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    PAC Presentation at World Diamond Council Meeting Print E-mail
    March 30, 2004. Ian Smillie, Research Coordinator of the Diamond and Human Security Project, attended the World Diamond Council Meeting today in Dubai (United Arab Emirates). Mr. Smillie discussed the economic and political impact of the diamond industry on West African countries. The presentation concluded with the challenges facing the Kimberley Process.

    Notes for Presentation at World Diamond Council Meeting, Dubai, March 30, 2004

    Ian Smillie, Partnership Africa Canada

    This third Annual Meeting of the World Diamond Council is being held at an opportune time for a stocktaking on the issue of conflict diamonds.

    The terrible wars in Sierra Leone, Angola and the Democratic Republic of the Congo, fuelled in part by diamonds, have ended. The Kimberley Process Certification Scheme is up and running, and there is a feeling in some quarters that the KPCS might not even be necessary for much longer. �There are no more conflict diamonds,� some say. �We have turned a corner and we can now move on to the bright sunlit uplands of �development �� and even �prosperity diamonds�.� While there have been great changes in the past two years, everyone here knows that the world does not operate in quite such a linear and optimistic fashion.

    I would like to talk about where we are today from four angles: history, geology, political science and economics.

    A recent World Bank publication compares the evolution of Botswana and Sierra Leone, which in 1970 were both low-income countries with significant diamond resources. In Botswana, diamonds were the engine of growth, making the country one of the fastest expanding economies in the world, while Sierra Leone has been last on the UN�s Human Development Index for more than a decade. Botswana, the World Bank report says, maintained a �stable and well-functioning democracy� while in Sierra Leone, �poor governance led to the state�s collapse and created the incentive as well as the opportunity for a rebellion throughout the 1990s.� The issue, from this perspective, is one of governance. African countries must now put their houses in order.

    But control over diamond resources is not simply a matter of establishing a �stable and well functioning democracy�. The geological nature of diamonds creates special problems that may actually contribute to undermining governance. Alluvial diamonds present a very difficult regulatory problem. This is particularly true in the DRC, Sierra Leone and Angola, but it also true of Guinea, Liberia, C�te d�Ivoire, Ghana, Central African Republic and elsewhere. The colonial regimes in Angola and the Congo exercised control over natural resources in a particularly harsh manner. And it is important to remember that both countries descended into fratricidal warfare within weeks of independence, and never recovered. Resource exploitation, which might have been an asset for development, never had a chance. In Sierra Leone the colonial regime was less harsh, but the �stable and well functioning democracy� inherited at independence was veneer-thin. Diamonds in particular had never been well controlled, and had been the subject of massive (and failed) crackdowns before and after independence. To make matters worse in Angola, the DRC and Sierra Leone, the alluvial diamond fields have acted as a magnet for hundreds of thousands of young men who, in each case, eventually became recruits for, or slaves of, rebel forces.

    And we know too well that when the rebels began to look at diamonds, they found a completely unregulated and highly secretive trading system in which unscrupulous elements were already adept at avoiding unwanted taxes and unwanted attention. It took two to tango. The problem was not only one of absent democracies; it was also the attendant presence of buyers who asked no questions.

    The wars we are talking about ended for various reasons. Each country was different. But a common and important element in each was diamonds. Intense media attention, growing industry awareness, UN reports and embargos, and NGO investigations all helped to choke the supply of funds to Charles Taylor and the RUF in Sierra Leone. Jonas Savimbi sold fewer diamonds in his last year than at any time over the previous decade. The Kimberley Process � weak and faltering as it was in its first three years � helped, by ensuring that all governments and the entire diamond industry were involved, and by demonstrating that there could never be a return to �business as usual� where conflict diamonds were concerned.

    Are the wars really �over�? West Africa � especially Liberia, C�te d�Ivoire and Guinea � remains unstable, as is eastern DRC. But it is unlikely that UNITA in Angola or the RUF in Sierra Leone could reconstitute themselves or be copied in the short run. With the world�s three largest UN peacekeeping forces at work in Sierra Leone, Liberia and the DRC, a serious damper has been placed on rebel opportunity and viability, both military and economic.

    It is worth noting, however, that as of January 2004, UNAMSIL, UNMIL and MONUC each had between 11,000 and 12,000 troops on the ground, with a combined annual budget of more than $1.7 billion to July 2004.

