Middle East Intelligence Bulletin
Jointly published by the United States Committee for a Free Lebanon and the Middle East Forum
  Vol. 6   No. 6-7 Table of Contents
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June/July 2004 


Hezbollah and the West African Diamond Trade
MEIB staff

diamonds

Although the Bush administration has succeeded in reducing international sources of terrorist financing since 9/11, the Lebanese Hezbollah movement is still flush with cash these days. Over the past three years, the militant Shiite organization has managed to strengthen its military apparatus, greatly augment its strategic rocket arsenal, start up Palestinian terrorist cells, and establish a presence in Iraq, while continuing to develop its extensive social welfare network in Lebanon.

Iranian aid, estimated at up to $100 million per year, remains the bedrock of the Hezbollah's financing, but there is no conclusive evidence that funding from Tehran has substantially increased. While the group's illicit finance network in the Triple Frontier region of Paraguay, Argentina, and Brazil has brought in tens of millions of dollars since the late 1990s, this cash flow is believed to have declined somewhat as a result of close cooperation between US and South American officials. Moreover, in the last few years US authorities have had substantial success in reducing the (much smaller) flow of Hezbollah financing from smuggling networks in the United States. However, it appears that one lucrative source of Hezbollah financing is still growing: the diamond trade in West Africa.

Lebanese first arrived in West Africa around the turn of the century, fleeing dismal economic conditions and population pressures at home. The penniless, mostly Shiite, immigrants were welcomed by the British colonial authorities, who saw in their arrival an opportunity to displace local merchants in commodity trade with the African interior. Provided with loans and other incentives, the Lebanese came to dominate produce and retail trade within a few decades, breeding widespread resentment among locals. After diamonds were discovered in eastern Sierra Leone in 1930, Lebanese traders quickly gained control of this lucrative market. Lebanese merchants play a major role in the region's economy today, particularly in the Ivory Coast (home to over 100,000 Lebanese), Senegal (roughly 20,000), and Sierra Leone (roughly 6,000 today; about 30,000 prior to the outbreak of civil war in 1991), and have developed strong ties governing elites in all three countries.

During the 1980s, Hezbollah developed an extensive network of operatives in West Africa.[1] However, it was much less successful than the rival Shiite Lebanese Amal movement in raising (or extorting) funds from local merchants. Amal held the upper hand because of its longer presence in the country (Amal leader Nabih Berri was born in Sierra Leone), and because religious fundamentalism has always been weak among Lebanese in West Africa.

The most lucrative source of funds was the Lebanese diamond traders of Sierra Leone, the most powerful of which was Jamil Sahid Mohamed, a childhood friend of Berri. Jamil was the right-hand man of Siaka Stevens, the president of Sierra Leone from 1971 to 1985, and "acted as a kind of super-president, occasionally vetoing ministerial appointments, even reversing ministerial decisions."[2] Stevens' successor, Joseph Momoh, forced Jamil into exile and sought to cut his regime's ties to Lebanese merchants by inviting Israeli diamond traders into the country. When civil war broke out in 1991, a number of powerful Lebanese gem merchants, led by Jamil and Samih Osailly, helped the brutal Liberian-backed Revolutionary United Front (RUF) sell diamonds from mines under its control. Most, however, left the country to escape the ravages of war.

Since the end of the civil war in 2002, Lebanese traders have become reestablished in Sierra Leone. In the Koidu region - the site of West Africa's richest diamond deposits and the focal point of the country's civil war - the majority of diamond buyers are Lebanese. Although most are licensed, they are also heavily involved in smuggling diamonds out of the country. According to the US embassy in Sierra Leone, around $70-100 million worth of uncut gems are illegally exported each year, comprising about 60% of the country's total diamond exports.[3] Most of this money goes to the merchants, who fix their prices, not the miners, who have no one else to sell to.

