diamonds from the country's disputed Marange Diamond Fields could be sold on the international market, after a report from the Scheme's monitor a month earlier described diamonds mined from the fields as conflict-free.
Global Witness was one of the first organizations to pick up on the link between diamonds and conflicts in Africa in its 1998 report entitled "A Rough Trade". With the passing of United Nations Security Council Resolution 1173 in 1998, the United Nations too identified the conflict diamond issue as a funding for war. The Fowler Report in 2000 detailed in depth how UNITA was financing its war activities, and in May 2000, led directly to the passing of United Nations Security Council Resolution 1295 and the diamond producing countries of southern Africa meeting in Kimberley, South Africa to plan a method by which the trade in conflict diamonds could be halted, and buyers of diamonds could be assured that their diamonds have not contributed to violence. In this resolution the Security Council wrote:
Welcomes the proposal that a meeting of experts be convened for the purpose of devising a system of controls to facilitate the implementation of the measures contained in Resolution 1173 (1998), including arrangements that would allow for increased transparency and accountability in the control of diamonds from their point of origin to the bourses, emphasizes that it is important that, in devising such controls, every effort be made to avoid inflicting collateral damage on the legitimate diamond trade, and welcomes the intention of the Republic of South Africa to host a relevant conference this year
On July 19, 2000, the World Diamond Congress adopted at Antwerp a resolution to strengthen the diamond industry's ability to block sales of conflict diamonds. The resolution called for an international certification system on the export and import of diamonds, legislation in all countries to accept only officially sealed packages of diamonds, for countries to impose criminal charges on anyone trafficking in conflict diamonds, and instituted a ban on any individual found trading in conflict diamonds from the diamond bourses of the World Federation of Diamond Bourses. The Kimberley Process was led by the diamond-producing African countries themselves. Also in tourist countries like Dubai,The United Kingdom, before gemstone could be allowed through their airport to other countries, the Kimberley Certification must be presented by the gem's owner or obtained from a renowned attorney.
On January 17–18 of 2001, diamond industry figures convened and formed the new organization, the World Diamond Council. This new body set out to draft a new process, whereby all diamond rough could be certified as coming from a non-conflict source.
The KPCS was given approval by the UN on March 13, 2002, and in November, after two years of negotiation between governments, diamond producers, and Non-Government organizations, the Kimberley Process Certification Scheme (KPCS.) was created.
The Kimberley Process attempted to curtail the flow of conflict diamonds, help stabilize fragile countries and support their development. As the Kimberley Process has made life harder for criminals, it has brought large volumes of diamonds onto the legal market that would not otherwise have made it there. This has increased the revenues of poor governments, and helped them to address their countries’ development challenges. For instance, some $125 million worth of diamonds were legally exported from Sierra Leone in 2006, compared to almost none at the end of the 1990s.
The Kimberley Process has ultimately failed to stem the flow of blood diamonds, leading key proponents such as Global Witness to abandon the scheme.
In addition to The Kimberley Process failing to curtail the flow of conflict diamonds throughout the world, there is no guarantee that diamonds with a Kimberley Process Certification are in fact conflict free. This is due to the nature of the corrupt government officials in the leading diamond producing countries. It is common for these officials to be bribed with $50 to $100 a day in exchange for paperwork declaring that blood diamonds are Kimberley Process Certified.
The Kimberley system attempted to increase governments' transparency by forcing them to keep records of the diamonds they are exporting and importing and how much they are worth. In theory, this would show governments their finances so that they can be held accountable for how much they are spending for the benefit of the country's population. However non-compliance by countries such as Venezuela has led to the failure of accountability.
The company Materialytics has stated that it can trace the origin of virtually any diamond. 
On January 18, 2001, President Bill Clinton issued Executive Order 13194 which prohibited the importation of rough diamonds from Sierra Leone into the United States in accordance with the UN resolutions. On May 22, 2001, President George W. Bush issued Executive Order 13213 which banned rough diamond importation from Liberia into the United States. Liberia had been recognized by the United Nations as acting as a pipeline for conflict diamonds from Sierra Leone.
United States enacted the Clean Diamond Trade Act (CDTA) on April 25, 2003, and implemented on July 29, 2003 by Executive Order 13312. The CDTA installed the legislation to implement the KPCS in law in the United States. The implementation of this legislation was key to the success of the KPCS, as the United States is the largest consumer of diamonds. The CDTA states: 'As the consumer of a majority of the world’s supply of diamonds, the United States has an obligation to help sever the link between diamonds and conflict and press for implementation of an effective solution.
During the 1990s diamond-rich areas were discovered in Northern Canada. Canada is one of the key players in the diamond industry. Partnership Africa Canada was created in 1986 to help with the crisis in Africa. This organization is also part of the Diamond Development Initiative. The Diamond Development Initiative helps improve and regulate the legal diamond industry.
The Kimberley Process was initiated in May 2000 by South Africa. Canada was a major supporter of passing this. Canada has passed several laws that help stop the trade of conflict diamonds. The laws deal with the export and import of rough diamonds, and also how they are transferred. In December 2002 the Export and Import of Rough Diamonds Act was passed by the Canadian government. This act acts as a system that helps control the importing, exporting and transporting of rough diamonds through Canada. The Export and Import of Rough Diamonds also states that the Kimberley Process is the minimum requirement of certifying rough diamonds and a certificate is also required for all shipments of diamonds. This certificate is called the Canadian Certificate, it gives permission for an officer to seize any shipment of diamonds that does not meet the requirements of the Export and Import of Rough Diamonds Act.
The Government of the Northwest Territories of Canada (GNWT) also has a unique certification program. They offer a Government certificate on all diamonds that are mined, cut, and polished in the Northwest Territories of Canada. Canadian diamonds are tracked from mine, through the refining process to the retail jeweler with a unique diamond identification number (DIN) laser inscribed on the diamonds girdle.  To obtain this certificate one must cut and polish the diamond in the NWT.