The persistence of informality: Perspectives on the future of artisanal mining in Liberia

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The persistence of informality: Perspectives on the future of artisanal mining in Liberia Steven Van Bockstael * Ghent University, Conflict Research Group, Department of Conflict & Development Studies, Universiteitstraat 8, 9000 Gent, Belgium

A R T I C L E I N F O

A B S T R A C T

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Throughout most of the developing world, the artisanal and small-scale exploitation of high-value resources such as gold and diamonds, often takes place informally, without the proper legal authorization. Government officials often blame this informality on miners’ unwillingness to comply with legal requirements. However, the lack of government capacity to adequately enforce such legislation, and the question of whether or not that legislation is actually feasible, is rarely considered to be a relevant factor determining the level of informality of artisanal mining operations. Drawing on field research in Liberia, this paper argues that many artisanal miners are in fact operating at various stages of legality, through payment of informal taxes, and following informal agreements made with local government officials. This kind of informal taxation can be seen as a locally grounded formalization, benefiting both cash-strapped artisanal miners who are unable to pay the full fees required by the Mining Code, and underpaid government officials who are presented with an opportunity to supplement their incomes. While illegal in absolute terms, these practices raise important questions regarding the feasibility and legitimacy of the current Mining Code, and the ways in which this crucial economic activity should be regulated in the future. ß 2014 Elsevier Ltd. All rights reserved.

Keywords: Artisanal and small-scale mining (ASM) Informal economy Liberia Extractive industries Natural resource governance

1. Introduction On 6 September 2007, a small shipment of rough diamonds was legally exported from the West African nation of Liberia. The shipment was valued at 222.000 USD, and earned the Liberian government around 6.666 USD in export royalties [51]. More importantly, it marked the resumption of its trade in rough diamonds with the rest of the world, which had been banned by the United Nations Security Council since 2001. Although diamonds did play a secondary role in financing nonstate armed actors in the Liberian civil war [20], Liberian diamonds mostly became known as proverbial ‘conflict’ or ‘blood’ diamonds because of their association with the war in neighboring Sierra Leone, a conflict that was closely intertwined with Liberia’s own [11]. Through an alliance between the Sierra Leonean Revolutionary United Front (RUF) and the Liberian insurgent leader and former President Charles Taylor, diamonds mined in rebel-held territories in Sierra Leone in the 1990s were sold internationally through the mediation of Charles Taylor, with arms and ammunition making the return trip [20,29,43]. Investigations by the United Nations and NGO campaigners in 1999–2000 publicized how the Liberian

* Tel.:+32(0)9 264 69 14. E-mail address: [email protected] http://dx.doi.org/10.1016/j.futures.2014.02.004 0016-3287/ß 2014 Elsevier Ltd. All rights reserved.

