Gem smuggling thwarts revival of Central African Republic

29th November 2017 By: Bloomberg

JOHANNESBURG – In the lounge of a luxury hotel in Bangui, the capital of war-torn Central African Republic, soft-spoken diamond dealers cautiously sidle up to guests.

Their whispered offers of gems for sale are a visitor’s first hint of the thriving illegal market for the precious stones in a country that five years ago was ranked as the world’s tenth-biggest diamond producer and is now mostly controlled by armed militias.

The illicit sales are bad news for the Central African Republic as it lobbies for the removal of an international ban on exports of its diamonds. The embargo, which was partially lifted last year, was imposed because of concerns over gem sales funding conflict. Yet while diamond exports offer a potential source of desperately needed government revenue, authorities so far have been powerless to curb the underground trade.

The government is aware that smugglers come to Bangui to buy diamonds but doesn’t have the means to stop them, said Mines Minister Leopold Mboli Fatrane. He cited the example of an Italian traveller arrested recently with scales and other diamond-evaluation equipment in his luggage.

“If you’re caught in the act, we’ll deport you,’’ Mboli Fatrane said in an interview in Bangui. “But we have a big country and barely any means to investigate.’’

Diamonds have been both a blessing and a curse for the Central African Republic since its independence from France in 1960, providing a crucial source of income for the poor while fuelling corruption and armed conflict among the elite. Under Jean-Bedel Bokassa, who wore a gem-encrusted crown when he proclaimed himself emperor in 1976, diamonds became a byword for the megalomania of the nation’s politicians.

In his workshop where decades-old equipment is collecting dust, diamond-cutter Joseph Guinot, 65, remembers those days fondly.

A geologist by training, he was asked to purchase 1,250 diamonds for Bokassa’s crown, and later helped sell the nation’s stones in Antwerp. He opened a diamond-cutting business and a jewelry studio, and built a hotel for clients from overseas. Life was good.

That changed dramatically by 2013, when a coup ousting President Francois Bozize triggered widespread rebel abuses that prompted militias to fight back. Months earlier, insurgents had seized the eastern town of Bria, the country’s main diamond hub.

The conflict that killed tens of thousands people prompted the Kimberley Process, an international certification group that seeks to halt the sale of diamonds from war zones, to suspend the Central African Republic. The economy contracted by 37% in 2013 as official exports collapsed, according to the International Monetary Fund.

Today, the Central African Republic is the poorest nation globally, ranking at the bottom of the list of 188 countries in the 2016 United Nations Human Development Index.

Following the appointment of an elected government last year, the Kimberley Process allowed a partial lifting of the ban from five areas in the west where fighting had subsided and some regulatory oversight could return. The first town to start trading internationally again was Berberati, in May 2016. Official exports have resumed “timidly,” the mines minister said.

However, as armed groups remain in control of key mining towns in the east, the chaos means that diamonds from rebel zones can easily be mixed with legal stones, the London-based policy group Global Witness said in a June report.

“Diamonds from all parts of CAR are finding their way out of the country and on to international markets,” the organization said.

Closer to the border, smugglers use neighbouring Cameroon as a transit point for large-scale flows of undeclared shipments of diamonds from the Central African Republic, according to the Ontario-based advocacy group Impact, which investigates mineral flows in conflict zones. The stones are flown to places such as Dubai and India, the organization said in a Dec. 2016 report.

The government is lobbying to lift the export ban completely, saying it can only stop smuggling if it has the funds to do so. The ministry’s budget for combating fraud was less than 20-million CFA francs ($35 000) when Mboli Fatrane arrived at the department in March last year, he said.

“We’ll have to get all our mining sites back and out of the hands of armed groups if we want real, sustainable peace -- it’s the only way,” the minister said. “It’s control of the mining sites that enables them to buy weapons.”

For diamond-cutter Guinot, there’s still hope that the golden era of diamond trading will return.

“Once we have security, we’ll be fine,” he said, standing near an employee polishing a rough stone. “No hard-working man can go hungry in a country that has gold and diamonds.”