Hezbollah financing and diamond trade in West Africa

Hezbollah Financing:

Diamond Trade in West Africa

While there has been an increasing amount of research in recent years concerning the nature of organizations and the networks that help them communicate from a positive perspective, there has been a paucity of scholarly investigation into how these networks are being used by terrorist organizations to support and fund their global agenda. The nations of West Africa in particular have been confronted with something of a "resource curse" when it comes to their diamond resources, and the illicit trade in diamonds in many of these countries has resulted in both domestic and international conflicts over the years. The exploitation of these natural resources over the years has also meant that many of these mineral-rich emerging nations have failed to reach their full economic, political and social potentials. While the diamond trade in West Africa has been legitimized and careful controls implemented over the years, analysts believe that as much as 20% of the world's diamond supply continues to be of an illicit nature. Furthermore, analysts also believe that some terrorist groups, including Hezbollah, are receiving at least some of their funding through this illicit trading in diamonds among the nations of West Africa, particularly Sierra Leone. The purpose of this paper is to provide a critical review of the literature to determine how the diamond trade in the nations of West Africa is being used to help finance terrorist organizations in general and Hezbollah in particular.

Outline

Part 1. Introduction

Thesis Statement

Approach

Background

Statement of the Problem

Preview Statement

Part 2. Review and Discussion

Background and Overview.

Diamond Trade in West Africa.

Emergence of Hezbollah Ties to West Africa.

Current and Future Trends.

Part 3. Methodology

Part 4. Conclusion

Hezbollah Financing: Diamond Trade in West Africa

Part 1. Introduction

Thesis Statement

One of the most difficult issues involved with prosecuting the ongoing war on global terrorism has been identifying and eliminating the funding sources for these terrorist groups. The purpose of this analysis is to determine how the diamond trade in the nations of West Africa is being used to help finance terrorist organizations in general and Hezbollah in particular.

Approach

This study uses an exploratory literature review approach to develop the background and other information needed to answer the above-stated thesis statement.

Background

The association between the diamond trade in West Africa and the conflict that surrounds it has been an issue of growing concern to the international community. The term "resource curse" was first coined by Auty (1993) in his essay, "Sustaining Development in Mineral Economies: The Resource Curse Thesis." This term meant that emerging nations that were primarily endowed with mineral resources have not been allowed to reach their full economic, political and social potentials. Unfortunately, many of the emerging nations of West Africa appear to be afflicted by just such a resource curse of diamonds. According to Warah (2004), "It is interesting to note that Africa's most conflict-ridden countries -- Angola, Sierra Leone and the Democratic Republic of the Congo -- are also the most diamond-rich countries on the continent, as well as the most poor and under developed. Conflict or 'blood' diamonds have fuelled wars and led to the massive displacement of civilian populations in many African nations" (p. 21). Although conflict diamonds represent a small proportion of the overall diamond trade, illicit diamonds continues to represent as much as 20% of the annual world production; Warah suggests that the continuing level of criminal activities creates an opportunity and a more space for conflict diamonds to be traded.

Statement of the Problem

Terrorism represents a fundamental threat to global security, and to the extent that terrorist groups continue to exploit the political instability of the emerging nations of the world will likely be the extent to which the achieve their goals of creating security concerns for the nations of the West. Indeed, according to Milward and Raab (2003), "Viewing the issue this way brings the realization that there is a set of individuals and organizations that constitute a network striving to achieve ends that create collective-action problems for governments all over the world" (p. 414).

Preview Statement

Part 2 of this paper below provides a review of the scholarly and peer-reviewed literature, as well as reliable governmental and organizational Web sites concerning these issues. Part 3 describes the project's methodology, and Part 4 provides a summary of the research and salient conclusions.

Part 2. Review and Discussion

Background and Overview.

Just as the entire continent of Africa is frequently mistaken for a country (even by the sitting American president), rather than being a single geopolitical entity, the term "West Africa" or "Western Africa" is used to refer the westernmost region of the African continent; according to the UN definition of Western Africa (which coincides with common reckonings of the region) includes the following 16 countries: West Africa represents the westernmost region of the African continent; according to the UN definition of Western Africa (which is congruent with current economic and political relationships in the region) includes the following 16 countries: Benin, Burkina Faso, Cape Verde, Cote d'Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo (West Africa, 2006). According to Thorp, Gamble and Harris (2006), the countries of West Africa joined to establish the Economic Community of West African States (ECOWAS) in 1975. Although each of these countries is endowed with certain natural resources, the presence of diamonds in some Western Africa countries has been the source of both enormous profits for these countries over the years, but a source of illicit trade as well, and these issues are discussed further below.

Diamond Trade in West Africa.

