Belgian Expert Describes Complexity of African Diamond, Arms Traffic

Groot Bijgaarden De Standaard

DE STANDAARD

Saturday, January 5, 2002

Interview with Johan Peleman, director of International Peace
Information Service, by Gilbert Roox in Antwerp; date not given: "UN
Expert Johan Peleman Discusses Africa's Black Holes -- How Clean is My
Diamond?" -- first paragraph is De Standaard introduction

Johan Peleman (36 years old) is director of the International Peace
Information Service (IPIS). From his monk's cell in a former Antwerp
monastery, he monitors the world's black holes. Peleman contributed to
the UN research reports on blood diamonds, Sierra Leone, and, recently,
Nigeria.

(Roox) Following Somalia, Sierra Leone, and Liberia, (the Democratic
Republic of) Congo also seems to be heading toward total implosion. Is
the conflict in Congo still a civil war, or is the country
disintegrating?

(Peleman) Congo is a gold mine for warlords. In the
government-controlled areas, there are Angolan and Zimbabwean mercenary
armies; the rebels in the east are supported by Ugandan and Rwandan
troops. At present, there are even reports of a fourth rebellion, in
which the Rwandans are allegedly deploying allies of the Hutu militias.
I just want to say that everything is possible. This is no longer a
war, but organized crime. The state has vanished; there are no more
social conventions. Local warlords levy taxes at gunpoint in their
little strongholds; they loot and they oblige the local population to
work for them as forced laborers. Within 10 years, they will probably
still be there -- as long as there are diamonds, gold, or tropical
hardwoods. War and chaos are more lucrative than peace. This
warlord-controlled economy will only come to an end if their business
becomes less profitable, for instance, if trade sanctions were to be
imposed by the international community. In that case, a w(Roox) Yet
sanctions will mainly hit the civilian population, which is already
suffering a lot. Just look at the UN boycott of Iraq.

(Peleman) Moreover, it would be difficult to implement a trade embargo
on such an immense country as Congo. No fewer than seven states are
involved in the Congolese conflict: Where would you begin? Would you
only impose an embargo on Congolese diamonds, or also on coltan, gold,
and hardwood? And should the embargo also include products from Rwanda,
Uganda, Zimbabwe, and so on? Trying to implement such an embargo might
easily take more than 50 years (number as published). And in a
continent like Africa, you would probably do more evil than good,
unless "smart" sanctions are implemented exclusively targeted at key
figures and trafficking rings. A general embargo on Congolese diamonds
would only move the trade elsewhere, to Congo-Brazzaville, for
instance.

(Roox) According to Kinshasa, last year diamonds worth more than
$1billion disappeared from Congo; this is four times the official
export figure.

(Peleman) However, this figure does not only refer to diamonds from
rebel-controlled areas. The lion's share of this traffic comes from
Angola, where diamonds from the area controlled by UNITA (National
Union for the Total Independence of Angola) rebels are subject to an
embargo. So they try to reach the world market via Congo, among other
places, where they meet with little resistance because of the chaotic
situation.

Imposing sanctions is, as is generally known, mainly a symbolic action.
Most embargoes are as permeable as a sieve and the United Nations has
neither the resources, nor the mandate to enforce them. Following all
the commotion regarding the Angolan blood diamonds, more than $1
million in diamonds are smuggled out of the country every day. Yet,
only one-third of the proceeds go to UNITA's war chest. There are more
than 100,000 garimpeiros, freelance diamond seekers, in Angola. It is
very difficult to control them all.

According to the Antwerp High Council for Diamonds, diamonds from
conflict-ridden areas amount to no more than four percent of global
production. But what is the merit of such statistics? The diamond
market is a cash market with as few paper trails as possible. No one
has any idea about the size of the contraband market. I guess that at
least 15 percent of all diamond trade is not included in any official
statistics.

(Roox) So, many of our Christmas gifts contain little blood diamonds
that cause a lot of African war suffering?

