Ghana warned over conflict gems

GABORONE, Nov 7 (Reuters) - A diamond watchdog seeking to stamp out trade in "conflict diamonds" agreed on Tuesday to put Ghana on probation after allegations it had been certifying gems coming from war-ravaged Ivory Coast, delegates told Reuters.

"We have an agreement in principle. A satisfactory solution has been found to the Ghanaian situation," a Western government delegate to the Kimberley Process said after a closed-door session.

The Kimberly Process's annual meeting of 46 governments and the European Union in Botswana has been seeking to close loopholes ahead of the release next month of the new Hollywood movie "Blood Diamond" starring Leonardo DiCaprio.

Ivory Coast is the focus since it is the last source of black-market diamonds being smuggled out by rebels following earlier civil wars in Angola, Liberia and Sierra Leone which were partly fuelled by gems.

Up to 200,000 carats of rough diamonds, worth $23 million, a year from the rebel-held north of Ivory Coast are being smuggled out, mostly into Ghana, where they are being certified as legitimate despite a United Nations embargo, non-governmental organisations (NGOs) have said.

Under the agreement, which is due to be formally adopted on Wednesday, Ghana will be given three months to halt the bogus certifications after which a review mission by the Kimberley Process will determine if it has been successful.

"A review mission is a pretty big shot across the bow, telling them prove yourself serious or else," another delegate said.

If the mission determined Ghana had not complied, it could be thrown out of the Kimberley Process, cutting off even its own national diamond output from gaining certificates.

Ghana will be given technical help to bolster monitoring during the three month probation period, delegates said.

Botswana, the world's biggest producer of high-quality diamonds and current chair of the Kimberley Process, impressed upon Ghana the seriousness of the situation, a delegate said.

"Botswana has been extraordinarily active in getting the attention of the Ghanaian authorities to the problem that they have. At the highest level, there were president-to-president talks when they just met in China (during a summit last week)," he said.

The certification scheme by the Kimberley Process -- under which governments monitor exports -- has helped cut the amount of conflict diamonds to less than 1 percent from as high as 15 percent 10 years ago, NGOs say.

The diamond industry says conflict diamonds never accounted for more than around 4 percent of total world production of raw diamonds, worth around $12 billion a year.