Diamonds worth their weight in blood.

• Position: YOUR LIFE

The film "Blood Diamond," which debuted last month and is set in Sierra Leone in the 1990s, takes its title from diamonds mined by forced laborers to benefit murderous rebels. The profits from the "blood" or "conflict" diamond trade--a small but significant fraction of the world market--have been used to finance dictatorial regimes and terrorist organizations, proclaims Barak Richman, professor of law at Duke University, Durham, N.C.

In response to the film, the diamond industry has mounted a campaign to reassure retailers and consumers that their gems are "clean," touting the implementation of a certification procedure known as the "Kimberly Process." However sincere the effort, the process potentially has crippling limitations, Richman insists. "The inherent features of diamonds--portability, untraceability, and universal value--make them the perfect currency for rebels and brutal dictators," he explains. "But they also pose many other legal problems, such as contract enforcement. Even a basic credit sale is beyond the reach of the legal system. So, to operate a functional market with effective contracts, the diamond industry has effectively erected its own legal system."

Though this private legal system operates successfully in downstream markets, such as New York's 47th Street, Richman asserts that it remains to be seen whether the Kimberly Process--another of the industry's instruments of self-governance--substantially can reduce the conflict...