Diamonds Are Not Always Forever!
...of a New Diamond Policy and Operations
1. Introduction 2. Summary 3. Discussion 4. Conclusion
1. INTRODUCTION
The link between diamonds and armed conflict in Sierra Leone is obvious, and has been exposed, investigated, and deplored by humanitarians, journalists, politicians, and diamond industry leaders. Less obvious are the complex, entrenched relationships between exploitative systems of financial intermediation and resource management, poverty, and the spectacular, mysterious wealth of the diamond trade. Diamonds have facilitated, not caused, and armed conflict. Pre-war economic and social injustice, which developed during the war into the illegal, and finally criminal, behavior common of the diamond traffic, must be addressed as a complex development problem. To ignore it is to perpetuate the conditions that gave rise to the war, and invite its resurgence.
2. SUMMARY
The Problem
In 1999, Sierra Leone's official diamond exports were slightly less than $1.5 million, compared to an industry estimate of $70 million as the real commercial value. The other $68.5 million of estimated value was lost to illicit and criminal activity. Diamond resources are linked to financing armed conflict. In addition, the problems of illicit diamond exports for Sierra Leone's economy are as follows.
• Low prices due to gray or black market. The purchase price to Sierra Leoneans is lower than the "fair market value" they would obtain from legitimate, competitive buyers. The discount is typical of any gray or black market.
• Inequities in resource distribution. The allocation of value in the chain from digger to exporter is exploitative.
• Loss of multiplier effect. The full value of diamond purchases does not circulate in Sierra Leone to generate more wealth.
• Lack of reinvestment: This is similar to the multiplier effect, but is an...
View Full Essay
