Africa's Gems: Warfare's Best Friend
Making Diamonds Work Return to Part I
Diamonds need not lead to horror. Botswana, the world's largest diamond producer, is one of the most stable and prosperous countries in Africa. The diamond industry there employs nearly a fourth of the country's 1.5 million people and accounts for two-thirds of government income.
De Beers and the government control the industry in a 50-50 partnership, but there is far more to the country's success than corporate paternalism. For starters, the borders of Botswana, unlike the borders of so many countries in Africa, make sense. Inside the borders, there is ethnic and linguistic unity. There is also a long history of democratic decision-making.
Traditional chiefs rarely take action without first consulting ordinary villagers, who are invited to speak freely. It also helped that Botswana gained independence peacefully. The country was so poor that the British decided it was not worth fighting for, so it was never inundated with guns or soldiers.
When De Beers discovered diamonds in Botswana in 1969, the government had been independent for three years, and the men running it were traditional chiefs who owned cattle. They came from a desert culture where people have to scrimp and save to survive the long, dry season.
During three decades, Botswana's leaders have carefully guided what became the world's fastest-growing economy. They invested in roads, schools and clinics. In stark contrast to the rulers of Angola and Congo, they created an African nation devoted to improving the lives of its people. In 1965, only about half of primary school-aged children attended school. Today, 90 percent of that group is enrolled. Life expectancy, which was less than 50 at independence, is now near 70.
Joao Silva / Sygma, for The New York Times
The new multi-million dollar diamond sorting plant at the Jwaneng Diamond mine in Botswana.
Phones work in Botswana, potholes get repaired, garbage gets picked up, and a lively press pokes fun at the government without fear. At $3,600 per year, the gross national product per capita is seven times higher than the average for sub-Saharan Africa. The standard of living is higher than in South Africa, Turkey or Thailand.
"Diamonds are not devils," said Terry Lynn Karl, professor of political science at Stanford and author of "The Paradox of Plenty," (University of California Press, 1997), a book about the poisonous mix of natural resources, big money and thieving elites in developing countries. "What matters is that there be a tradition of good government and compromise in place prior to the exploitation of these resources."
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.
De Beers
A March 2000 ad for De Beers 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.
Tracing the Stones
Near Antwerp's train station, police barricades seal off three narrow streets. In warren-like rooms above the streets, men hunch over precision turntables, grinding rough diamonds to coax forth shapes and colors that lure wholesaler jewelers to Belgium from around the globe.
Eight out of 10 of the world's rough diamonds — about 125 million carats a year — pass through Antwerp's Diamond Center. But exactly which of those stones come from war zones in Africa is something Antwerp's experts say they find hard to tell.
Photographs by Gael Turine for The New York Times
Rogier Maaskant
Above: At the Krochmal workroom in the diamond center of Antwerp, a polisher inspects a rough diamond. Center: The chief polisher checks all diamonds before they are sent to jewelers. Below: A jewelry shop in Antwerp, Belgium.
Michael Vaughan, managing director of the Diamantkring, one of the four exchanges in Antwerp, said that his business depended on trust, and that if diamonds have been smuggled by African rebels and re-packaged elsewhere, "we don't know about it."
Many diamond traders in Antwerp do not particularly want to know where the stones come from. A recent United Nations report complained of "extremely lax regulations" at the world's largest diamond bourse in Antwerp. A Canadian human rights group, Partnership Africa Canada, calls Antwerp "a diamond smuggler's dream."
Belgium has objected to the report, saying it ignores major moves in January to set up tougher customs inspections and a new certification system with the Angolan government.
But it is not just Belgium. According to the United Nations report, Antwerp is flooded with diamonds exported from countries passing off smuggled diamonds as their own, complete with false, but official, certificates of origin. The experts say those countries include Liberia, Uganda, Rwanda and Zimbabwe.
One way to keep rebel-mined diamonds off the world market would be to impose a diamond embargo on African countries known to be exporting smuggled stones. Thus far, though, there is little enthusiasm in the United Nations for such a move. "It is tough enough in Angola, believe me," Mr. Fowler said.
Human rights groups and some members of Congress are also calling for a mandatory diamond-labeling system. One proposal calls for a worldwide ban on sales unless diamonds have verifiable documents proving country of origin. A bill introduced in Congress last year would require similar documentation for diamonds sold in the United States.
Representative Tony P. Hall, an Ohio Democrat, and Representative Frank R. Wolf, a Virginia Republican, introduced the bill after seeing the horrors of war in Sierra Leone.
"The world looked the other way in Angola for most of the 1990's, while revenues from diamond sales were used to butcher innocent civilians," Mr. Wolf said. "We should not stand by as the same thing happens in Sierra Leone and Congo. We should do whatever it takes to cut off the flow of money."
The diamond industry in the United States objects to the proposals.
"There is no way to tell where a diamond comes from," said Eli Haas, president of the Diamond Dealers Club of New York. "Diamonds don't have identifying marks and probably never will. You just can't look at a diamond and say, yes, it comes from Sierra Leone."
That may be changing. De Beers says that it is "actively pursuing" a diamond fingerprinting technology being developed by the Royal Canadian Mounted Police at a forensic laboratory in Ottawa.
Using lasers, the technology tries to identify chemical impurities that are characteristic of diamonds from a particular country. Before it can work, though, a huge database containing the fingerprints of the world's diamonds would have to be gathered and a method of industrial testing would have to be devised.
"Identifying them is going to take many years," said Andrew Bone, a De Beers spokesman in London. "Most international experts believe that the techniques are not yet sufficient to allow the tracing of individual stones. Nevertheless, we are committed to helping in any way we can."
Buying Love Tokens
It appears likely, then, that a trickle of diamonds from the war zones of Africa will continue to leak into jewelry stories, at least until technology, international law or a heretofore unseen vigilance in the diamond industry finds a way to stop it.
De Beers insists that the chances of buying such a diamond are infinitesimal.
"There is less than a one-in-a-hundred chance that any single stone will come from conflict areas," said Mr. Bone, the De Beers spokesman.
Despite such assurances, the window remains open for African rebels. Smugglers in Sierra Leone and Congo have ready access to the third of the world diamond market that De Beers does not control. And Unita, although its diamond dealing is down sharply from the mid-1990's, is still selling between $80 million and $150 million worth of stones a year, according to the most conservative estimates. To perk up sales, Unita held a sale last year, military experts said, marking down rough-diamond prices by a third.
The perceived need to own a diamond appears, if anything, to be increasing.
On a recent Sunday afternoon, Tracy Scholl, of Suffolk County, Long Island, stood with her fiancé, Mike Sabatino, at an engagement ring counter on 47th Street in the diamond district of Manhattan.
"When you get engaged, you get a diamond," Ms. Scholl said as Mr. Sabatino, an electrician from Staten Island, warily eyed a one-carat ring that cost $5,500. "It is what you are supposed to do."
And Africa? "I want to say that I would not want a diamond because of that stuff in Africa, but I guess that's not really true," Ms. Scholl said. "Me not buying a diamond is not going to stop what is going on over there."
