A Delicate Coast of Diamonds

Some good news came out of Africa this week. The forces supporting Alassane Ouattara, the elected president of Côte d’Ivoire, have been able to remove Laurent Gbagbo from power, a year after he lost the presidential elections. Until now, the country was divided into two main areas, north and south, each with its own government, armed forces and tax collection entities. The north, where Ouattara was located, is where the country's diamond deposits are found.

As long as there was no recognized government, and the forces in the north were considered rebels, the UN's Security Council imposed a number of embargos on the country, including on arms and diamonds. According to some estimates, about one million carats of diamonds are mined in the country annually. With a full embargo in place and no evidence of any stockpiling, the country's full production is believed to be smuggled out to its neighboring countries: Liberia, Guinea, Mali, Burkina Faso and Ghana.

The last report of the Group of Experts on Côte d’Ivoire, dated April 12, 2010, states: "Ongoing diamond mining in northern Côte d’Ivoire, specifically in Séguéla and Tortiya, provides the impetus for exports of Ivorian rough diamonds in violation of the sanctions regime." It goes on to state that local commanders of the Forces Nouvelles de Côte d'Ivoire (New Forces or FN) "monitor mining very closely, [yet] they are unwilling to prevent violations of the embargo."

Political unrest gives ground to smuggling. The West African region is known for its poor border controls and diamonds are moved around with no restrictions. Ghana, Guinea and Liberia are KP members, expected to comply with KP requirements, i.e. block the smuggling into their countries. "However," the experts report states, "these States have proven to operate ineffective controls on diamond trading. Despite this, the Kimberley Process fails to take action when its participants do not, or cannot, adhere to its principles." In short, they want the west to deal with it.

A source closely familiar with the situation told us that the smaller goods are smuggled into Ghana, Guinea and Liberia where they are mixed into the local production, get KP certificates and then exported into the legitimate stream.

The interesting diamonds, 2 carats and above, including 5 ct, 10 ct and even bigger stones, are smuggled mainly into Mali where a local trader is the largest buyer of these goods. Mali is not a member of KP and these diamonds are smuggled from there to the main trading centers. A couple of years ago a UN team came to Israel to investigate this further. An Israeli official denied to me that they found anything and indeed there is no mention of this in the report.

So the question is, as the elected president is taking his seat, what will the UN do when the sanctions are reviewed - the embargo expires at the end of this month. Will it be extended? The logical step is to support the country, allow it to benefit from diamond revenues, and stifle the smuggling.

The UN, however, is anything but logical. Consider this: the group of experts states on- and off-record that there are no human rights violations involved in the diamond mining in the north. Further, the UN calls the elected president and his supporters 'rebels', even though the UN recognized the election's outcome. Therefore, as long as they are still in the country, are they really conflict diamonds?

The situation is fresh. It's not clear if Gbagbo's supporters will let go of their power. "The question is who is going to take control of the north," the insider said. The integration – of two governments, revenues, military and military commanders – into one cohesive unit is a big issue. Are NF commanders willing to give up their fat income from diamonds? Will big traders from Mali give up their income or try to encourage continued smuggling? Our source summed it up simply and eloquently, saying the situation is "delicate." Indeed.

In its recommendations, the group of experts urges the Ivorian Ministry of Mines, with the assistance of FN commanders, to keep track of diamond production and sales, including the names of buyers, price and carat weight. It also urges the World Federation of Diamond Bourses (WFDB) to monitor and prevent those convicted of trading in illicit diamonds from trading with WFDB members. Finally, it urges Government authorities in Mali and Burkina Faso to monitor their borders vigilantly.

Even big organizations tend to deal with only one crisis at a time. With Zimbabwe on its hands, can we expect KP to address the Ivory Coast as well? Indeed, delicate.

Have a peaceful weekend.