Global Policy Forum

Global Aid Needed to Make Diamond Trade Sparkle


By Stephen Leahy

Inter Press Service
March 19, 2004

Sierra Leone's 'blood' diamonds could be transformed into 'development' gems if the international community provides a helping hand, says a report released Thursday.

The West African nation's diamond industry has undergone a remarkable turnaround since the 1990s, when the Revolutionary United Front (RUF) used the sale of diamonds to finance a decade-long rebel war. In 2003, after two years of peace, Sierra Leone officially exported half a million carats of diamonds, worth more than 75 million dollars, says the report, 'The Diamond Industry Annual Review: Sierra Leone 2004'.

The 12-page document was written by Ottawa-based Partnership Africa Canada (PAC) and the Network Movement for Justice and Development based in Sierra Leone's capital Freetown. Diamond dollars could provide the nation's new government with badly needed export revenue that it could invest in health, education and other vital infrastructure, says Susan Isaac of PAC, a coalition of Canadian and African non-governmental organisations (NGOs) working on issues of conflict and sustainable development. "It's our hope that the conflict (blood) diamonds can become development diamonds," Isaac told IPS.

Since their discovery in the 1930s, diamonds have had a major impact on Sierra Leone, accounting for more than two-thirds of the nation's export earnings and a quarter of its gross domestic product (GDP) in the early years following the country's independence from the United Kingdom in 1961. But smuggling and corruption of the gems became a growing problem, largely fuelling the rebel war during the 1990s. In 2000, as a result of international pressure and United Nations sanctions, the government began to regain control of the diamond industry.

But that management is still extremely weak, and even government officials admit that diamond smuggling remains substantial, perhaps even larger than the legitimate export trade, the report says. "There's an amazing lack of violence in the country now," according to Lansana Gberie, a Sierra Leonean historian at the University of Toronto. "But smuggling remains a huge problem," adds Gberie who is also a research associate at PAC, investigating diamond-fuelled civil wars throughout Africa. Smuggling has been linked to organised crime and even to terrorist groups like al-Qaeda, added Gberie in an interview. But "the government is desperate for cash and can't afford to employ enough mine inspectors, police and other resources to deal with the problem".

There is a real danger of foreign "criminal elements" attempting to take over the diamond business in the country for purposes that include money laundering, the report quotes President Tejan Kabbah as saying. While Sierra Leone is a signatory to the Kimberley Process (KP), the South African-led initiative designed to cut off sources of illegal diamonds, it does not yet have the capacity to fully participate in the international certification scheme, according to the report.

"Regulating Sierra Leone's diamond certification scheme will involve significant cost and political will by the Government of Sierra Leone, in addition to sustained financial and political support from the international donor community," it adds. The Kimberley Process went into effect last year and includes other African countries such as Angola, Sierra Leone, the Democratic Republic of the Congo (DRC) and Liberia.

Until NGOs documented the multi-billion-dollar trade in recent years, diamond-buying countries in the North were unknowingly funding a number of tragic conflicts in Africa. Today, 60 countries participate in the KP after having enacted laws that make it illegal to import rough diamonds from sources that do not participate in the process. Only rough diamonds shipped with certificates of origin are to be traded, according to the KP. In Sierra Leone, that poses an enormous challenge because more than 200,000 small-scale, or artisanal, miners work in remote locations, the report points out. It says the country is making a satisfactory effort to comply with the minimum standards of the KP, but also points out that stopping smuggling would be easier if all countries refused to permit illegal diamond imports.

Corporate mining is also returning to Sierra Leone. For example, a number of Canadian companies have exploration permits, and Branch Energy Ltd, a subsidiary of Canada's DiamondWorks, has the only diamond-mining lease in the country. Its holdings in the Kono district are estimated to be worth up to two billion dollars. Branch Energy has said that part of its revenue, after it begins full operations, will be invested in the local community, to build a clinic, skills training facilities and a primary school.

A portion of the government's three percent diamond export tax is also being put into a Diamond Area Community Development Fund, which is earmarked for small-scale development in diamond communities. After 18 months the fund totalled nearly 800,000 dollars, less than hoped for, says Isaac. Problems remain with how that money is being used and local NGOs are closely watching spending, she added. In fact, civil society is carefully tracking Sierra Leone's entire diamond industry and its ongoing transformation in the country, she says. "That's the purpose of the report: to keep shining a spotlight on the industry".

Other significant problems, which are difficult to address because of the lack of regulations on artisanal mining -- corporate miners must conduct environmental assessments -- are the environmental impact of mining and the use of child labour. Not long ago, some observers argued the country's diamond industry should be shut down entirely because of its contribution to civil unrest, corruption and other problems, Isaac says. But PAC argues that with rules and regulations, diamond mining could be enormously beneficial to Sierra Leone.

The fact remains that there are many billions of dollars worth of diamonds to be mined and Sierra Leone needs money to rebuild, adds Gberie. While stability is slowly returning, the nation is going through a difficult transition and will need much help from the outside world for a number of years, he says, which is in itself a challenge. "The attention of the international community is difficult to sustain. It's already shifting to Liberia."

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