Liberia Mining Deal Blocks Lifting of Sanctions

Liberia has lost any chance for now of persuading the U.N. to remove sanctions on its diamond exports due to a mining deal it signed with a foreign firm which has no mining experience.

The deal was secretly signed in January with the West Africa Mining Corp., or WAMCO, a new company that is 90 percent-backed by the London International Bank Ltd., a private investment firm, said a panel of five external experts in a report to the U.N. Security Council.

The agreement, which would lead to a "de facto monopoly over much of Liberia's diamond-producing regions" and exclude other dealers from competing for diamond purchases, was revealed by the experts three months ago.

"In the context of the obfuscation and opacity surrounding the WAMCO agreement, progress by the National Transitional Government of Liberia towards meetings the requirements of the Security Council (for resuming a legal trade in diamonds) has effectively stalled," the experts reported.

Liberian diamond exports have been banned by the Security Council after the U.N. body found that President Charles Taylor, who fled into exile in Nigeria in 2003, was financing civil war in the area through illegal trading in arms for diamonds and Liberia's other natural resources.

Liberia's transitional authorities, which are governing the country until democratic elections due to take place in October, have requested the council lift the ban to help the country's ailing economy. Around 80 percent of Liberia's population of 3.4 million people live in poverty, according to the United Nations.

The experts who prepared the report for the U.N. said international donors trying to help Liberia qualify to resume legal diamond trading were now likely to suspend any funding "until outstanding questions regarding the deal have been answered."

The interim government, in an April 27 progress report to the United Nations, said it had "satisfied all conditions" for recommencing trade in rough diamonds under the Kimberley Process.