The business of Blood Diamonds: A historical perspective

This is not to suggest there was no “evidence.” For one thing there was the discovery by the BBC that a twenty-eight-year-old al-Qaeda “member” named Mohammed Khalfan, arrested in Africa for involvement in the 1998 embassy bombings, was a leading shareholder of a Congolese diamond mine. The actual shareholder turned out to be Kamal Khalfan, a man in his sixties—the BBC publicly apologized and paid £500,000 in damages to his company. But that was not the end of such evidence. There were also abundant stories about a couple of Lebanese Shi’a diamond dealers “linked to” and “connected with” al-Qaeda - somehow they had missed the fact that at the time they were financially supporting bin Laden, his Taliban allies in Afghanistan were engaged, allegedly with the help of Arab auxiliaries, in massacring that country’s Shia population.
The Lebanese dealers later claimed (probably correctly) that rumours of their bin Laden association were spread by business rivals seeking to discredit them. Just who those rivals might be can perhaps be inferred from the fact that the UN found a group of ex-Israeli Air Force pilots moving smuggled diamonds from Angola, Sierra Leone, and Liberia and that one of the first acts of a post-conflict government of Sierra Leone was to arrest Israeli Reserve-Colonel Yair Klein. Klein, who had won undying fame in the late 1980s for training Norco-militias on behalf of Colombian drug lords, had arrived in Sierra Leone to sell “security services” to Israeli diamond traders trying to recover territory lost to the Lebanese Shiah in an earlier round of diamond wars.
There were a few other problems with the Osama-sells-conflict-diamonds story. For one thing, how did an organization supposedly spearheaded by a Saudi “Wahhabi fundamentalist” make a breakthrough into an area where most of the population in the trade was Shi’a Muslim from Southern Lebanon? True, those intent on the tale of al-Qaeda peddling conflict diamonds could resurrect the fatuous but widely believed “link” between al-Qaeda and Hezbollah.
But even that begged a few questions. It was never clear from any of the sensationalist stories if Hezbollah was supposed to be actually running “cells” of diamond dealers or just getting contributions from time to time from members of the Lebanese Diaspora who made money in diamonds, or real estate, or selling powdered milk and cans of tuna.
Furthermore Hezbollah was never a serious presence in West Africa. To the extent Lebanese Shi’a in the region have any consistent political preferences, it would be not for the radical Hezbollah but the far more mainstream and rival AMAL movement, whose leader, senior Lebanese politician Nabih Berri, was born in Sierra Leone.
In any case, participation would be interspersed in a matrix of undercover activity that would be almost impossible to unscramble. The diamond begins its commercial life in mines rife with theft; crosses borders in smugglers’ pouches or, what is often the same thing, diplomatic luggage; comes briefly into daylight again in cutting and polishing centres whose practitioners, more often than not, grant themselves a general tax exemption; re-enters underground freight channels via informal bourses where deals have traditionally been done in cash and sealed with a handshake; sneaks again across borders to dodge import duties or excise taxes; then finally arrives in a retail marketing network replete with commercial fraud.
En route the diamond might pass through the hands of impoverished diggers and backwoods traders, career criminals and corrupt functionaries, spies and insurgents, counterfeiters and money-launderers, and investment sharks and telemarketing scam artists before coming to rest around an especially elegant neck or a languorously beckoning finger - at least until some enterprising jewel thief thinks differently.
In addition, only cut and polished diamonds are really effective as capital flight vehicles. Even the most adroit trader in rough finds it difficult to guess a stone’s ultimate value - amateurs usually lose their shirts. If, just before 9/11, al-Qaeda had really shifted its supposed assets from traceable forms into things like diamonds that were nicely anonymous and easy to move, its supposed financial managers made a dumb move.
During the latter part of 2001, a glut drove down prices of some leading categories by 30 percent. In that case, the involvement of al-Qaeda in conflict diamonds is presumably something the world’s anti-terror experts ought to welcome, for it would work faster than investments in Sudanese agribusiness to deplete Osama’s fabled fortune.
Not least, the entire “conflict diamonds funding terrorism” tale misses a key point about the structure of the underground diamond business. Rarely do insurgent groups actually control diamond mining. As with virtually all other forms of contraband, they control the areas in which production occurs or across which traffic runs. Their major gain comes not from direct participation, though particular individuals might do so on their own account, but from taxation.
Rebel groups manage through military power (which neither al-Qaeda nor Hezbollah could possible muster in sub-Saharan Africa) to impose import and export duties, license fees, transportation surcharges, and, in some cases direct bribes for particular officers. In other words, the insurgents form the quasi-public infrastructure within which the diamond trade is run by experts and industry insiders much as before any guerrilla group takes over. In the case of diamonds, some wandering mujahideen type is not likely to be in a position to cut much ice, so to speak.
Nonetheless the campaign was a great success. The NGOs, peddling a mishmash of half-truths, unsubstantiated rumours, and spook disinformation, got their certification schemes, which gave officials of corrupt and repressive governments a pretext to knock out independent miners and turn concessions over to kin and cronies. De Beers had its market power confirmed.
National security types got to reinforce their bin Laden myth. And the US took advantage of the tale to assign a Treasury official to work with banks in the Sahel region of Africa to disrupt terrorist operations in diamonds and in gold. On the other side, innocent people were smeared with association with terrorism and anti-Arab stereotypes further entrenched. But that was just more unfortunate collateral damage of the sort that any war, including one on terrorism, inevitably produces.
For more info on this and related issues, reading R.T. Naylor’s book “Satanic Purses” is a real pleasure.