A Diamond is (Not Liberia’s) Forever

Liberia is poor. Its people are poor, its government is poor, the state of the country’s infrastructure is poor. You’d be hard pressed indeed to find a country much poorer than Liberia today.

And yet, paradoxically, Liberia should be filthy rich. From the perspective of its natural resources, Liberia boasts a literal gold mine. Open a map of Liberia, close your eyes and draw an X, and you may very well have located your fortune. Dig below the ground and you’ll find diamonds, iron ore, gold, and other lucrative minerals. Look up and you’ll run straight into one of the gazillions of trees that comprise Liberia’s vast and valuable forest. And, if you’re the kind of pirate who is willing to take a gamble on your treasure, head straight for Liberia’s continental shelf and be first in line to discover possible new reserves of oil and gas.

Tragically, Liberians know precious little of the bling bling from these riches, and far too much bang bang. The hefty profits from extractive industries – diamonds, gold, forestry – have for decades been used against Liberia’s people instead of for them. These riches fuelled the prolonged civil conflict, putting hundreds of thousands of guns into the hands of rebel factions and child soldiers. Corrupt business deals and outrageous plundering by (morally repugnant) political leaders from previous governments meant that Liberia saw almost none of the proceeds from the sales of its diamonds and trees.

The solution seems all too obvious and basic. Governments should be the honorable stewards of a country’s resources. Any leader who steals should be locked up. Private (and particularly foreign) companies should not get away with highway robbery: a reasonable share of their profits should be transferred to the country from whose land these companies are getting rich, and used responsibly to fund schools, hospitals, and roads. And the ultimate consumers of these products --- in particular the millions of love-struck American men who purchase the bulk of the world’s diamonds for their future brides --- should take great care to ensure that their insatiable demand for Liberia’s buried treasures results in development, and not destruction.

For their end, the Government of Liberia is now doing its part. Last week the Government launched its participation in the “Extractive Industries Transparency Initiative” in a jubilant ceremony at City Hall, complete with balloons, singing teenagers and the requisite presence of government and donor dignitaries. At the fanfare event, President Sirleaf announced the Government of Liberia’s voluntary pledge to enact a more transparent, accountable and equitable management of its extractive resources. Basically, this will entail publication of all payments made by mining, petroleum and forestry companies to the government, and the reconciliation and external audit of payment and revenue information.

Me, Minister Sayeh, Dan Honig, and Dabah (special assistant) at the EITI launch

A similar program in Nigeria has made progress in ensuring that oil revenues actually end up in the coffers of the national government. Whether or not this money escapes Nigerian’s notorious corruption as it filters to the local level is a separate question, of course. And a skeptical reader may also question the effectiveness of governments in spending this money and at the end of the day, whether it will actually improve the lives of everyday citizens. However limited this progress, though, it does suggest that the marriage of strong political commitment at the top and watchdog programs can help avert the flagrant robbery of the past.

As Liberia now throws open the doors of its mining and forestry operations, the challenge ahead lies in translating this political commitment into urgently needed revenues, employment, and infrastructure. Liberia's development prospects in the next decade will depend heavily on these extractive industries. In the absence of reliable electricity, a trained workforce, and uninterrupted peace and stability, I'm dubious about the prospects for much other private sector activity, like tourism or manufacturing, at least in the short term. Liberia's natural resources are so valuable to the rest of the world that they will attract investment, regardless of the constraints that scare other nervous investors away. The huge Mittal Steel deal and other new concession agreements will soon revive these critical industries and jump start the economy. Perhaps this time around, Liberians will finally get a piece of their treasure.

**To learn more about Liberia's efforts to comply with the Kimberly certification for its diamonds, see Kaysie Brown's recent blog posting


** For anyone in the market for a diamond engagement ring, check out Amnesty International and Global Witness for more information on how to purchase a conflict-free diamond.


** Click here to read the full text of the President's speech.