In her essay, "Illicit Diamonds: Africa's Curse," Warah (2004) reports that, "Just as the history of Arab States is intimately tied to the discovery of oil in the region, the discovery of diamonds in Africa has not only impacted the continent's history, but has been one of the leading causes of conflict" (p. 20). The connection between the diamond trade in West Africa and the Middle East has a long history as well. According to Warah (2004), diamonds were discovered in eastern Sierra Leone in 1930 in the Kono region; during that same year, as news of the discovery was received abroad, the first Lebanese trader arrived in Kono and established trading posts well in advance of colonial authorities who failed to establish a district office in the region until 1932. In fact, Middle Eastern traders were even in place before the establishment of the British-owned Sierra Leone Selection Trust; this organization was granted exclusive diamond mining and prospecting rights for the entire country in 1935; thereafter -- until 1956, when an alluvial diamond mining arrangement was authorized -- it was illegal for anyone not working for the Trust to deal in any way with diamonds. Nevertheless, the illegal trade in diamonds continued and even increased, with numerous Lebanese traders eventually settling in Kono and providing the funds for Africans to mine and sell their diamonds to them alone (Warah, 2004).

By the 1950s, Warah reports that the illegal trade in Sierre Leone's diamond resources had increased significantly; at the time, it was estimated that 20 per cent of all diamonds reaching the world's diamond markets were smuggled from Sierra Leone, primarily through Liberia and mainly by Lebanese and Mandingo traders (Warah, 2004). This author adds that, "In later years, civil war often revolved around the control of this illicit trade" (Warah, 2004, p. 20). In 2002, a UN Expert Panel reported that the then "interim" leader, Issa Sesay, had flown to Abidjan late in 2001 with 8,000 carats of diamonds that he had sold to two traders of undisclosed identity, who were apparently using a Lebanese businessman to run errands for them between Abidjan and the Liberian capital, Monrovia. Some reports suggest that the UN peacekeeping force in Sierra Leone may have been involved in the illicit diamond trading as well (Warah, 2004).

Not surprisingly, then, the diamond trade in West Africa has been the source of a great deal of internal and external strife as well. For example, Adebajo (2002) reports that an important aspect of the battles that have been fought in West Africa areas has been over control of resources. For example, one West African leader, Alhaji Kromah, reestablished the Mandingo trading links with Sierra Leone, from which his ethnic group had been excluded by officials in March 1991. Likewise, Charles Taylor was equally keen to regain control of western Liberia because he had been denied funds from his illicit diamond trade in Sierra Leone (Adebajo, 2002).

Emergence of Hezbollah Ties to West Africa.

According to Milward and Raab (2003), some terrorist groups have increasingly targeted the nations of West Africa in an effort to further destabilize these regions in the hopes of consolidating power there in the future, as well as providing them with the funds and arms they need to accomplish these and other goals in the process. "In the case of arms trafficking," they advise, "there are arms dealers eager to sell AK-47s to conflict zones all over the world. There are shipping and air transport services willing and able to transport the weapons to warlords who are destabilizing much of West Africa. The warlords trade diamonds for guns, and the arms brokers and transporters in turn launder the diamonds with brokers in Antwerp and deposit the money in Swiss banks" (Milward & Raab, 2003, p. 413). Likewise, Warah (2004) reports that shortly following the September 11, 2001 terrorist attacks in New York and Washington, D.C., the Washington Post identified a disturbing aspect of the illegal diamond trade in West Africa that linked it directly with international terrorists. In their article published on 2 November 2001, war correspondent Douglas Farah reported that the Al Qaeda network had managed to "reap millions of dollars in the past three years from the illicit sale of diamonds mined by rebels in Sierra Leone"; furthermore, the report showed that three senior Al Qaeda operatives had visited Sierra Leone at different times in 1998 and thereafter. At the time, Farah also maintained that the West African Shi'ite Lebanese community was sympathetic to Hezbollah and often served as a link between the RUF rebels and Al Qaeda; according to Gberie, though, much of the evidence linking West Africa's Lebanese community to global terror networks has been primarily "anecdotal and circumstantial" (Warah, 2004, p. 21).

