Global Policy Forum

By Michael Fleshman

Improvements in Sierra Leone, but continuing violations in Angola and Liberia

Diamonds and other natural resources are continuing to finance armed conflicts in Angola and the Mano River Union states of Liberia, Sierra Leone and Guinea despite improved enforcement and monitoring of UN arms and diamond sanctions. Reports submitted to the Security Council in October charge that both the Angolan rebel leader, Mr. Jonas Savimbi, and the Liberian government still violate the trade and weapons bans with the help of a global network of arms dealers, diamond merchants and natural resources companies. Stronger regulation of the mining industries in Angola and Sierra Leone is helping to reduce rebels' access to the stones, the Council was told. But the absence of international controls on diamond exports has allowed sanctions-busters to evade national regulations by smuggling them to neighbouring countries for sale on world markets.

Council investigators continued the controversial practice of "naming and shaming" governments, businesses and individuals suspected of sanctions busting, and recommended a number of new measures to choke off the trade in natural resources for weapons. UN officials cautioned, however, that additional sanctions against Liberia could worsen an already-desperate economic situation, saying that any additional sanctions should be carefully targeted at the government and accompanied by increased humanitarian aid.

The reports are part of an ongoing effort by the Security Council and Secretary-General Kofi Annan to make sanctions more effective instruments for the maintenance of international peace (see Africa Recovery, January 2001). The Monitoring Mechanism on Sanctions Against Angola and the Panel of Experts on Liberia are among the committees established by the Council to investigate sanctions violations and monitor international compliance.

Angola's 'vanishing diamonds'

The UN imposed the first of a series of arms, travel and financial sanctions on the Angolan rebel movement, UNITA, in 1993 in an effort to weaken its war-making capacity. But lax enforcement by member states and UNITA's seizure of many of Angola's diamond producing areas allowed the movement to finance its operations with smuggled gems and to re-arm with impunity. At one point, the report asserts, UNITA was the single largest producer of diamonds in Angola. In 1998 UNITA abrogated a peace agreement and returned to war -- a move that prompted the Security Council to investigate Mr. Savimbi's sanctions-busting operation and helped focus international attention on the link between diamonds and conflict in Africa.

In their 12 October report, investigators noted that the recapture of many of the country's major diamond producing areas by government forces, and reform of Angola's mining industry, has reduced UNITA's access to rough stones and hampered its ability to sell them on world markets. But implementation of the reform programme, which includes registration of independent miners and dealers and a requirement that all uncut gems exported from the country be certified, has failed to halt UNITA's use of diamonds to finance the war. Last year the Angolan government estimated that the rebels still earned between $90 mn and $125 mn from the stones, known as "conflict diamonds."

Investigators also found evidence of a "shadow buying structure" in Angola operating outside the government certification programme. A recent crackdown by the government, including the de-certification of 400 traders suspected of smuggling, should reduce the illicit flow of diamonds to other states. The Council is examining 16 international diamond companies with offices in Antwerp for possible involvement in the scheme, and has forwarded information on one firm to the Belgian government for further action.

Overall, between $350 mn and $420 mn worth of Angolan diamonds were smuggled into neighbouring countries in 2000. That figure represents about half of Angola's yearly output and 5 per cent of annual rough diamond sales worldwide

Sanctions require states to seize all Angolan diamonds entering their territory without a government certificate of origin. Yet, "to date not a single parcel of illicit Angolan gems has been intercepted anywhere," the report notes. "These diamonds seem to vanish into thin air.... How is this even possible, given the magnitude of the trade?... Perhaps more importantly, why is it possible for diamonds to vanish?"

One answer is that they disappear into the legitimate trade. Investigators report that a large volume of Angolan stones are taken clandestinely to third countries where they are mixed with legally mined diamonds and sent on to Antwerp or Tel Aviv for finishing. Adoption of a global certification programme for all uncut diamonds would make smuggling more difficult by requiring that all stones be identified and traced in shipment regardless of country of origin. In late November the major diamond-producing countries reached agreement on such a programme. Concerns about the legality of a mandatory certification scheme under world trade rules may weaken the effectiveness of the accord, known as the Kimberley Process (see next page).

UNITA's arms dealers

UNITA has also found ways to evade stricter enforcement of arms sanctions. The Council is focussing increasingly on the role of a former Soviet Air Force officer, Mr. Victor Bout, and his network of airfreight companies in the shipment of weapons. According to the report, UNITA continues to receive the bulk of its weapons from Eastern Europe, operating through a handful of trusted arms dealers using forged documents and aircraft supplied by Mr. Bout.

