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The long haul to normality: slowly but surely, Liberia is hauling itself back to normality. A deal with an Israeli diamond company, debt cancellation and a brave attempt to come to terms with the trauma of the war all point to a brighter future for the country. Report by Neil Ford.

Liberia remains one of the world's weakest economies, with a very limited budget, a weak infrastructural base and biting poverty. But the government is working hard to improve the situation and real headway has recently been made on several counts.

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First, rapid progress has been made towards generating diamond revenues that will help to rebuild the rest of the economy. Secondly, the international community has shown a willingness to help deal with the country's debt mountain; and finally, the security situation is gradually improving, helping to guarantee the progress that has been made to date.

Diamonds are Liberia's most valuable proven natural resource but the export of the gems was outlawed in order to stem the flow of blood diamonds to the international market. However, UN sanctions on the export of Liberian diamonds were lifted in April, allowing the government to lift its own ban on exports.

It has also opened gem certification offices to check that diamonds are produced and marketed in accordance with the Kimberley Process, which seeks to end the trade in blood diamonds. The new certification offices should help to re-establish a sector that fell into disrepute long before the export embargo was introduced in 2001.

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In the most recent development the Israeli Diamond Institute (IDI) signed a deal with Liberian President Ellen Johnson-Sirleaf in Tel Aviv to carry out a survey of diamond prospectivity and resources across the country. Israel is a major player in the global diamond industry, as Israeli companies process many of the raw diamonds found around the world. Under the new deal, the IDI will provide Monrovia with a team of specialists to carry out the assessment. The managing director of IDI, Eli Avidar, commented: "Liberia can be a big market. All its neighbouring countries have diamonds, so there's no reason to believe there are no diamonds there. And the new president has brought new leadership and a rule of law."

Johnson-Sirleaf said: "Mineral wealth has played a major role in the past, not in serving the needs of our people but in promoting conflict. In fact, for us and some of our neighbouring countries that are resource rich, these resources were characterised as a resource curse." She added: "Liberia has an opportunity for national renewal and national reconstruction" and said that she hopes that diamond exports will now help her government to tackle poverty and finance development projects.

Late last year also saw a breakthrough on Liberian debt cancellation. At present, the national debt stands at $4.5bn--not the highest financial liability in Africa but very high for a country with such a small population and limited financial resources.

The kind of in-depth debt cancellation provided by the enhanced highly indebted poor countries (HIPC) scheme is only available after years of successful fiscal reform and the completion of IMF spending programmes. Despite a good start, the Liberian government will take at least several years to undergo such a process.

The IMF announced that donor nations had pledged a total of $842m to help reduce the debt burden, in what the head of the IMF, Dominique Strauss-Kahn, described as "a critical step towards comprehensive debt relief".

The money should pay off all the arrears Monrovia owes to the IMF on debt repayments that have not been made for 24 years. The support will be offered as part of a three-year economic reform agreement with the Liberian government. The campaign for debt relief received support from a number of high profile figures, including US President George W. Bush and Irish rock star Bono.

Overcoming the legacy of war

Some countries, including Brazil, Turkey, Indonesia and India, had opposed the agreement because the money will come out of existing IMF finances rather than from new support from the industrialised world. However, the deputy Liberian minister of information, Gabriel Williams, said that the deal "enables our country to now move forward and accelerate the pace of reconstruction with the resources that we are going to be able to access as a result of this major development".

Further progress is also being made to overcome the legacy of the war years and to return the country to normality. In August, the United Nations (UN) published a report on the state of Liberia that generally praised the progress that has been made since 2003, although it warned that a return to violence could easily destabilise the entire Mano River region. One month later, the UN Security Council extended the mandate of the UN peacekeeping force, the UN Mission in Liberia (Unmil), by another 12 months.

However, in a sign that the security situation is improving, Unmil will be cut back by 2,000 troops to 12,000 and the UN police presence in the country will be reduced by 1,000 officers. It is hoped that Unmil can be scaled back yet again at the same time next year, as the training of the Liberian army and police force means that the domestic security forces will increasingly be able to take responsibility for internal law and order.

The Truth and Reconciliation Commission (TRC) is also collating a great deal of information on the decade-long atrocities in order to help Liberians come to terms with what happened.

In a major step forward, the US government agreed to hand over classified information collected by its intelligence agencies. The head of the JPC, Augustine Toe, said: "The TRC has a mandate to investigate human rights in this country. With this document the TRC will be able to go forth with its work and give the Liberian people the true nature of our history."

Monsignor Andrew Karnley, of the Catholic Justice and Peace Commission of Liberia (JPC), which officially handed over the documents, added: "Today, the JPC is contributing these documents to the Truth and Reconciliation Commission as a means of healing our past and as an important step towards choosing a path of peace and dialogue."

While the Liberian government faces a mountainous task in re-establishing a viable state, there is no doubt that it has made a good start. Referring to the debt agreement, the president of the World Bank Robert Zoellick, says: "President Johnson-Sirleaf has done a tremendous job in a difficult situation and this breakthrough will help all of us to offer her and Liberia more support."

With supporters such as the World Bank, IMF and UN offering substantial support and the new Liberian leader proving a hit with both Liberian voters and the international community, it seems that human as well as natural resources could help to turn the West African country's fortunes around.

RELATED ARTICLE: Diamonds

Freetown looks to stem smuggling

The new president of Sierra Leone, Ernest Bai Koroma, is seeking to implement his election pledge of tackling corruption. One of his first targets since becoming president in September appears to be the illegal export of diamonds and other valuable minerals, using consignments that are marked as containing mineral samples for overseas analysis.

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A letter from the presidential office that was obtained by the Reuters news agency, stated: "It is reported that there appears to be little or no supervision or regulation of this activity by government."

All mineral exports were banned for a time in November last year in order to allow the government to introduce much tighter controls on mineral exports. It is believed that a large proportion of Liberian diamond production is smuggled out of the country, while the Ministry of Mining is to review all existing mining contracts in order to ensure that they are fair.

Those employed in legitimate mining industries, including the country's biggest foreign investor, Sierra Rutile, appear to support tighter controls. The general manager of Sierra Rutile, Bob Lloyd, commented: "We support this ban because we want Sierra Leone to give an example."

However, he added: "It does have an impact on things here and if it continues it will have a major effect on us. Our customers would be understanding at first and then after a month or so they would get a bit impatient." The firm exports 100,000 tonnes of rutile a year; rutile is used in the production of titanium.

Koroma also wants to introduce comprehensive mineral legislation to ensure that the country can benefit more from mining activity. Apart from diamonds and rutile, the country possesses large reserves of bauxite and gold.

At the Commonwealth heads of government meeting in Kampala in November, the Liberian president told journalists: "We have not benefited as much as we should have from our mineral resources and that is why we are going to put in place a mining policy that will ensure that we move away from having low returns. It will not only add value but it will enhance employment opportunities."

The British government is to provide technical support to the new Liberian government to redevelop its mining industry regulations and legislation.

Liberia lacks the ability to process most minerals within its borders but Koroma wants to force mining companies to polish precious stones within the country as soon as possible in order to create employment and boost export revenues.

As in neighbouring Liberia, the government of Sierra Leone hopes that diamond revenues will provide a large proportion of the money required to finance national reconstruction.
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Title Annotation:LIBERIA
Comment:The long haul to normality: slowly but surely, Liberia is hauling itself back to normality. A deal with an Israeli diamond company, debt cancellation and a brave attempt to come to terms with the trauma of the war all point to a brighter future for the country.
Author:Ford, Neil
Publication:African Business
Geographic Code:6LIBE
Date:Jan 1, 2008
Words:1550
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