>From NY Times, April 6, 2000 "Africa's Diamond Wars"
Full article at:
http://www.nytimes.com/library/world/africa/040600africa-diamonds.html
Exploiting a Continent
The miseries of modern Africa are, in many ways, a legacy of its history.
In the case of both Angola and Congo, colonialism obliterated whatever
political culture may have predated the arrival of Europeans. It invented
huge, largely fictive nations - Angola is the size of Texas, Congo of the
United States east of the Mississippi - roping together people who regarded
one other as foreigners. To make their nation-building pay, colonialists
used force to haul off everything from ivory to rubber to human beings.
In Congo, the Belgian colonial state was famously greedy and cruel. Its
agents set impossible quotas for production of rubber and ivory, killing or
chopping off the hands of villagers who failed to meet them. The novelist
Joseph Conrad called it "the vilest scramble for loot that ever disfigured
the history of human conscience."
In Angola, the Portuguese were less brutal, but no less toxic.
At independence in 1975, several hundred thousand Portuguese residents,
virtually the entire educated population, abandoned the country. Some took
even their doorknobs with them. They left behind a place where almost no
Angolans had any training in statecraft, business or agriculture.
Then for the better part of the last 50 years, the cold war and the
white-minority governments of southern Africa injected cash and arms into
regional wars.
The Central Intelligence Agency, for instance, supported Unita in the early
1970's and again in the late 1980's. The Marxist government of Angola
received military assistance from the Soviet Union and up to 50,000 troops
from Cuba. When the C.I.A. was not helping Unita, the rebels got military
backup from white-ruled South Africa.
Sierra Leone, a small country in West Africa, had a more benign colonial
history under British rule. But since the 1940's, predators who smuggle
diamonds have warped every aspect of the nation's economic and political
life.
The meddling of colonialists, superpowers and white governments all but
stopped at the start of the 1990's, leaving diamonds, oil and other natural
resources as the primary forage for rebels and governments.
In those countries where there was nothing to trade for weapons - as in
Mozambique, where post-apartheid South Africa stopped financing rebellion
and post-Communist Eastern Europe stopped financing the government - war
simply fizzled out.
But Angola, Congo and Sierra Leone had plenty of diamonds left over to
excite greed, fuel war and to buy favors. The United Nations report on the
embargo against Unita described how Mr. Savimbi gave a "passport sized"
packet of diamonds to the president of Togo, Gnassingbe Éyadéma, as payment
for allowing his children to live in Togo and go to school there. Togo has
denied it.
Mr. Savimbi "sealed" his friendship with the president of Burkina Faso,
Blaise Compaoré, by giving him a number of envelopes full of diamonds, as
well as contributing to his political campaign and helping his government
pay debts, according to the report. In return, it said, Burkina Faso sent
Mr. Savimbi three flights of diesel fuel. The government of Burkina Faso
denies that.
"Oh, the diamonds, diamonds, diamonds," said a character in Graham Greene's
"The Heart of the Matter," a 1948 novel set in Sierra Leone. "You cannot
understand how many bribes are necessary."
Manipulating Scarcity
De Beers created its cartel 110 years ago when the company's founder, Cecil
Rhodes, realized that the sheer abundance of diamonds in southern Africa
would make them virtually worthless. By carefully manipulating scarcity, De
Beers prospered as perhaps the most powerful cartel in the annals of modern
commerce.
In the process, however, De Beers has run afoul of antitrust laws in the
United States. The company's senior executives dare not enter this country
because of an outstanding antitrust indictment that charges De Beers with
fixing the prices of industrial diamonds.
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. Through
the years, it has sponged up periodic floods of diamonds from Russia,
Australia and, until recently, across parts of war-ravaged Africa where it
does not own all the mines.
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.
That, for the most part, is also an invention of De Beers. 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."
Diamonds spilling out of Angola's war zone have had a destabilizing effect
on the cartel, first by increasing the supply of gem-quality stones and
then by tarring the reputation of De Beers as a company that trafficked in
blood-stained goods.
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.
Global Witness, a London-based human rights group, embarrassed De Beers in
October of 1998 with a report that showed - citing the company's own annual
reports - how the cartel had pumped large amounts of money into the coffers
of the rebels as the war escalated.
A year later, De Beers took decisive action. The company declared last
October that it would not buy any diamonds that originate in Angola, except
from one government-controlled mine.
Some diamond experts said De Beers' announcement, while laudable, came late
- after Unita, having exhausted the easy pickings in Angola's alluvial
mines and having lost considerable territory to Angolan government forces,
could no longer roil the world market with high quality stones.
De Beers moved again last month to sanitize the image of the diamonds it
sells. As of March 26, the company says it can guarantee that none of its
diamonds originate with African rebels, but come instead from its own mines
in South African, Botswana or Namibia, or are bought from mines in Russia
or Australia.
Human rights groups have welcomed De Beers' moves and praise the company
for taking steps they say the entire diamond industry should follow.
Rebel-mined diamonds, though, can still find their way out of Africa. About
a third of diamonds imported into the United States are purchased from
traders who are not employed by De Beers and are not bound by its new rules.
Louis Proyect
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