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Conflict diamonds threaten India's booming polishing business.
Kimberley Process regulator fails to stem flow of blood diamonds overseas.
Blood diamonds or no, Antwerp remains a go-to spot for the polished stones.

India plays the middleman

Conflict diamonds threaten Surat's booming polishing business.

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Illustration by Antler. (Paul O'Driscoll/Getty Images)

Editor's note: You’ve probably seen the movie. “Blood Diamond” — starring Leonardo DiCaprio and his down-home Rhodesian accent — that delves into the dusty, deadly world of mining diamonds to finance conflicts in African war zones.

The film didn’t paint a pretty picture. But it did intensify the spotlight on the issue, which itself was reflective of real-world events like the Kimberley Process in 2000 — which drew governments and industry together in an effort to stem the savage trade.

But here we are a decade later and the buzz has died down. There is still talk about blood diamonds, but the multi-billion dollar global trade has hardly come to a grinding halt.

GlobalPost takes a look at how the ongoing ugliness ties the world together — from the raw diamond mines in Zimbabwe to India, where little-known middlemen polish the stones ‘til they shine on the shelf in Antwerp, hidden from view unless you know who to ask.

As long as diamonds are forever, blood diamonds will be too.

SURAT, India — This summer, the authorities in Surat, the commercial capital of the state of Gujarat, arrested two smugglers attempting to sell nearly a million dollars in so-called blood diamonds.

Close on the heels of similar busts, the arrest again raised fears that the chaotic conditions making this small city on India's Arabian coast the world's new diamond-polishing hub may also make it one of the weakest links in the fight to stop overlords from financing armies with the precious stones.

“Every month, diamonds are coming from Zimbabwe without a Kimberley Process Certificate (KPC),” said Kirti Shah, an elected official of the Surat municipal corporation who is also a diamond trader.

“But I'm the only person in the diamond market who will talk about it openly.”

Read more: Many African diamonds still bloody

Once known for processing small, cheap stones, Surat has gradually replaced Antwerp as the center for cutting and polishing nearly all of the world's rough diamonds — as local traders have invested heavily in technology and infrastructure to compete for large, flawless stones. (Antwerp remains a go-to for shoppers.)

Yet even as local factories have installed cutting-edge, laser-guided planning and marking software and the latest grinding and polishing machines, Surat's main advantage over polishers in Belgium and Israel remains its cheap labor force and a centuries-old, trust-based system of trading that keeps transaction costs low.

Every day, trading houses small and large rely on couriers to hand-carry millions of dollars worth of diamonds to Surat from Mumbai on local trains — with no protection but anonymity.

In Surat's markets, diamonds change hands on the street and zip back and forth across the city by motorcycle as traders haggle over prices. When a sale is finally made, nine times out of 10 the deal is done in cash, with nothing but a hand-written chit to record the transaction.

Last year, $30 billion worth of stones passed through this city, according to the Gem & Jewelry Export Promotion Council. That's 11 out of 12 of the world's diamonds.

And while there are no reliable estimates, it stands to reason that if nearly all of the world's legal diamonds make their way here, a good portion of the conflict diamonds do, too.

More: How Surat bounced back from the plague

“It's a very big market,” said a senior investigator in the local branch of the directorate of revenue intelligence — the outfit responsible for combating smuggling, counterfeiting and other economic crimes. “So many brokers are trading on the pavement itself. It's very difficult to monitor.”

Diamond traders say that local press reports claiming that conflict diamonds comprise 15 to 30 percent of the market (citing unnamed sources) have exaggerated the problem. But with some 5,000 polishing units — around 1,500 of them tiny cottage industries scattered throughout the state — it's patently impossible to track each and every stone.

“This not a problem only for Surat, or only for India. It's a problem around the world,” said Damji Mavani, secretary of the Surat Diamond Association, which conducts seminars and other programs to raise awareness about conflict diamonds.

According to the revenue intelligence officer, who is not authorized to be quoted by name in the media, Indian revenue officials have only been