The former government was done away with and the NPFL established the new government, the National Patriotic Reconstruction Assembly (NPRA). In 1996 an election was held and Charles Taylor came to be the president. As of now, his credibility as a trustworthy leader is in great question. Taylor claims that the civil war in Sierra Leone is not his problem but that of the British. Taylor was quoted: The war in Sierra Leone is a war over diamonds, but not because Liberia wants diamonds. This war is happening because the British want the diamonds. (Africa.com)
All in all, Liberia is a country in shambles. Its economy is in utter chaos and there is not much being done to restore it. [Liberia s] economy had started its downward plunge even before the war and the situation was further aggravated by the crisis illegal mining of resources went on through out the war. All the warring factions had participated in illegal mining of resources. (Alao) On top of that U.S.-Liberian relations are not doing so well either. Disputes over property rights have ignited arguments between the two governments. Last Wednesday, Clinton banned Taylor, senior members of his government and their families from visiting the United States. In retaliation, Taylor issued his own instructions Friday denying entry visas to U.S. officials. (Washington Post)
Liberia has become a major criminal entrepot for diamonds, guns, money
laundering, terror and other forms of organized crime. The astoundingly high
levels of its diamond exports bear no relationship to its own limited
resource base. By accepting Liberian exports as legitimate, the
international diamond industry actively colludes in crimes committed or
permitted by the Liberian government. (PACNET)
The countries described above all have extremely unstable and volatile economies. Their problems are rooted in disputes over control of land and diamond mines. On the other hand, there are countries in Africa that are not in the same situation as Angola, Sierra Leone, and Liberia. Nations such as Botswana and Namibia have very stable economies, which rely heavily upon diamond mining activities. How is it possible that some countries can fall into such turmoil, while others can be extremely prosperous when diamonds are a key factor in their economy?
Botswana has the strongest economy in Africa, and also has the highest GDP/person in Africa. The dependence on diamond mining activities on Botswana s economy is great. (MBendi) Botswana lies immediately to the north of South Africa and is bordered by Namibia and Zimbabwe. Its lush landscape is extremely untamed and contains an astonishingly large variety of wildlife. The discovery of numerous diamond reserves in the late 1960 s brought upon great economic potential. By the beginning of the 1980s, diamonds had well overtaken beef as the country’s leading foreign exchange earner and in 1981, diamond exports accounted for 40% of total exports and rose rapidly thereafter to reach approximately 80% of total foreign exchange earnings by 1989. (Botswana Gov t Website)
Botswana exports to several nations including many European nations, South Africa, and the U.S. This beautiful African nation is known to many as The Gem of Africa. Many diamond mining oriented businesses have flourished in Botswana over the years. Debswana is a joint company of DeBeers and the Botswana government. This company has control over three very large and important diamond mines in Botswana. These mines account for the largest majority of Botswana s production of approximately 20 million carats per year. Debswana employs about six thousand people and is Botswana s largest employer. (MBendi) One of Botswana s premiere diamond mines is located in Orapa. [Orapa s] giant kimberlite pipe was discovered by DeBeers geologists in the late 1960 s and the mine became operational in 1971 (Joyce)
Namibia, formerly known as South West Africa, is another fine example of an economically stable country, which is heavily involved in diamond mining. The economy of Namibia is primarily market based. Economic policies aim at sustaining economic growth, variety in the productive base and the attraction of foreign investors. (MBendi) Although over the past several years, Namibia has seen a decline of mining as a major factor in their economy, it still plays an important role.
Mining contributed 13% to Namibia s GDP in 1999, of which diamond mining activities represented 9%. Mining products produce up to 50% of Namibia s annual export earnings. Although the mining industry plays a vital role in Namibia s economy, the mining sector has experienced a decline in growth over the past few years. This has mainly been as a result of several mining ventures closing down due to diminishing ore reserves and low commodity prices. Namibia s main mining products include diamonds, uranium, gold, zinc, copper and lead. (MBendi)
In this nation the state oversees all mineral mining activities. Licenses are issued to give investors rights to mine in certain regions. There are several different types of licenses, which can be obtained, including, Non Exclusive Prospecting Licenses, Reconnaissance Licenses, Exclusive Prospecting License, and Mineral Deposit Retention Licenses. Each license grants different rights to mining investors and are only valid for certain amounts of time. There are different mining taxes and royalties placed on mining companies as well. Tight government control and rigid mining regulations are obvious reasons why Namibia has been successful in its diamond mining ventures. Diamonds are slowly loosing their importance in Namibia s economy but as of now are still an immensely important factor. Could tight regulation of diamond mining, in countries in conflict such as Sierra Leone and Angola solve their problems?
