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You are here: Home / Economics / Blood Diamonds, Hezbollah, and Diaspora: A Story of A Globalized Economy
Blood Diamonds, Hezbollah, and Diaspora: A Story of A Globalized Economy

Blood Diamonds, Hezbollah, and Diaspora: A Story of A Globalized Economy

November 30, 2017 by James Novello 1 Comment

The contemporary tale of diamond mining in Africa is a story about postcolonial states and the issues they face. For the nation of Sierra Leone, the story of the diamond rush brings to the forefront problems of smuggling, law enforcement, and international actors, all of which tied together to form the international image of the “blood” or “conflict” diamond.

Blood diamonds trickled into public consciousness in the late 1990s and early 2000s as a response to the increased sale of them in West Africa to fuel the Liberian civil wars. Neighboring Liberia, Sierra Leone’s diamond business then became a breeding ground for smuggling due to longstanding issues, which stretched back to before independence in the diamond rush of the 1950s, and before that with the arrival of diaspora from Lebanon in the late 1800s.

Even before independence, one of the challenges of the government at the time was dealing with the issues associated with a diamond rush. To curtail the massive upheaval that comes with events like gold or diamond rushes such as mass migration, inflation, and subsequent riots, the government began to regulate the fledgling diamond trade in 1936. The first step the government took was to draft the Diamond Industry Protection Ordinance, which gave exclusive zones, called Diamond Protection Areas, to English-backed mining companies such as Delco and the Sierra Leone Protection Trust (SLST). By demarcating the boundaries of specific corporate-owned lands, European dealers and companies worked at first for their own benefit, and later in tandem with the pre-independence colonial government formed in 1951 with the blessing of the Crown.

Some of these regulations created by the government to specifically limit the negative effects of a rush included granting mining or operating licenses within diamond-heavy areas only to those native to Sierra Leone. In addition, almost all laws sought to stem the flow of people from other parts of West Africa like Liberia and Guinea. After purchasing licenses, registered diggers would be allowed joint government-private ventures that would provide a market for the recently mined diamonds, and the diamonds would later be sold elsewhere by international corporations. Without a license, you wouldn’t be able to legally sell your haul.

This move towards legitimizing miners themselves was partly to reduce the number of international competitors, partly to stem the tide of illegal mining done by average citizens of Sierra Leone that began around 1952. From early 1952 to mid-1953, seizures of illegally mined or transported diamonds totaled over £100,000 (£2,640,000 today), with the largest arrest yielding £60,000 (£1,584,000 today) in raw diamonds. Later, by 1954 the largest local estimate of illegal diamond operations was estimated to employ 30,000 unlawful diggers, totaling in revenues exceeding £5,400,000 a year (£138,240,000 today).

The actual effectiveness of these laws that were put in place in is dubious. Many international diamond magnates stepped in either towards the government and received favorable trading rights, which would obviously come with huge amounts of political clout, while some international brokers stepped into the shadows and operated illegally. On the ground, although licenses had been issued, the informal governmental structure of colonial Sierra Leone and the chiefdoms within had few ways of judging the actual effectiveness of individual laborers once the licensing had been completed. Moreover, smuggling from either immigrants or natives continued to go unaccounted for, and the black market removed taxes from sales that could have gone to the colonial government. By 1956, the initial diamond hysteria had died down, leaving only successful diggers and their international contacts making an international network that operated in some parts legitimate, and other parts in the shadows.

In the commotion of the rush, many regulations failed due to the informal nature of the pre-independence state of Sierra Leone. One of the largest problems associated with license issuing was the regulation of license holders themselves. For example, because of the widespread nature of colonial empires, ethnic groups not historically native to Sierra Leone found themselves in a category that others weren’t.

The most important diasporic group within Sierra Leone linked to diamond trading and smuggling was the Lebanese. This group of displaced Lebanese emigrated from Lebanon, then part of the Ottoman Empire, sometime from the 1870s and 1890s due to unfavorable harvests. Since many of these individuals had been present in the colony before the beginning of 1950, many Lebanese diaspora found themselves included in the “native born” category.

After the diamond rush had subsided, the nation of Sierra Leone charted its own course on the international stage after it was granted independence in 1961. At the same time, the international market for diamonds had stabilized, and mining had become a more pedestrian operation in comparison to earlier years. Later, as with many West African nations, however, in the early 90s, the nations around Liberia found themselves dragged into the first of two Liberian civil wars. With the need for cash to find revolution came a need for high-profit items such as diamonds, which led to the popularization of blood diamonds. Although postcolonial corporations continued to meddle in the diamond business, other actors soon found the venture of smuggling to be extremely profitable.

One of those organizations was the US-designated Lebanese terrorist organization Hezbollah. With large amounts of Lebanese diaspora in West Africa, Hezbollah was easily able to find contacts for diamond smuggling. Part of the reason connections still existed is the disproportionate amount of resilience that displaced Lebanese communities have historically held. Within these connections, the Lebanese portion of diamond smuggling began to take shape once more. From the chaos of war-torn West Africa came both the liquidation and exportation of blood diamonds which would in turn fund the Lebanese organization.

However, unlike other forms of funding for the current expenses of terrorist organizations like simple cash donations, Hezbollah was able to utilize the diamonds as products. Although diamonds can be traced to their origins, the process of inspecting diamonds is lengthy and doesn’t provide useful information besides general area of origin, which lines up with areas that diamonds procured legally. In addition, diamond ownership isn’t personally tied and has no serial numbers to track, unlike stocks, bonds, or almost all forms of currency. This mobile exchange unit that acted as both investment and product for the organization would then be liquidated in emerging markets in places like Dubai, where postcolonial governments were ill-equipped to deal with smuggling operations.

In response to the large-scale diamond smuggling operations that came out of Liberia during the civil wars, the United States and the rest of the international community popularized the notions of the blood diamond, asking consumers to change their purchasing habits in order to stop either local warlords or terrorist organizations like Hezbollah. The main issue for organizations like Hezbollah was that the illegal smuggling operations, similar to how the organization operated when they attempted to enter the drug market, relied on the market to exist independent of the organization. Hezbollah was never the leader in smuggling, only one of many organizations that attempted to make money behind the scenes. The implications of terror organizations being able to be the market makers in smuggling operations, such as ISIS’s oil smuggling, shows a shift in the operational choices of terror organizations.

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Filed Under: Economics, International Tagged With: Africa, Colonialism, Middle East, Terrorism

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Comments

  1. DiasporaMagazine says

    September 12, 2020 at 5:02 am

    Wow that was strange. I just wrote an very long comment
    but after I clicked submit my comment didn’t show up. Grrrr…
    well I’m not writing all that over again. Regardless,
    just wanted to say wonderful blog!

    Reply

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