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The world has a lot of natural resources that can be used to benefit humanity and his society. However, as a result of the paradox of the plenty, much of these natural resources have resulted in the death and destruction of man, decline in economic growth and political unrest (Goreux, 2001).
Diamonds provides a good example of a natural resource that have brought about negative effects in the lives of individuals in the regions that it is found. Since the end of the cold war, conflict diamonds have captured the international eye as a result of the civil wars and political unrest that they have resulted in.
This essay shall thus focus on the role played by diamonds in financing civil wars in West and Central Africa and the role that international bodies such as the World Bank and the United Nations can play to prevent future conflicts and help post war victims. The essay shall focus on countries such as Angola, Sierra Leone and the Democratic Republic of Congo (DRC). It is here that a lot of conflict with regards to diamonds hail from.
These countries have a variety of natural resources that can be used to sustain their economies. However, despite from benefiting from their natural resources, especially diamonds, Angola, Sierra Leone and DRC are the countries with the lowest GDP in the world. According to the World Development Report of 2000/2001, DRC was ranked 194th, Angola 203rd and Sierra Leone 205th (Goreux, 2001).
Due to the political unrest that is being experienced in these countries, their governments have been unable to reduce the level of poverty and improve on the status of their economy with the help of their natural resources.
Botswana is perhaps the country that has benefited greatly from mining diamonds. As a result of the mining, processing and selling of diamonds, the country has enjoyed a tremendous economic growth for the last 30 years. This growth in the economy can only be compared to the growth that is experiences in East Asian Countries (Goreux, 2001). However, the source of diamonds in Botswana is somewhat different from that of Sierra Leone.
Despite their differences, the benefit that can be gained is relatively the same. This essay shall thus discuss the process of mining diamonds, the conflicts that arise from diamonds and the role that the World Bank and other international bodies can play to minimize these conflicts and ensure that diamonds are used to benefit the economies of the countries that they are found in.
Diamond Mining and Processing
Before a diamond arrives at the jewellery shop, it undergoes five distinct stages. The first stage involves the mining and collection of rough stones. Here, De Beers plays a key role. The company owns over 40% of the diamond mines that are distributed all around the world (Gould et al, 2010). In addition, it holds a huge buffer stock. As a result, the company has been dictating the prices of diamonds for several decades now.
The second process involves the sorting of the stones in terms of size and quality. This is done before the stones are transported to the manufacturer. Thirdly, the stones are cut, shaped and polished. New York only deals with high-valued stones while the rest are polished in Bombay and other neighbouring cities. Manufacturing of the stone is the fourth stage. Here, diamonds are shaped into various designs and are embedded on a variety of ornaments.
This can be as per the manufacturer’s specifications or as per the requirements of a specific customer. Marketing of the product is the last stage. Here, various companies use a number of methods to reach out to their consumers. At the present moment, e-marketing is one of the reliable marketing techniques as online purchasing is taking over the industry.
Diamonds have a significant revenue. In 1999 for instance, the value of diamonds that were mined at mine gate was approximated to be $7.8 billion (Simon, 2000). Furthermore, the rough estimate of diamonds that were sold to manufacturers amounted to $14 billion. The value that was added in the process of incorporating gold, platinum, silver and other valuable stones was around $14 billion.
This made the total production price of diamonds during that year to be approximately $28 Billion. Therefore, to earn profits, retailers normally advocate for a 100% margin thus the total value of retail diamonds in 1999 was a whooping $56 billion. Most of these sales were made in the United States alone.
41% of the diamonds that end up in the world market come from Botswana, Namibia and South Africa. Most of the mines in this region are owned by De Beers. Most diamonds are mined from kimberlite pipes.
The mining process, sale and marketing of the product are controlled by the Central Selling Organization (CSO). CSO is part and parcel of the De Beers group thus it will be true to say that De Beers controls the mining, selling and distribution of diamonds in the world.
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10% of the worlds diamonds come from Central Africa. Unlike in Botswana and South Africa where diamonds mines are fenced and protected under high security, mining in alluvial mining along riverbeds is practiced in Central and Western Africa. Here, individuals, small-scale entrepreneurs and unskilled individuals are involved in the operations.
Due to the fact that mining is conducted along riverbeds, enforcing fences and other forms of security is impossible. In addition, no laws are present to govern and regulate the operation and if they are present, this authority lies on the hands of corrupt individuals who do not administer it effectively. This therefore provides a serine environment for conflict and rebels to thrive in.
Most of the alluvial mining activities are conducted by individuals who do not possess any professional qualification or skills. These individuals use traditional mining methods. In addition, mining is not considered a commercial activity but a subsistence activity. The activity is carried out by poor individuals in remote areas within the country.
According to WDR of 2000, there are approximately 13 million people who practice artisan mining in the world and these individuals have 80 to 100 million dependants (Goreux, 2001). These individuals work under harsh conditions where the processing and marketing skills of the precious stone are rudimentary. The wage that they get as a result is minimal. In addition, they expose themselves to risky situation and health hazards.
The main problem that is facing the alluvial mining process is the lack of a fiscal policy and proper governance that follows the legal framework. This activity lacks proper licensing, taxation and trade control mechanism. In these areas, there are no labour laws that strive to ensure that employees benefit from their activities. In addition, the process of law enforcement lies on the hand of the rebels.
These rebels provide harsh working conditions to the artisan miners and do not compensate them adequately. Finally, most of the artisan miners are young males who have no sense of culture and the spirit of savings. With such an attitude, these individuals face hazards such as drug abuse, alcoholism and STD infections (many commercial sex workers are found in these regions and they increase the transmission of STDs and STIs to these young males).
