NCPA - National Center for Policy Analysis

Diamond Cartel Enlists U.N. In Effort To Quash Competition

August 3, 2000

As the De Beers diamond cartel well knows, the problem with diamonds isn't their scarcity -- but their abundance. Critics say that for a century, the cartel has stifled the flow of gem diamonds from sources not under its ownership or control -- employing a variety of means.

It recently announced it was abandoning its policy of buying what it calls "blood diamonds" from African conflict zones, on the theory that its payments go to promote civil wars. But analysts charge that its real purpose, with the help of the U.S. and the United Nations, is to keep its lock on diamond markets.

  • Back when Europe ruled Africa, the cartel arranged with colonial administrators to police or close down freelance diamond gathering.
  • It also enlisted the assistance of dictators and mercenaries to suppress -- often by maiming or killing -- prospective diamond hunters.
  • But those tactics have recently been refined by convincing the U.N. Security Council to impose a global ban on "undocumented" gem diamonds from "conflict zones."
  • President Clinton hopped on board with a call for an international conference to break the link between "the illicit trade in diamonds" and armed conflict.

At a May conference in South Africa, the U.S., Britain and Belgium, among others, agreed with De Beers upon the importance of establishing a global certification scheme for diamonds.

Free-market economists have long made the point that cartels and monopolies cannot enjoy their favored positions for long without the active assistance and protection of governments. De Beer's history and its latest coup presents the perfect example.

Source: Edward Jay Epstein, "U.N. Is Diamond Cartel's Best Friend," Wall Street Journal, August 3, 2000.

 

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