(Peleman) Not so many as a few years ago, although I fear that the trade has hardly been curbed.

(Roox) Despite the acclaimed Antwerp control system involving
certificates of origin, is that likely to become the world standard? In
the Belgian Senate's Congo Committee, you said that these certificates
are ineffective.

(Peleman) I may have formulated this a bit too strongly. Nevertheless,
for the time being the certificates are not yet banning blood diamonds,
all they often do is to provide them with an official clearance. Even
ministers in Sierra Leone admit this. In this country, the diamond
mines are located at the border between government- and
rebel-controlled areas. And what are dealers doing there? After their
official working hours, they buy rebel diamonds. The laundering of
diamonds already occurs in their country of origin. And the government
can do very little against it because, if it takes tough measures, the
trade will simply move to Guinea or Ivory Coast.

(Roox) So this is no more than a public relations campaign: "Antwerp, a
warlord's best friend" (preceding five words published in English),
seeks to improve its image?

(Peleman) All I can do is observe that in no diamond center whatsoever
has ever a "sanctions' buster" (preceding two words published in
English) been arrested. As far as I know, no batch of conflict diamonds
has ever been seized. Nevertheless, I can easily name a dozen
traffickers who are involved in dubious deals in Congo. "Naming and
shaming" (preceding three words published in English) is not enough. UN
panels may call hundreds of traffickers by name, but nothing will
happen if the police of the member states do not arrest these
criminals.

In Italy, Ukrainian mafia member Leonid Mini has been imprisoned for
violating the embargo. The week before Christmas, I was in Slovakia,
where an MI-35 combat helicopter bound for Liberia had been
intercepted. The sender was Victor Bout, Africa's main arms trafficker,
who also operated for a while via Ostend Airport.

These are important precedents. Only if one manages to arrest
traffickers and dismantle trafficking networks will there be an effect
of deterrence. At present, our certificates are above all the subject
of mockery: Some traffickers even told me that they are now making more
money because the sanctions boost prices.

(Roox) The Antwerp world diamond center seems to have adopted a primarily defensive approach.

(Peleman) This is not right, though. A few sensational arrests could
give good publicity (Peleman laughs -- De Standaard editor's note).
Antwerp should lift the oath of secrecy and throw out a number of
malafide diamond merchants; it would become all the better for it.

(Roox) Last month, Antwerp made the international news when the
Washington Post reported that Usama Bin Ladin's al-Qa'ida network had
laundered terror money through the Antwerp diamond market.

(Peleman) The article was published at the time that our (UN) panel
presented its report on Liberia in New York. All at once, all questions
were about Bin Ladin. At that time, I said I had no data corroborating
the report. Some NGOs (nongovernmental organizations) were annoyed at
me because of this. They said I had missed a unique opportunity to get
blood diamonds on top of the political agenda (Peleman laughs -- De
Standaard editor's note). But I am an expert, and not a politician. The
Washington Post reporter has since visited me, and I have to admit: I
think it is more than just an unfounded rumor. Yet it remains difficult
to find evidence: There are no fingerprints on diamonds. That is why it
is such an attractive investment for Mafiosi and warring parties.
During the civil war in Lebanon, entire militias were financed via
money-laundering operations in Sierra Leone.

(Roox) Antwerp-based diamond merchant David Zollman, who was wrongfully
accused of violating the embargo, said that international indignation
about war diamonds is merely humbug. "Africa's main problem consists in
large-scale arms trafficking," he said. "And tanks and helicopters can
be tracked down much more easily than diamonds."

(Peleman) I agree. Wars can go on as long as there are weapons. Yet it
is possible to fight on two fronts: arms trafficking and funding. At
IPIS, we mainly focus on the funding aspect of wars. This may be done
through diamond trafficking, but other raw materials may also
constitute a source of funding. And in areas where there are no raw
materials, you will see a kidnap industry emerge, as happened in
Columbia. So there is more to it than just diamonds, but diamond
trafficking is an issue that receives much media attention. All major
African diamond countries are torn by wars. Diamonds are not only
funding armies, but diamond concessions often give rise to wars.