    This is an enormous cost, and it is not sustainable. But it does give the governments involved at least some time to heal wounds, to create new physical and political infrastructure, and to try to establish conditions for a more lasting peace. Had this level of international investment been available for development purposes in these countries during the 1960s and 1970s, and had donors been willing to discuss �governance� during the Cold War, it is arguable the wars might never have taken place. In fact it was only when the US and apartheid South Africa stopped giving UNITA money and weapons that it turned in earnest to diamonds.

    The future of these countries now turns on whether productive activities can be made available to the young men who fought in the wars � productive activities that outweigh the return on more dangerous endeavours.

    The KPCS will help to ensure that whatever happens, conflict and illicit diamonds will never be traded with the ease they enjoyed in the 1990s. But the KPCS is still a work in progress: it has been very difficult to get the statistical data base up and running. And while there is now a voluntary peer review process, there is so far no regular independent monitoring of all participants for compliance. It has taken more than two years of intense pressure, for example, to get serious consideration of the blatant diamond laundry problem in Brazzaville.

    If the Kimberley Process is given the teeth it needs, it can reduce the many opportunities that still exist for laundering illicit diamonds into the legitimate trade. Already there has been progress. In 2003, Sierra Leone recorded its largest export level in more than two decades, at US$76 million in total. This was an 85 per cent increase over 2002 and triple what was officially exported in 2001. And the DRC exported an all-time record of $642 million in rough diamonds, a 62 per cent increase over the previous year. Both governments attribute the increase, in part, to the Kimberley Process.

    But there is a problem overshadowing the bright statistics, the tentative peace arrangements, and the efforts, at least in some places, to build democratic and responsible government. A huge number of young men still swarm over the alluvial diamond fields of Africa. In Sierra Leone there may be as many as 200,000. In the Congo, the government estimates 700,000. In Angola there may be 300,000. In all, there are probably a million African artisanal alluvial diamond diggers, almost all of them unregistered and unregulated. These young men, who work for nothing except what they are lucky enough to find � and individually they don�t find much � produce ten or maybe twenty percent of the diamonds that go into the jewellery shops of London, Tokyo, Paris and New York. They work for the diamond industry. But they are potentially dangerous, and over the past decade they have shown just how dangerous they can be � to human security, to good governance and top the diamond industry itself.

    Since colonial times, African governments have sought to limit the influx of people into alluvial diamond areas by a variety of means: pass systems; arrests; fines; imprisonment. Amnesty International has reported the murder of illegal diggers by mining firms in the DRC, and Angola is currently in the process of deporting thousands of illegal Congolese diamond miners. None of these efforts has ever worked for long. The issue is not that the returns on alluvial diamond mining are high. The work is dirty, hard, sometimes dangerous, and it probably produces little more than a couple of hundred dollars a year for most diggers. In fact, the competitive scramble in a largely informal economy only serves to drive prices down at the pit level, creating a lucrative business for middlemen.

    There are two issues here. The first has to do with the creation of viable economic alternatives for those who dig diamonds. This is a macro economic challenge that is considerably more daunting for countries emerging from war than others. The second is about converting the informal diamond digging economy into a more formal one. Cooperatives and other arrangements which provide organized workers with a better price for their labour could help to convert the competition for diamonds into competition for jobs. This will require study and concerted efforts by governments, the diamond industry, NGOs and donor agencies. Given the number of people involved, however, and given the half century of destabilization fostered by an unregulated diamond trade, any successful investment could yield major dividends. In the year ahead, Partnership Africa Canada and Global Witness will be studying this issue in greater depth and we will engage the industry in our research.

    One thing is clear: given the nature of alluvial diamonds, and given the history of Sierra Leone, Angola and the Congo, �development diamonds� will not happen by themselves. They will not come from foreign troops and an unsustainable $1.7 billion peacekeeping effort, or from ritual calls for stable and democratic government. And they will not likely emerge unless serious attention is given to the wider issue of illicit diamonds. A strong KPCS will help, but alone it is not enough. NGOs became involved in the diamond issue because we wanted an end to the wars. In a sense � together � we have achieved the goal, but if we want it to last, we NGOs � and you � have to do more.

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