There has been stronger compliance with arms sanctions since the July 2000 launch of the Organization of African Unity (OAU) Ad-Hoc Committee on UNITA Sanctions, the Council learned. But gaps in the Southern African regional air traffic control system make it very difficult to monitor sanctions-busting flights into rebel-held areas

. The report also notes that UNITA's diplomatic offices around the world have now been closed in accordance with the ban on travel and diplomatic representation. Senior rebel officials, however, continue to operate unofficially in countries of particular interest to UNITA, including Belgium, the US and Burkina Faso. The report does point to "positive" actions by some other countries to enforce the travel and representation bans, including Cí´te d'Ivoire, Togo and France.

Controversy over Liberia sanctions

On 26 October, the Panel of Experts on Liberia submitted to the Council its investigation into the government's compliance with Resolution 1343 of March 2001 imposing arms, diamonds and travel sanctions on the government for its alleged support of rebel movements in Sierra Leone and Guinea. The panel noted that since the imposition of sanctions "there are significant signs of improvement" in the region's political and security situation -- particularly the restoration of peace in Sierra Leone and the resumption of dialogue between Liberia and Guinea over guerrilla attacks in the border area.

The report concluded, however, that while the Liberian authorities have taken steps to comply with some requirements of the resolution, particularly those provisions grounding Liberian aircraft suspected of sanctions busting, they have continued to violate the prohibitions on diamond sales and arms imports. The flight ban was prompted by widespread fraud in the national aircraft registry -- irregularities that made it impossible to monitor aircraft movements and were "directly linked" to violations of the arms embargo. The panel also concluded, however, that many of the registry problems dated from the chaotic period of the Liberian civil war, and that the newly appointed civil aviation director was making a good-faith effort to identify and re-register the country's air fleet.

On weapons sanctions, the panel charged that, despite the imposition of two arms embargoes on Liberia -- first in 1992 in response to the civil war and again in March 2001 -- "a steady flow of new arms continued to enter into the country." The panel provided detailed accounts of five violations of the embargo during 2000 to back up the charges. The allegations were dismissed as "void of any substantive relevance" by Liberian Foreign Minister Monie R. Captan, during the Security Council debate on the report on 5 November 2001. Mr. Captan noted that the alleged violations all occurred prior to imposition of the new measures. The Council also failed to account for Liberia's national security needs in light of attacks by Liberian rebel groups, he said. The government charges that the dissidents operate from bases in Guinea.

Tracing the money

The report charged that funding for sanctions-busting activities was being conducted outside the official budget, and often involved payments to suppliers directly from private companies and contractors doing business with the government. The panel recommended that the Security Council consider lifting the flight ban but impose additional measures to reduce funds available for weapons purchases. The call for additional sanctions on the Liberian economy, however, proved as controversial as the charges of sanctions violations.

One source of finance for sanctions-busting, the report asserts, are revenues generated by the use of Liberia as a "flag of convenience" by some 1,700 ships around the world. In 2000, registration fees netted the Liberian government an estimated $18 mn, funds that are supposed to be paid into central government accounts. Sanctions investigators, however, charge that a portion of those funds, instead of reaching the national treasury, were deposited into private accounts for arms purchases, with a corresponding drop in government income. The panel recommended that maritime registration fees be placed in an escrow account to prevent further diversion into sanctions-busting and other off-budget purposes.

The growing Liberian timber industry, which was expected to generate some $25 mn in government revenue in 2001, has also come under Council scrutiny for its role in violating sanctions. According to investigators, Mr. Charles Taylor, the Liberian president, has awarded valuable logging concessions to companies controlled by personal friends and family members. These firms in turn provide money and logistics for sanctions-busting activities. The head of one multinational logging firm, the report charges, flew a shipment of weapons to Liberia in 1999 in his private plane. Other companies are also allegedly involved in government arms smuggling operations. The panel recommended that the Council ban the industry's principal foreign exchange earner, unfinished "round logs," beginning in July 2002. Investigators also urged the Liberian government and the International Monetary Fund to jointly investigate the handling of timber revenues.

Mr. Ed Tsui, director of the UN Office for the Coordination of Humanitarian Affairs, however, cautioned the Council about the humanitarian impact of further sanctions. Liberia, he noted, had been devastated by the 1989-96 civil war and is in "a humanitarian and human rights crisis." Gross domestic product in 2000 was just $177 per person -- less than half the 1980 level, and donor support for humanitarian assistance programmes "has been quite disappointing." Sanctions on the timber industry, he told the Council during the 5 November debate, would probably eliminate 10,000 relatively well-paid jobs, and affect 90,000 people. Sanctions on another major sector of the Liberian economy, rubber, he argued, could devastate the family finances of as many as 225,000 people and "particularly affect the most vulnerable in the Liberian population."