(Roox) In any case, for Sierra Leone, diamonds have been a curse rather than a blessing.

(Peleman) The people there are aware of this. Local diamond trade
associations say: "To get this country back on its feet, we need a
five-year embargo." Previously, Sierra Leone had been a rice exporting
country. At present, it has to import everything in exchange for
expensive dollars, because everyone has left the agriculture industry
and is now seeking fast profits in the diamond industry. The country as
a whole has been turned into a moon landscape. In Sierra Leone,
diamond-related riches have gradually putrefied society. Corruption
became the rule, and in the late 1980s the state was virtually
bankrupt. At that time, Scipa Finance, an Israeli company, paid back
Sierra Leone's debts in exchange for diamond concessions, thus enabling
the country to receive further IMF loans. This was an unprecedented
situation: Is it at all possible to take over a sovereign state? At a
given moment, Scipa's big boss was in jail on account of "economic
sabotage," and the local (Sierra Leonean) econom(Roox) Failed states
such as Sierra Leone no longer seem an issue of concern to the
international community, they have become black holes on the world map.
However, there is as much international activity going on as in
Switzerland. Intelligence services, spies, international traffickers,
and mafiosi of various nationalities are stepping on each other's toes.

(Peleman) Yes, it is a fascinating snake nest. In the 1980s,
Kalmanovitch, an Israeli of Russian descent, obtained an exclusive
contract for the Sierra Leonean diamond trade. In his wake, the entire
leadership of the Russian mafia settled down as refugees in Freetown:
Rachmiel Brandwain, who had been arrested in Belgium for gold
smuggling, and Boris Nayfeld and Marat Balagula, the Russian godfathers
from Brooklyn. Kalmanovitch was a jack-of-all-trades. He worked for the
Mossad, but in 1988, Israel exposed him as a Russian double agent and
arrested him. After his release, he went back to Russia. According to
intelligence services, he is now working as an intermediary for
Mogilevitch in Budapest.

(Roox) US expert Wayne Madsen said, "Certificates are only a feel-good
factor to make people forget that the diamond industry stinks. They
will only benefit large diamond concerns, because these are the only
ones who can supply 'clean' diamonds." If necessary, they even hire
mercenaries to protect their concessions.

(Peleman) This criticism is partly justified. Especially De Beers has
established a huge security system in South Africa, Botswana, and
Namibia to prevent trafficking. In Namibia, the police are given 60
percent of every batch of smuggled diamonds they seize. This resembles
Miami Vice; strictly speaking, they should be regarded as mercenaries,
and not as police officers.

(Roox) Mercenary armies are a known phenomenon in Africa. In the 1960s,
Union Miniere (Belgian mining company) already hired mercenaries to
protect its plants in Katanga.

(Peleman) The situation is much worse now: We witness the actual
privatization of conflicts. There are private armies that are managed
like private companies, such as the one of the South African Executive
Outcomes (EO) agency. EO contracts out mercenaries, security agents,
and weapons, and it is also active in the mining industry -- a very
interesting combination of interests. A second phenomenon is the
privatization of national armies. Look at Congo: Zimbabwean military
cross three different borders and are deployed there as diamond miners.

(Roox) In the 1990s, private military contractors such as Executive
Outcomes and Sandline received positive press reports in Africa. EO
enforced a peace agreement following 20 years of civil war in Angola,
and it also put an end to the Sierra Leonean rebels' blind terror. Even
the United Nations for some time considered deploying mercenaries to
disarm Rwandan refugees in the camps in eastern Congo.

