Venezuela's Hugo Chávez has earned a bad reputation of late, at least in some quarters

Venezuela's Hugo Chávez has earned a bad reputation of late, at least in some quarters. Now he's accused of thumbing his nose at another international norm: the ban on trading 'conflict diamonds.' Only a minor gems player itself, Venezuela could nonetheless undermine the entire international framework crafted to stop the trade—a bad business linked to thousands of deaths. Small-scale diamond mines pockmark Venezuela and, as recently as 1997, the country exported 300,000 carats of the gems, worth about $30 million. But these days, the official diamond trade has dwindled to zero. Caracas claims that's because of environmental concerns, and that it's adhering to the Kimberley Process (KP), a U.N.-sponsored scheme to eliminate the sale of the blood diamonds that, in the late 20th century, were used to finance wars in which hundreds of thousands of Africans were killed. (The KP does that by requiring its 45 member nations and the EU to certify all rough diamonds—even those mined outside of conflict zones—as clean before sale.) Still, Caracas hasn't issued a single certificate since the end of 2004—a stark contrast to the 33,000 carats during the two years prior. And while the government claims there are no gems to certify, it's probably no coincidence that the exports of next-door Guyana—which has barely increased its mining in the past two years—have mysteriously shot up by the same amount that Venezuela's have dropped. 'It's all contraband,' says Venezuelan trader Alfonso Avendaño, who argues that the Venezuelan government has left traders like him with no choice but to work with illicit gems.