Gem dealers face war-on-terror backlash

Insight on the News, July 15, 2002 by John Elvin

The gemstone tanzanite may not be a rival to diamonds, emeralds and rubies, but it is a lovely blue-to-purplish jewel quite popular in the United States. In sparkling combination with a variety of gold and silver settings, it holds a prominent niche in catalogs and offerings of major retailers such as Tiffany & Co., Zale and the cable-TV shopping network QVC.

At least that was the case until late last year, when the Wall Street Journal ran an article suggesting that the terrorist organization al-Qaeda likely was profiting from gem-smuggling operations, particularly those involving tanzanite. Sales dropped off as the patriotic American public reacted to the article. In short order the aforementioned retailers, as well as many other U.S. jewelry outlets, dropped the gem.

The United States provides 80 percent of the market for this particular stone, so the implications of that move were grim for the stone's homeland, Tanzania--and particularly for miners who earn a living of sorts in the only location where the gem is found. In addition to miners, the plummet in sales has had an impact on cutters, manufacturers, suppliers and dealers along the chain of commerce that provides the stones to the U.S. retail market.

The Journal's story was not without foundation. A supporter of Osama bin Laden apparently had sold a few tanzanites in London a few years ago, and there were other possible links. Tanzanian officials, though, claimed they could find no evidence of the operations of a terrorist front group that the article tied to smuggling.

In February, in conjunction with the major gem trade show of the year held in Tucson, Ariz., a Tanzanian delegation showed up to assure dealers that no terrorist groups were profiting from sales of tanzanite. Also on hand was Michael O'Keefe, East African affairs officer for the U.S. State Department. "We have seen no evidence that al-Qaeda or any other terrorist group is currently using tanzanite to finance its efforts or launder money," O'Keefe told members of the American Gem Trade Association. He went on to praise Tanzania as "a valued partner in the war on terrorism."

Out of that meeting came an agreement, the Tucson Tanzanite Protocol, establishing a system of warranties guaranteeing that the gems were mined and exported legally. More than a dozen national and international organizations signed. Furthermore, Tanzania has declared the mining site a controlled area where no visitors are allowed without a dealer's license and other identification.

Cecilia Gardner, executive director and general counsel for the Jewelers Vigilance Committee, tells INSIGHT that as a result of the agreement at least one major retailer now is back in the tanzanite business, and "we are hopeful that the retail market will fully recover from the damage of unsubstantiated allegations. We are all committed to taking the steps necessary to ensure confidence in tanzanite."