(Peleman) This was because of the trauma incurred in the wake of the
failed intervention in Somalia: The member states were reluctant to
supply blue helmets. The NGOs, too, welcomed the mercenary armies. At
last they managed to get their food convoys to their places of
destination. David Shearer of Save the Children wrote an enthusiastic
report about EO, describing them as the new peacekeepers of Africa.
Thanks to them, there were no more juvenile soldiers, etc. In Sierra
Leone, too, several people would like EO to return to the country.

(Roox) Just like the Congolese calling for their Belgian daddy.

(Peleman) Yet, I remain skeptical about this. Private armies can stop
an armed conflict, as EO did in Sierra Leone. However, after their
departure, anarchy will promptly erupt. Therefore, I prefer a UN
intervention: At least we know for what the United Nations stands. This
is not the case for companies such as EO. It recruits troops from the
former South African death squads; Sandline recruits in former SAS (UK
Special Air Services) circles. I suppose these people are not
particularly concerned about human rights. Officially, they say they
act as military advisers, but there are plenty of witness reports
saying that they are actually fighting. And sometimes, they even become
real arms traffickers. In 1998, Sandline staged a coup in Sierra Leone
to bring ousted President Kabbah back to power. Despite the arms
embargo, a whole load of Kalashnikov guns and missile launchers were
flown over from Bulgaria. Yet, the British supported this action, so it
provoked virtually no international pro(Roox) That coup was sponsored
by an Indian, Rakesh Saxena. In line with old traditions, he had
advanced some $10 million in exchange for a diamond concession.

(Peleman) Saxena was involved in the notorious bankruptcy of the
Bangkok Bank of Commerce, in which $2 billion vanished. Thailand has
requested his extradition for several years, but he is still in Canada.
Initially, Saxena was allowed to move about freely in Canada, but when
he was caught carrying a false passport of a deceased Yugoslav, he was
placed under house arrest. Yet, one small concession was made: He pays
his own guardians; in fact, they are his private bodyguards (Peleman
grins -- De Standaard editor's note).

(Roox) The services of Executive Incomes are very expensive: Utterly
poor Sierra Leone had to pay $2 million per day for its intervention.

(Peleman) This case is still the subject of legal proceedings.
Moreover, a mining company linked to EO, Branch Energy, had received
six diamond concessions in Sierra Leone. So far, EO has always denied
that it had anything to do with companies such as Branch Energy, but
this company emerges wherever EO is operating. And how credible is EO's
denial if it refuses to reveal its shareholders? It is probably no
coincidence that the company is registered in the Bahamas. In my
opinion, this is a very serious case of conflicting interests. When
will those private military contractors begin to elicit conflicts
themselves, so that they will later be called in to suppress them?

(Roox) Ever since the Cold War, plenty of weapons have been circulating
in Africa. Will the situation ever clear up there?

(Peleman) The arms stocks from the Cold War are still being used: Arms
move from one conflict-ridden area to another. Moreover, there is a
permanent supply of new weapons. When searching the Internet, I come
across new deliveries almost on a daily basis. This trade will
guarantee many more years of war-related misery in Africa.

(Roox) Moreover, countries such as Sierra Leone are faced with the
additional problem that they have developed a real culture of war. The
Kalashnikov business is still the most profitable trade.

(Peleman) A juvenile soldier who is demobilized in Sierra Leone will
soon end up in the slums of Freetown. There, he will quickly become a
gangster, by lack of any other alternative. All the world's failed
states are facing this problem: Conflict settlement does not
necessarily entail development. In Afghanistan, the Americans now seem
prepared to inject billions of dollars in the reconstruction of
civilian society. This will be a process spread over many years. Not
only the culture of violence has to be suppressed, but also the entire
country has to be rebuilt from scratch: the central government, customs
authorities, the economy. Just look at the problems the United Nations
is experiencing in its protectorates of Bosnia and Kosovo. And as soon
as a conflict has been settled, the international community loses its
interest.

(Roox) There is virtually no interest in Africa anyway. You cannot turn
the entire continent into a protectorate, we hear diplomats say. This
would be tantamount to renewed colonization.

