Most of the world's largest diamond producing and consuming countries have reached an agreement to try to stem the flow of co-called conflict or blood diamonds, blamed for financing wars in Africa.

They are under no illusions, however, that they will be able to stop the deadly trade.

Proceeds from the sale of diamonds, most of them mined in alluvial deposits in Sierra Leone, Guinea, Liberia and the Congo, have been used to finance civil wars that have killed at least 500,000 people and left many thousands more refugees, according to officials and activists.

The threat of a consumer boycott of diamonds spurred South Africa and other large producers to push for a system to monitor the flow of conflict diamonds. The effort was spurred on by reports that the al-Qaeda organisation, blamed in last September's US terrorist attacks, also used conflict diamonds to pay for some of its operations.

The UN General Assembly last week adopted a resolution calling for the speedy adoption of the Kimberley Process, a round of negotiations for an agreement to control the diamond trade. Those negotiations failed to yield an agreement by last November's deadline.

Certification system

On Wednesday, delegates from 37 countries, the European Union, the World Diamond Council, and non-governmental organisations (NGOs) agreed to a new certification system to track the diamonds.

Abbey Chikane, chairperson of the Kimberley Process and head of the South African delegation to the conference here, announced the binding agreement.

He said delegates were able to overcome the stumbling blocks of statistics gathering, participant monitoring and control, World Trade Organisation (WTO) compatibility, and the form of administrative measures needed to stop the trade.

The agreement will be ratified at a ministers' meeting in Switzerland in November, Chikane said.

"We believe we are ready to launch a scheme simultaneously at the end of this year," he told a news conference. "The emphasis of this meeting has always been to look at the need to establish legislation to support this scheme and establish the regulatory framework to do so. We have reached consensus on the need to use the current monitoring and reporting regimen and we are confident that the mechanisms we have so far will support an international regulatory scheme."

He said some technical details remain to be decided but "I'm confident that whatever problems that we have to deal with on the way to the implementation process, the chair, together with the technical team, can deal with those." No illussions

However, he added, there are no illusions the trade can be completely stamped out.

"One of the problems that you have is that alluvial mining is very hard to regulate. In the process of setting up a regulatory framework in these countries, one hopes that there will be a way of establishing a regulatory framework,'' he said. "We do expect national governments to have laws that will allow them to implement the certification scheme. We want that across the board, without exception. We have given all these countries time, from now until the end of the year, to consult their legislatures and parliaments."

One of the main concerns of delegates was that the WTO would object to any agreement that changed trade rules between WTO members. In this case, participants in the diamond programme have agreed to not export to non-participating countries. Chikane said the issue had been dealt with.

A petition signed by 73 NGOs was presented to the conference, demanding a mandatory monitoring programme rather than voluntary enforcement, which is what delegates ended up adopting.

Ian Smillie, research director of Partnership Africa Canada, which has worked for three years to stop the trade in conflict diamonds, said an independent monitoring and enforcement system is the only way to stop the trade.

After all, Smillie reasoned, "we're not attacking the legitimate diamond industry."

According to experts, conflict diamonds make up about four percent of the annual global diamond trade, worth about 7 billion dollars.

Origin point

At November's talks in Botswana, participants agreed there should be a certification process to prove the origin point of diamonds but could not agree on the details.

At this week's talks in Ottawa, Canada, here, delegates agreed on a voluntary system of certification, rather than enforcement by an independent agency.

Diamonds are key to economies like Botswana's, which gets about 80 percent of its government revenues from profit sharing with diamond companies and from direct and indirect taxes on the industry.

Namibia, another diamond exporter, relies on diamonds for more than half its export earnings.

Smillie said a global diamond consumer boycott would hurt those countries without stamping out trade in illegal gems.

The Kimberley Process agreement is expected to be on the agenda of the 'Group of Eight' summit in Alberta, Canada, next summer.

"We hope this process eventually ends with an enforcement system with teeth," Smillie said. "This has been a first step." (IPS)