Now that Jamil and other Amal-backed merchants have been sidelined, Hezbollah has had a free hand in tapping into this revenue flow. The fact that most Lebanese merchants have close family and business connections in Syrian-occupied Lebanon makes them extremely vulnerable to Hezbollah threats. "There's a lot of social pressure and extortionate pressure brought to bear: 'You had better support our cause, or we'll visit your people back home,'" explains Larry Andre, the deputy chief of mission for the US Embassy in Sierra Leone. "They're asking for contributions . . . Will they use threats? Sure," says Joseph Melrose, one of Andre's predecessors.[4] Because so much of the trade is illegal, victims of Hezbollah extortion are reluctant to seek protection from the authorities.

A glimpse into the scale of Hezbollah profits from the diamond trade came in December 2003, when a Union des Transports Africains (UTA) airliner loaded with Lebanese passengers crashed off the coast of Benin - on board, according to news reports and Western diplomats in Sierra Leone, was a Hezbollah courier carrying $2 million.[5]

Whereas Hezbollah derives revenue in Sierra Leone primarily through extortion of Lebanese merchants, in the Congo, which has been wracked by civil war since 1998, Hezbollah operatives "muscled their way into the business" and began purchasing diamonds directly from miners and local middlemen at a fraction of their market value.[6] The highest quality stones are sold in the Belgian diamond marketing hub of Antwerp, while the bulk are sold in emerging diamond markets where the organization can operate more freely, such as Bombay and Dubai.

After the September 11, 2001 terrorist attacks in the United States, Belgian intelligence discovered that al-Qaeda had bought up to $20 million worth of diamonds from Samih Osailly, who shipped the gems from RUF-held areas of Sierra Leone through Liberia.[7] Although al-Qaeda and Hezbollah are usually mentioned in the same breath when terrorist links to the diamond trade are discussed, the two organizations have been involved in very different capacities. Al-Qaeda buys diamonds as a way of hiding money (there is no inexpensive and reliable method of tracing their source), while Hezbollah is involved to make money.

In November 2002, 52 countries engaged in the diamond trade adopted an international certification regime designed to stop the flow of "conflict" diamonds into the global market. The new protocol, known as the Kimberley Process, requires that all rough diamonds passing through or into a participating country be transported in sealed containers and labeled with certificates of origin. On July 10, the Republic of Congo, which has limited diamond production but is a source of re-exported blood diamonds from Congo and the Central African Republic, was expelled from the Kimberly Process (meaning that it now cannot legitimately export diamonds).

However, it is unlikely that any of the major diamond-exporting countries of West Africa will face such sanctions because the Kimberly Process lacks a regular, independent monitoring agency. According to a recent report by South Africa's Institute for Security Studies there is "no mechanism to keep a check on abuses that are carried out by, or with the complicity of, the state and its agents."[8] In light of the political strength of Lebanese merchants in Sierra Leone (which allows them not only to export diamonds freely, but also to re-export conflict diamonds purchased elsewhere in West Africa), Hezbollah's profits from the diamond trade are safe for the time being.

Related Articles:

Matthew Levitt, Hizbullah's African Activities Remain Undisrupted, RUSI/Jane's Homeland Security and Resilience Monitor, 1 March 2004.

Notes

  [1] "Hezbollah Network in West Africa, Report Says," The Associated Press, 27 November 1989.
  [2] War and Peace in Sierra Leone: Diamonds, Corruption and the Lebanese Connection, The Diamonds and Human Security Project, 2002.
  [3] "Hezbollah Profiting from African Diamonds," The Associated Press, 29 June 2004.
  [4] "Hezbollah Profiting from African Diamonds," The Associated Press, 29 June 2004.
  [5] "Hezbollah Profiting from African Diamonds," The Associated Press, 29 June 2004.
  [6] Douglas Farah, "Digging Up Congo's Dirty Gems; Officials Say Diamond Trade Funds Radical Islamic Groups," The Washington Post, 30 December 2001.
  [7] Douglas Farah, "Digging Up Congo's Dirty Gems; Officials Say Diamond Trade Funds Radical Islamic Groups," The Washington Post, 30 December 2001.
  [8] "Lure Of 'Blood Diamonds' Brings Risk, Hardship," The Los Angeles Times, 28 June 2004.


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