Geopolitics

How Diamond Smuggling Drives Central African Religious War

Muslim Seleka and Christian anti-Balaka militiamen have squared off for the Central African Republic's so-called blood diamonds. Some call the wartorn nation a 'gemocracy'.

Displaced victims of the war near Bangui airport last spring.
Displaced victims of the war near Bangui airport last spring.
Cyril Bensimon

BANGUI — Not a single stone. Not a single carat.

Since May 23, 2013, and the suspension of the Kimberley Process — the certification scheme for the origin of rough diamonds — the Central African Republic (CAR) has officially exported none of the many diamonds that lie in its rivers. It's a massive loss of income for this bankrupted state. In 2012, even though most of the stones were already fraudulently exported, almost 372,000 carats were transported out of the country legally for a value equal to around 45 million euros.

Today, the French embassy in Bangui is calling for the sanctions to be lifted. The aim of the embargo decreed two months after the Muslim Séléka rebels took over power was to prevent armed groups from financing themselves by trading stones, but this measure led to a boom in smuggling. And it was enough to worry the World Diamond Council (WDC), which, on June 30, threatened to punish all those who violate this prohibitive measure. The WDC declaration followed a search carried out two weeks earlier in Antwerp, in Kardiam Diamond Tools" facilities.

Investigations are still ongoing to determine whether Central African stones were in "mixed lots" from Dubai. Several sources well-informed on this trafficking racket explain that one of the techniques used to "clear" the gems exported from the countries under embargo consists of mixing them with stones of other origins.

A decade-long campaign against "blood diamonds" has forced the industry to try to polish its nefarious image. The introduction of the Kimberley Process fulfilled this ambition, but its full implementation remains difficult in an environment where secret is a precious tradition.

Business no longer booming

Whether it is in Bangui or in provincial mining areas, all the collectors and the trading agencies are looking glum. According to the people involved in this field, business has slowed down and construction projects are not being launched due to insecurity and lack of funding.

"We fiddle around. I sell to a few friends but I don’t keep anything in stock. Last week, three white people flew over but they were wasting their time," a collector from Bria, in the east of the country, said a few days ago. In Bangui, the main trading agencies adopted different strategies after the suspension.

According to the group of experts nominated by the United Nations Sanctions Committee, the Diamond Marketing Organization (Sodiam) is still proceeding with its purchases in diamantiferous regions and is hoarding its rough stones (more than 40,000 carats worth more than 6 million euros), waiting for the embargo to be lifted.

In the diamond sector, this raises hard questions. Once the ban on exports is lifted, will these stones be considered as clean? How does a company manage to freeze such sums of money for an undetermined period?

Badica, the second most important trading office, has no reserves, but according to several sources, this company has not stopped its purchases in eastern regions (Bria and Sam-Ouandja) controlled by the former Séléka. Both companies were pillaged when the Séléka took power in March 2013. Sodiam even saw Oumar Younous, one of its former buyers who became a rebel general, raid its offices.

A merchant's coup

At the time, some had called the putsch the "coup of the diamond merchants." The main stakeholders of the sector are Muslim traders and many had not come to terms with the Operation Closing Gate, led in 2008 by President François Bozizé and his nephew, who at the time was the Minister for Mining, when, in one single day, all their goods were confiscated. The maneuver aimed to take over this easily exchanged wealth, but that was enough to push the disadvantaged traders to support rebel movements, of which the main officers, Zacaria Damane, Abdoulaye Hissène or Mahamat Saleh, had all previously worked in the stone trade.

After operating in their area of origin in the north of the CAR, the 2013 takeover of the western mining zones was violent. In October, more than 50 people were killed in the locality of Garga, as the International Crisis Group (ICG) says in its report called The Central African Crisis: From Predation to Stabilisation, "some miners joined the anti-balaka to seek revenge for the atrocities and extortion committed by the Séléka."

Since the Séléka were removed from power in January, there has been a sort of "social revolution" in the west of the Central African Republic. The landscape was remodeled in blood when some 40 Muslims were massacred in Guenn where the miners — who represent the main part of the anti-balaka battalions — drove out the Muslim collectors and took control of the activity.

According to Aurélien Llorca, the coordinator of the UN expert group, "the satellite images in this area show an expansion of the number of mining sites and the two anti-balaka leaders there have been able to resume relations with the collectors from Sodiam and Badica."

Tel Aviv to Mumbai

Several operators of the trade say offices have opened on the Cameroonian side of the border to sell off goods. In the east of the country, where former Séléka rebels have withdrawn, the sites are usually not directly controlled by former rebels, but their superiors extort the collectors and the road taken by the smugglers leads to Sudan and Chad.

Searching for diamonds in Sierra Leone (USAID Guinea)

Finally, a last route goes through the border with the Democratic Republic of Congo through Lebanese networks, mainly Shia Muslims. According to another well-informed source, all these illegal export trades, which benefit from the complicity of the authorities of the different countries, lead mainly to Dubai, where the stones easily receive the Kimberley Process certification before being sent to Antwerp, Tel Aviv or Mumbai.

For Llorca, "the main obstacle for the peacekeepers when they are deployed on Sep. 15 at the earliest will be to regain control of the diamond trade." For years, the CAR has been a "gemocracy," the ICG says. From Emperor Bokassa and Ange-Félix Patassé to François Bozizé and Michel Djotodia, all tried to take over the gem trade when they rose to power.

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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