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2004-04-03 Africa: Subsaharan

Al-Qaeda involved in the African diamonds trade

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Posted by Dan Darling 2004-04-03 1:43:14 AM|| || Front Page|| [11132 views since 2007-05-07] Top

#1 Terrorists? Involved with "blood diamonds?" Ya gotta be kidding! Why, just the name, "blood diamonds" should scare them right off. The irony factor alone would make their heads explode.

Posted by Zenster 2004-04-03 2:08:26 AM|| 2004-04-03 2:08:26 AM|| Front Page Top

#2 Interesting chain of attribution: The VOA quotes General Wald, who in turn bases his statements on former WaPost-er Doug Farah's testimony to congress.

Keep in mind that diamonds aren't really all that scarce: The high prices are largely a result of control of the market by the DeBeers organization and its collaborators. As non-cartel producers such as Russia take an increasing share of the market, this control has slipped. Even before the "blood diamonds" (the industry prefers "conflict diamonds") problem, DeBeers was exploring ways to differentiate its diamonds from those of non-cartel producers in what is increasingly becoming a commodity market.

It not all that surprising that most proposals for halting the sales of "blood diamonds" (origin certification, microscopic tagging of diamonds, etc.) also enhance the monopolists' control of the trade. One remedy that doesn't get mentioned (because it would kill too many sacred cows) would be to break the cartel and let diamond prices collapse, which would make the "blood diamonds" (and all others) less valuable.

The Congressional Research Service report "Diamonds and Conflict" [PDF] [HTML, via Google] quotes Farah's WaPo reports (pages 11-12):

"A November 2, 2001, Washington Post report by Douglas Farah described a series of alleged Al Qaeda-related diamond purchasing activities that appear to be separate from those noted in the earlier court case. The report alleged that diamond dealers working directly with men named by the FBI as key operatives in bin Laden's al Qaeda network, purchased diamonds from members of the Revolutionary United Front (RUF), a Sierra Leone rebel group with links to the government of Liberian President Charles Taylor. [Surprise meter's broken again - ED] The Liberian government has consistently denied such reports.

The Washington Post account also tied sales of RUF diamonds to the funding of the southern Lebanese Hizballah militia movement. [Round up the usual suspects!] It noted that a minority of diamond traders in the Lebanese diaspora in Africa had long been believed by analysts to be involved in such activities, as have other published reports, both prior to and following the Washington Post account.

A couple more links for those interested:
Atlantic Monthly series (from 1982) "Have You Ever Tried to Sell a Diamond? [Part 1] [Part 2] [Part 3] is a fascinating look at how the diamond market works and why diamonds aren't a good investment (hint: you buy retail, but sell wholesale).

Von Mises Institute article (appears to be c.a. 1992)

Posted by Old Grouch 2004-04-03 2:12:08 PM|| 2004-04-03 2:12:08 PM|| Front Page Top

#3 Keep in mind that diamonds aren't really all that scarce: The high prices are largely a result of control of the market by the DeBeers organization and its collaborators

Yep. The major expense in the diamond biz is PR and making the big rock smaller.

Remember:
Paying for a diamond is forever.

Posted by Shipman 2004-04-03 3:15:19 PM|| 2004-04-03 3:15:19 PM|| Front Page Top

#4 The debeers corp has been floating rumors about "blood diamond" trade for years. They will do anything to keep thier monopoly. Escalating the rumor mill to al-Qaida is going too far. Boycott diamonds. There are plenty of much more scarce gem-stones out there.

Posted by Jack 2004-04-03 4:17:39 PM|| 2004-04-03 4:17:39 PM|| Front Page Top

#5 Lapidary grade diamonds represent a unique pinnacle in commercial marketing hype. Sitting atop that spire is the DeBeers organization. They have simultaneously both monopolized and synthesized the diamond market out of thin air. Through some of the most cunning psychological manipulation of deep emotional axioms ever to be seen, they have fabricated a trade worth untold billions of dollars.

One carat engagement rings began to wane in popularity some decades ago. This happened just as "investor cones" and private sight holdings were also recognized for the burn jobs that they were. As the American market collapsed, DeBeers merely switched to plan B. They invented "tennis bracelets," "eternity," "family" and anniversary rings plus ostentatiously over-ornamented baguette settings to dispose of commonly found low weight diamonds of poor color and cut.

When American demand flattened, DeBeers merely went about artificially implanting the notion of a diamond engagement ring into Asian societies. The history of their Japanese marketing strategy is an exemplary study in profitably grafting totally arbitrary traditions onto an entirely foreign culture.

Synthesis may yet excel nature at producing very large flawless stones. Not so with anything of more ubiquitous character. It is only through manipulative business practices that low three-digit, high grade one carat cut stones are not on the market. Contrary to common perception, good quality diamonds are extremely common once you locate them.

It is astounding how any popular impression remains that jewelry retains its value. The notion that "diamonds are a girl's best friend" dies hard, regardless of any misplaced feminine preference for portable assets. DeBeers roars with laughter all the way to the bank whenever anyone thinks they are actually investing in diamonds.

Posted by Zenster 2004-04-03 7:53:42 PM|| 2004-04-03 7:53:42 PM|| Front Page Top

#6 And Coca Cola artifically inflates the demand for sugared flavored water. Its called marketing. What planet do you live on where you can be 'astounded' marketing works.

There is a very simple solution. Do what I do and don't buy diamonds or Coca Cola.

Posted by Phil B 2004-04-03 8:21:21 PM|| 2004-04-03 8:21:21 PM|| Front Page Top

#7 Phil B - Lol! Nice summation! Minimalist, are you? Lol!

Posted by .com 2004-04-03 10:38:48 PM|| 2004-04-03 10:38:48 PM|| Front Page Top

#8 Do what I do and don't buy diamonds or Coca Cola.

I don't. And the only thing that I called astounding was how the public still thinks jewelery and, specifically, diamonds are any sort of investment whatsoever. Let's also try to avoid confusing honorable marketing with monopoly.

Posted by Zenster 2004-04-04 11:03:26 PM|| 2004-04-04 11:03:26 PM|| Front Page Top

#9 PS: Old Grouch, that Atlantic Monthly article is required reading for anyone considering the purchase of a diamond. I've cited it many times before.

Posted by Zenster 2004-04-04 11:09:10 PM|| 2004-04-04 11:09:10 PM|| Front Page Top

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