Malian Ambassador Moctar Ouane echoed Mr. Tsui's concerns, noting that the Council has taken steps in recent years to target economic sanctions to avoid injuring civilian populations. Failure to do so in Liberia, he said, risked the "credibility" of the measures. He reminded the Council that the Economic Community of West African States has called for the resumption of development aid to Liberia. Further sanctions alone, he said, "cannot restore peace in West Africa.... Sanctions are not the only means available, nor are they necessarily the best solution available to us."

On diamonds, the panel noted that the UN ban on the export of Liberian diamonds had largely achieved its purpose -- to end the movement of smuggled Sierra Leonean diamonds into Liberia in exchange for arms. The report conceded, however, "The embargo has created a different problem. Since it is impossible to sell Liberian rough [diamonds] officially, dealers are seeking to camouflage their Liberian diamonds as those from neighbouring markets" -- including Sierra Leone. Ironically, sanctions intended to prevent Sierra Leonean diamonds from being smuggled into Liberia were causing legitimately mined Liberian diamonds to be smuggled into Sierra Leone.

'Kimberley process' accord

The solution to the new problem, the panel observed, would be the introduction of a "credible and transparent" certification scheme for Liberian-origin stones similar to those adopted by Angola and Sierra Leone. The report also noted, however, that the effectiveness of national certification programmes in controlling the trade in conflict diamonds would be limited until they become part of a global regulatory framework requiring rough diamond importing and exporting countries to certify the country of origin and legal export of all stones.

Efforts to develop such a worldwide scheme took an important step forward in Gaborone, Botswana, on 28 November, when negotiators for dozens of diamond exporting and importing countries ended over a year of negotiations and agreed on the "essential elements" of an international certification programme. The protracted negotiations, known as "the Kimberley Process" after the South African diamond mining centre, would require the use of tamper-proof containers for all rough diamond shipments and a Kimberley Process Certificate identifying the country of origin of the stones, the size and value of each shipment and the identity of the exporting authority (see box, below).

The agreement would establish minimum national standards for the handling of stones to weed out conflict diamonds from shipments of legally mined gems. The use of diamonds to fund armed conflicts, the negotiators declared, could be "seriously reduced" by the certification scheme. Diamond producing countries are also concerned that boycotts by consumers upset about conflict diamonds could damage the legitimate trade. But the governments were unable to reach agreement on some key aspects of the certification programme, including whether signatory states should prohibit the import or export of uncut diamonds to non-signatories.

The US, Canada and Japan have expressed concerns that efforts to bar non-signatory states from trading in uncut diamonds may run afoul of World Trade Organization (WTO) rules governing free trade. Human rights organizations and many governments counter that the certification plan must be universal and mandatory if it is to succeed. A working group of Kimberley Process countries will examine ways to make the agreement compatible with trade liberalization policies while details of the certification plan are finalized.

"I don't think we'll have a problem," said Mr. Kennedy Hamutenya, the chief Namibian negotiator at Gaborone. "The WTO should be able to give us the green light." The chief US negotiator, Mr. Alan Eastham, agreed that while free trade concerns needed to be addressed, the issue was unlikely to jeopardize the certification effort. "We'll find a way." The UN General Assembly must approve the certification agreement, with implementation scheduled to begin at the end of 2002.

Kimberley agreement on global diamond regulations

On 28 November the world's leading diamond exporting and importing states concluded over a year of negotiations with agreement on the "essential elements" of a system of regulations for the handling and trade of uncut diamonds, some of which finance conflicts in Africa. Declaring that "urgent international action is imperative to prevent the problem of 'conflict diamonds' from negatively affecting the trade in legitimate diamonds," participants in the "Kimberley process" talks agreed to:

-- effective national controls to weed out "conflict diamonds" from shipments of legitimately mined stones

-- use of tamper-proof containers for imports and exports

-- national legislation to enforce the agreement

-- forgery-resistant certificates to accompany all shipments of rough diamonds, indicating country of origin, issuing authority, weight in carats and value of each shipment, identity of importers and exporters, and confirmation that Kimberley Process controls have been followed

-- effective methods to track diamond shipments in transit

-- prohibition of imports of uncut diamonds from, or their export to, countries outside the Kimberley Process agreement

-- collection and exchange of data on imports and exports of uncut stones

-- periodic review of compliance and enforcement measures

-- all shipments of uncut diamonds to comply with the Kimberley requirements before the end of 2002.

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