Lebanon Diamond Law At Center Of Political Storm
March 11, 04
A draft law regulating Lebanon’s shadowy diamond trade recently passed by parliament but rejected earlier this month by President Emile Lahoud is at the center of a growing political storm involving business interests linked to Prime Minister Rafik Hariri.
The law was passed with the aim of bringing order to the country’s diamond market where illegal operations and money laundering schemes are reportedly widespread.
Lahoud rejected the proposed regulations saying parts of it were unclear. The rejection follows a reported massive deal struck last year between Russian diamond giant Alrosa and Horizon Development, a Beirut-based company owned by the son of Prime Minister Rafik Hariri.
The $500 million deal would establish a retail network for Russian diamonds in the Middle East and is seen by some Lebanese diamond industry members as an attempt to corner the regional diamond market.
Reports have suggested that Lahoud’s rejection of the law is an effort not only to foil the Hariri-backed diamond enterprise in Lebanon, but also intended as another stage in the continuing political battle between the two leaders which has recently reached a head.
“The draft law really came as a result of pressures from the United States to stop money laundering,” said one diamond dealer. The dealer added that many drug dealers use diamonds to launder their funds.
The dealer claimed that 80 percent of diamonds handled in Lebanon enter the country illegally. This means the government can only tax 20 percent of diamonds moving through the country, creating a revenue shortfall that the draft law was aimed at fixing.
Around 50 Lebanese factories import rough diamonds while four of them polish the diamonds for export.