Problems Facing Conflict Diamonds
Many people have always considered diamonds to be a symbol for purity (Simon, 2000). That is why, many individuals offer diamond rings to their spouses and loved ones as a symbol of love. However, the scenario is quite different in Angola and Sierra Leone. Diamonds have for a long time been used to finance civil wars. The United Nation Security Council developed an interest in diamonds after the 1992 violence that hit Angola (Gould et al, 2010).
Following the failure of peace accords in the country, the Security Council issued embargos on all diamond exports from the region and the importation of arms and war equipments in the country. The same actions were taken against Sierra Leone after the 1997 military coup and the failure of the Lome peace agreement of 1999. These actions led to the establishment of a sanction committee within the UN.
The characteristics of diamonds present a conducive environment for rebels to benefit from the stone. Diamonds can be mined using simple tools via the alluvial method. These mining areas are vast and are located in remote areas of these countries.
It is thus difficult for the government or any other official agency to have full control of the region. Their minute sizes and high value increase the ease at which diamonds can be smuggled. In addition, it is very hard for officials to determine the exact origin of a stone. As a result, smuggled diamonds find an easy way into the world market.
Diamond diggers comprise of approximately 10% of the national population of Angola and Sierra Leone (Gould et al, 2010). These individuals are extremely poor. They spend much of their lives in these diamond fields in the hope of getting a huge rock that will transform their lives.
However, a higher proportion of them fail at achieving this goal. This in turn results to an increase in their level of poverty and desperation. Such individuals are thus easily recruited into the rebel forces either as fighters or as miners. This tremendously increases the power and revenue of these rebel groups.
Angola has been facing a lot of disputes with regards to diamonds since the 1980s. However, after the rejection of the 1992 election results by UNITA, violence erupted in the country. UNITA armed the rebel forces with revenue from the sale of diamonds while the government armed its military with proceeds from exports, mainly from oil. The sanctions that were imposed by the UN were not effective at all.
For instance, the rebels could buy diamond certificates for only five dollars. In addition, it was reported that the rebels and military officials were exchanging diamonds. This thus made it impossible to differentiate between legit and conflict diamonds. Furthermore, rebel leaders still had access to financial deposits abroad.
However, the UN imposed tight measures that regulated the sale of conflict diamonds in the year 2000. It was a regulation that all certificates of origin to be printed on a security paper. This forced the rebels to sell their diamonds at a discount. This move did not stop them from participating in illegal trade but reduced their revenue.
Also during this time, UNITA had lost most of its mines. This reduced the quantity of diamonds that they could acquire and this in turn reduced the amount of revenue they would earn. Although there are talks that UNITA is still involved in illicit diamond trade, their revenue and impacts on the sale of diamonds has drastically declined.
The situation was not any different in Sierra Leone. During the 1970s, diamonds was one of the major foreign exchange earners for the country. During this time, mining activities were under National Diamond Mining Cooperation. However, as a result of corruption, the efficiency in the operations of this body declined. By 1980s, only a small proportion of the diamonds that were exported followed the legal channel.
Consequently, there developed a huge conflict of interest between the body and the local communities that surrounded diamond mines. These communities complained that much of the revenue earned from the venture was used to benefit a few individuals in the government and only a small proportion was used to develop these communities. This led to the eruption of the rebellion in 1991.
This rebellion was spearheaded by Revolutionary United Front (RUF). Most if not all of the finance that was used to sustain these rebels came from the sale of conflict diamonds from the mines that they controlled. Sanctions against the sale of conflict diamonds and importation of arms were levied against the country in 1997 by the UN Security Council. It was also mandatory for all the diamonds to have a certificate of origin printed on a security paper that was issued by the government. These actions reduced the illegal activities of the rebels.
Actions to be Taken
It is essential for the World Bank, the United Nations and governments from all the states worldwide to come and work together as a team in order to end this predicament. Through their collaboration, it may be possible to bring peace in these conflict zones and enforce a government body to control the mining activities.
This will increase the security of the region, improve the working condition of miners and ensure that the mining activity is conducted professionally. As a result, individuals are likely to benefit from the venture, minimal environmental degradation may be experienced and rebels will be ultimately kicked out.
The mining process should also be carried out professionally. The World Bank and other agencies should provide the required assistance in term of finance, machinery and resources to ensure that this process is conducted in an effective and efficient manner.
There should be transparency and accountability within the government and the bodies that will be in charge of the mining activities. Most importantly, a higher proportion of the revenue that shall be accrued from the venture should be used to benefit the local community. This action will earn the support of the locals in the mining activity. In the long run, poverty shall be eradicated, peace shall be earned and economic growth and development shall be experienced.
Proper practices need to be employed in order for societies to benefit from their natural resources. The lack of these practices has resulted to civil unrest in Central and Western Africa for the last several decades as a result of conflict diamonds. These conflicts have resulted to the deaths of hundreds of thousands of individuals, amputations, destruction of property and mass migrations.
As a result, the economies of these countries have greatly been affected. However, through proper governance, collaboration with international bodies and involvement of the local community, these nations can benefit from diamond mining. This will in turn lead to the elimination of poverty and a growth in the economy of these nations and the world at large.
Goreux, S. (2001). Conflic Diamonds: African Paper Working Series. Journal of Africa, 3 (4), 122-145.
Gould, A., Marshall, S., Weber, I., Carhart, K. and Jeff Hughes (2010). Blood Diamonds: Too High a Price to Pay. Web.
Simon, H. (2000). Conflict Diamonds. The Mining Journal, 6 (12), 21-30.