When one thinks of a true monopoly, an obvious name that comes to mind in the diamond industry is DeBeers. This company was established over one hundred and ten years ago, and since then has taken control over an immense portion of the diamond mining operations in Africa as well as other parts of the world. [DeBeers] mines between them account for around half of the world s output of rough gem diamonds by value. (MBendi) Having so much power in the diamond industry gives DeBeers an advantage when it comes to the supply and demand for diamonds internationally. The company’s grip on the diamond market has slipped a bit from near-total dominance at mid-century, but it has continued to keep the price of gem-quality diamonds high by being both aggressive and flexible. (NY Times)
Diamonds have an intrinsic value attributed to romance and love. DeBeers can be thanked for this label. In 1938, De Beers hired a New York advertising company to convince millions of couples that the larger the diamond on an engagement ring, the greater their love. In the 1960’s, a similar campaign in Japan created a diamond engagement ring tradition. (NY Times) Would diamonds have the same image in people s minds through out the world, if it weren t for DeBeers? Not likely. In fact diamonds are not the rarity most believe them to be. They are greatly abundant in the nations they are mined from. The main reason for the disputes over diamonds is the demand for them internationally. Together with the artificial perception of rarity, what makes diamonds profitable to more than 2.5 million miners, traders, cutters and wholesalers around the world and what energizes the $50-billion-a-year retail diamond jewelry industry is romance. (NY Times)
The relationship between the U.S. and DeBeers has not been doing too well as of lately. DeBeers has violated several antitrust laws in the U.S. DeBeers has been accused of fixing industrial diamond prices in the global market. In fact many DeBeers executives will not enter the U.S. because of these disputes. Nonetheless, DeBeers continues to roll in the money from countries all over the world including the United States.
There are currently allegations that DeBeers bought illegal diamonds from Angola s rebel group UNITA. To maintain world prices, De Beers bought up a sizable amount of what UNITA was selling although the company insists that it bought the diamonds on the open market without any direct dealings with the rebels, and that it stopped all buying when the embargo was imposed in 1998. (NY Times) If DeBeers did in fact purchase blood diamonds from UNITA, they would be in direct violations of several embargos and could potentially suffer major consequences. In response to these accusations DeBeers states that it will refuse to purchase diamonds that have knowingly originated in Angola, with an exception of one government controlled mine.
In March of 2000 DeBeers made a guarantee that none of it s diamonds are purchased from conflicted regions. They claim that all of their diamonds come from mines they own in South Africa, Botswana, Namibia, and other non-African locations. DeBeers has been commended by several organizations for its new claims. However, it will be seen if DeBeers can stand up to its claims. De Beers is part of the problem. In its efforts to control as much of the international diamond market as possible, it is no doubt purchasing diamonds from a wide variety of dubious sources, either wittingly or unwittingly. (PACNET)
The Diamond High Council, or the Hoge Raad voor Diamant (HRD), is located in Antwerp, Belgium. Eight out of 10 of the world’s rough diamonds about 125 million carats a year pass through Antwerp’s Diamond Center. (NY Times) With so many diamonds circulating through Antwerp, it is virtually impossible to tell if a specific diamond may have been mined in an area of conflict. Most diamond traders in Antwerp don t rely upon hard fact as to where their diamonds come from, but merely upon trust. Although a certificate of origin comes with most diamonds these are easy to forge and replicate.
The city of Antwerp is a thriving business center. There are thirty thousand people employed in diamond commerce and industry and Antwerp has an 85% share in the global offer of rough diamonds. (DMA) Of course there are no published statistics detailing the amount of illegally mined and traded diamonds that come through. The only protection against smuggled diamonds is a customs office. It is not very hard for a smuggler to avoid being caught by a customs official when crossing borders. Neither the Government of Belgium nor the HRD have estimates of the quantity or source of smuggled diamonds. In addition, there are few active policies aimed at controlling diamond smuggling. (PACNET)
Due to the lack of policing in Antwerp, the city has become the global capital for smuggled diamonds. As noted before, the only way in which diamonds are traced is by documentation of the last country from which the diamond was last exported. This nation does not necessarily have to be its nation of the diamond s origin. A major problem with the Belgian environment – as it pertains to Sierra
Leone or any other diamond producing country – is the lack of interest and
information on the true source of the diamonds entering the country. (PACNET) In reality, the country of origin of the diamonds is not the top issue on the minds of diamond investors in Antwerp.
In conclusion, diamonds are a fuel for both economic prosperity and at the same time drive other economies into the ground. Countries such as Angola, Sierra Leone, and Liberia have suffered immensely as a consequence of being diamond rich regions, while nations such as Botswana and Namibia have become extremely stable economically. When it comes down to the basic question of how diamonds affect an economy, an answer is not easily found. Possibly the determining factor is the control of diamond trade. In countries such as Namibia strict government control has keep smuggling and illegal mining almost completely out of the picture. Nations such as Sierra Leone, which have extremely minimal policing of diamond traffic, smuggling and illegal mining, have led brutal civil wars.
A disturbing reality is that many people worldwide are not aware of the conflicts going on in these nations. Such violence and brutality should not go unnoticed by the global community. If more people were aware of the situation, action could be easily taken to solve the problems. These wars have been going on too long, and too many lives have been sacrificed for these rocks.
Monopoly companies such as DeBeers do not help the struggle one bit. In fact they aid civil dispute by engaging in illegal activities as well. If De Beers were to take a greater interest in countries like Sierra Leone, and if it were to stop purchasing large amounts of diamonds from countries with a negligible production base, much could be done to end the current high levels of theft and smuggling. (PACNET) Companies such as these overlook the conflict they often cause, just so they can make that extra money. The economic future looks quite grim for Angola, Sierra Leone, and Liberia. If they are to convert to economically sound nations it will take time and action. Strict policing must be implemented and rebel groups must be taken out of the picture. When one thinks about the value of a diamond, it does not seem worth the amount of lives that have been sacrificed for it.