(Peleman) It will already be difficult enough to get rid of the black
holes on the map. For Sierra Leone, I am fairly hopeful. A 20,000-troop
UN force is stationed there. This is a major asset and, what is more,
they spend many dollars in the country (Peleman laughs -- De Standaard
editor's note). If the blue helmets stay long enough, reconstruction
may be successful. Antwerp has supplied computers and the diamond
industry is being cleansed. Talks are going on with the rebels about
jointly managing the diamond concessions. That is one step. Convincing
the people to return to the farming industry will be another step.
Otherwise, Sierra Leone will only have its diamond trade and depend on
foreign imports for all other products.

(Roox) And what about mafia state Liberia, whose flag is used to cover up many dubious deals?

(Peleman) Following the elections, warlord Charles Taylor has become
president. However, he is still running the country as if it were his
private property. Liberia has the second-largest registered merchant
fleet. Most of the proceeds of this business go to the arms trade. In
Liberia, a letterbox company can be set up for a mere $1,500. This is a
heaven for Mafiosi. Most companies are dismantled again after one
transaction. How would it be possible to control all this? Since May, a
UN embargo has been in effect on exports of raw diamonds; an arms
embargo had already existed before that time. The arms embargo should
be extended, but the diamond embargo should be lifted as soon as Sierra
Leone introduces the certificate of origin. However, it is difficult to
imagine how this can be done in a country that does not even have
electricity.

(Roox) Conclusion: Disarmament is only possible if there is also economic development.

(Peleman) Yes, otherwise, today's militias will become tomorrow's arms
traffickers. We witnessed this in Yugoslavia. The Kalashnikovs that
were used in Bosnia are now resurfacing in bank robberies in Western
Europe. Actually, this is not so bad (grins -- De Standaard editor's
note): This way, the West will take the problem seriously.

(Roox) You are a reputed arms trafficking expert. How do you trace illegal arms deals?

(Peleman) At sea, it is very difficult: A container can hardly be
trailed. However, in Africa arms are mostly trafficked via air, which
is faster. And even though you work with different carriers, or even if
you change the registration numbers, a smuggling plane will always
leave a paper trail, simply because of the landing taxes that all
countries are eager to levy. All that is required is a persistent
research effort.

(Roox) This is a remarkable job for a former philosopher whose
university paper was about French guru Jacques Lacan.

(Peleman) Yes, I even was a conscientious objector and I opposed all
kinds of authority. Now I am constantly dealing with intelligence
services, police forces, and military people. It is all in the game.

(Roox) Would it not be better for you to work as an investigator?

(Peleman) I would never be given the same freedom of movement as I am
enjoying now. And I would not be allowed to travel so much. Last year,
I went to Africa 30 times. The operational budget of the UN panel on
Liberia amounted to 1 million euros. The Belgian security forces cannot
compete with this. It proves that illegal arms trafficking is not a top
priority for the Belgian Government.

(Roox) So you are waging your own private little war with such traffickers as Victor Bout?

(Peleman) Sometimes I give him a call inviting him to an interview.
Then we agree to meet in Dubai. Subsequently, he does not show up and
seems to have changed his mobile phone number, once again. Sometimes, I
am talking to his associates, and in the middle of the conversation,
Victor calls. His brother asks whether he would like to talk to "our
friend Johan," and then he invariably answers: No (Peleman laughs -- De
Standaard editor's note)

This is a cat and mouse game, isn't it? I am studying these networks
and try to dismantle them. Sometimes I am really astounded, because
they really operate ingeniously: In every individual country, their
activities are legal, but the overall result is unlawful. Bout is an
expert in such transactions. Obviously, as a researcher, you are always
running behind the facts, yet I managed to seriously cross him on
several occasions: the combat helicopter in Slovakia, another two
helicopters destined for Liberia that were intercepted in Uganda. I am
sure this cost him several millions of dollars.
	

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