Furthermore, some political leaders in the Middle East suggest that Hezbollah is not the ruthless terrorist organization that many observers believe. For example, in 2003, Lebanese Ambassador Farid Abboud presented a talk on the current state of Hezbollah and the misconceptions surrounding the nature of the organization, particularly following the U.S. demand that Lebanon freeze the group's assets following the terrorist attacks of September 11, 2001. According to Ziad (2003), "The ambassador began by stressing that Hezbollah was not a terrorist group, nor 'a fringe element that commits outrages now and then.' Rather, he said, it is a broad-based political party that participates in elections, with representatives in parliament and a legitimate political presence in the system" (p. 72). According to the ambassador, Hezbollah's agenda is not to create an Islamic state in the U.S. Or in any other country. In fact, according to Abboud, "[Hezbollah] doesn't give a hoot about the way of life in this country. Its agenda is very localized, and its practices are indicative of this" (Ziad, 2003, p. 72). Finally, the ambassador suggested that Hezbollah primarily seeks a resolution to the Israeli-Palestinian conflict: "We will not disqualify it from the Lebanese polity," the ambassador added, "just because its agenda is anti-Israel" (Ziad, 2003, p. 72). To drive home the point, the ambassador concluded by saying: "If you [the United States] want to use certain moral and legal parameters to judge one side, then judge the other side as well. Otherwise, go back to politics. Hezbollah is just one part of the conflict that exists between the Arabs and Israelis, the crux of which is the Israeli occupation of Palestine" (Ziad, 2003, p. 72). Notwithstanding the ambassador's characterization of what is taking place in the Middle East and beyond today as being "very localized," the fact remains that Hezbollah and other Islamic fundamentalist groups are increasingly seeking funding through illicit channels in some West African nations today, and these trends are discussed further below.

Current and Future Trends.

In the recent past, though, the illegal trade in diamonds has become the source of an increasing amount of international scrutiny, a process that has made it much more difficult for middlemen and smugglers to operate. According to Warah (2004), the past few years have witnessed the emergence of a program of policy research, education and advocacy to help ensure the integrity of the international diamond industry for the primary benefit of the countries where the diamonds originate. "It has also extensively published reports that have uncovered the secret dealings and James Bond-style manoeuvres of the middlemen and smugglers in the industry who operate often with the full knowledge and approval of Governments (or rebel movements), and act as conduits for diamonds smuggled from neighbouring countries" (Warah, 2004, p. 21). An international certification process for rough diamonds, known as the Kimberley Process, was initiated by the Government of South Africa in May 2000; since that time, there has been more and more participation among the regional stakeholders and to date, more than 35 nations have been meeting on a regular basis to develop the system, which was established in 2003 (Warah, 2004). In Sierra Leone, the diamond certification system was instituted in October 2000, four months after the UN Security Council passed a resolution that banned diamond exports until a certification system was established; during the year that followed after the system was introduced, legal exports increased from $1.3 million to $25.9 million worth of diamonds; nevertheless, authorities continue to believe that many of the better quality diamonds are still being smuggled and are not going through the official certification system. "In other words," Warah concludes, "the illicit diamond trade continues to operate through informal agreements that are sealed with a nod, a wink and no paper trail" (emphasis added) (Warah, 2004, p. 21).

Part 3. Methodology

According to Neuman (2003), a comprehensive literature review methodology involves a critical analysis of a wide variety of sources to identify common areas of interests and current trends. Therefore, this study consulted both university and public libraries, online sources such as Questia, EBSCO and others, as well as relevant governmental and organizational Web sites considered relevant to contributing to the objectives of providing timely answers to the guiding thesis statement. In this regard, Wood and Ellis (2003) also identified the following as important outcomes of a well conducted literature review:

It helps describe a topic of interest and refine either research questions or directions in which to look;

It presents a clear description and evaluation of the theories and concepts that have informed research into the topic of interest;

It clarifies the relationship to previous research and highlights where new research may contribute by identifying research possibilities which have been overlooked so far in the literature;

It provides insights into the topic of interest that are both methodological and substantive;

It demonstrates powers of critical analysis by, for instance, exposing taken for granted assumptions underpinning previous research and identifying the possibilities of replacing them with alternative assumptions;

It justifies any new research through a coherent critique of what has gone before and demonstrates why new research is both timely and important.

To complement the literature review thus far and to identify which nations of West Africa represent the primary players in the trade of diamonds, Table 1 below provides a list of each of the respective natural resources of the 16 nations that comprise West Africa today; those nations with diamond resources are highlighted for easy reference.

Table 1.

Natural Resources of West African Nations.

Country

Natural Resources

Comments

Benin

Small offshore oil deposits, limestone, marble, timber

The economy of Benin remains underdeveloped and dependent on subsistence agriculture, cotton production, and regional trade; is also a transshipment point for narcotics associated with Nigerian trafficking organizations and most commonly destined for Western Europe and the U.S.; vulnerable to money laundering due to a poorly regulated financial infrastructure.

Burkina Faso

Manganese, limestone, marble; small deposits of gold, phosphates, pumice, salt

Formerly Upper Volta; one of the poorest countries in the world.

Cape Verde

Salt, basalt rock, limestone, kaolin, fish, clay, gypsum

Cape Verde continues to exhibit one of Africa's most stable democratic governments.

Cote d'Ivoire

Petroleum, natural gas, diamonds, manganese, iron ore, cobalt, bauxite, copper, gold, nickel, tantalum, silica sand, clay, cocoa beans, coffee, palm oil, hydropower