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Government was actively supporting the RUF, and ultimately led to the imposition of a blanket export ban on diamonds originating from the country in March 2001, through UN Security Council Resolution 1343 [46]. Previous investigations into the smuggling of diamonds by the Angolan rebel movement UNITA had brought the world’s attention to the ways in which rough diamonds were being used by certain rebel movements to finance armed conflict [17]. Despite outcries in the international media, none of this was a particularly closely held secret: one of the main sources of the British NGO report that is credited with spawning the ‘conflict diamonds’ campaign were the annual reports and public statements of diamond industry giant De Beers, in which the company proudly mentioned how its diamond buyers, despite the ongoing conflict and the increased amounts of diamonds smuggled onto the ‘open’ market by UNITA rebels, had succeeded in purchasing this excess production in order to prevent price destabilization [17]. Indeed, by that time it was a well-established fact among academics, investigative journalists and the intelligence community that violent conflicts in developing countries were increasingly linking rebels and rulers with international commercial interests [11,27,34,39,40]. As far back as 1993, Belgian Members of Parliament tried to ban ‘UNITA diamonds’ from being traded in Antwerp, the leading world trading center for rough diamonds. The bill did not pass, and would have proven to be impossible to implement, given the difficulty with ascertaining the origin of falsely declared diamonds (and thus being able to prove in a courtroom that diamonds from country X did in fact actually come from country Y) [34, p. 103]. The global conflict diamond campaign, together with an innovative investigative approach of the United Nations Security Council, gave rise to an unprecedented effort to reform the global diamond industry. A meeting hosted by the Southern African Development Community (SADC) in the historic mining town of Kimberley, South Africa, in May 2000 became the starting point for a series of peripatetic negotiation rounds that became known as the Kimberley Process, which was subsequently supported by a UN General Assembly resolution. Remarkably fast for an initiative on this scale, a consensus was reached two years later on how to best stop conflict diamonds from entering the legitimate diamond industry, and in the process help block one avenue of funding for armed conflicts. This mechanism, the Kimberley Process Certification Scheme (KPCS), came into effect on January 1, 2003. It created a closed global market for rough diamonds, where KP participating countries are only allowed to trade rough diamonds with other participating countries, using Certificates to create a paper trail [18,53]. Regular endorsements by both the UN General Assembly and Security Council, at first supporting the KP negotiations, and after 2003 taking the form of an annual assessment presented to the assembly by the KP chair, gave the KP/ KPCS the necessary legitimacy and authority to carry out its work. In 2007, satisfied that the Liberian Government had enacted several reforms1 that would increase the government’s oversight of the mining and trading of rough diamonds in its territory, the UN Security Council lifted the diamond embargo through Resolution 1753, clearing the way for the resumption of normal trade though Liberia’s participation in the Kimberley Process [47]. Ever since, however, the Liberian Government has been repeatedly criticized by both the KPCS and the UNSC for failing to make sufficient progress in formalizing its small-scale mining industry, and improve its internal controls, which has cast doubts as to whether the authorities are able to prevent diamonds from being smuggled in or out of the country. This potentially compromises the integrity of the KPCS certificates in the wider Mano River Union region [48,55]. In this paper, we will demonstrate how the transformation of a largely informal, extralegal part of the economy into a fully formalized industry is one of the key focal points of the Liberian Government, the KPCS, and the UNSC. We will also show that several characteristics inherent to the diamond industry in many developing countries, as well some of the basic assumptions underpinning the KPCS, make this formalization appear at times a Sisyphean task. Based on extensive field research undertaken in rural Liberia’s diamond mining communities in 2010, 2011 and 2012, we will argue that many artisanal miners are, in fact, operating at various stages of legality, through the payment of informal taxes, and based upon informal agreements with local government officials. These informal practices can be considered coping strategies in environments governed by an inflexible legal framework that is not in tune with local realities. It can be seen as locally grounded ‘formalization’, benefiting both cash-strapped artisanal miners unable to pay the full fees required by the Mining Code, as well as underpaid government officials who are seizing an opportunity to supplement their incomes, while also decreasing the amount of mining activities which are wholly beyond any form of official oversight or (tacit) approval. While illegal in absolute terms, these practices raise important questions regarding the feasibility and legitimacy of the current mining legislation, while also shedding light on the inner workings of a significant part of the ‘real’ economy of Liberia (cf. MacGaffey’s 1991 analysis of the Zaı¨rean economy [31]). Contrary to what is sometimes suggested in policy analyses, these mining areas do not represent ‘ungoverned’ territories per se [38] but are rather spaces of constant interaction and competition between local government officials, miners, traders and financiers, and non-mining community members. Following Roitman [54], such areas perfectly lend themselves to the study of the (il)legitimacy of state and non-state actors’ practices, in a context where the illicit is often rendered licit. The study of these interactions allows for better conceptualization of the realities of natural resources management with regard to easily accessible mineral deposits in contexts of fragile statehood, currently in stark opposition to enforcementbased strategies to coax informal miners and traders into joining the formal economy.

1 Based on the KP minimum requirements, this entailed the enactment of specific legislation requiring the installation of a system of internal controls, and governing the issuance of Kimberley Process Certificates for all shipments of rough diamonds.

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2. Diamond mining livelihoods in Liberia The specific natural occurrence of diamonds strongly determines the way in which these gems can be extracted. Most large-scale diamond mines are situated on top of so-called ‘primary’ or ‘kimberlite’ deposits. These are known to contain relatively large amounts of diamonds in a relatively small surface. Because diamonds in primary deposits are usually encased in hard rock formations, they require the application of advanced, capital-intensive and heavily mechanized extraction methods. Examples of such mines, typically run by foreign-owned or joint-venture mining companies, can be found in the Canadian Arctic and Botswana’s deserts. So-called ‘secondary’ or ‘alluvial’ diamond deposits are formed when stones are eroded from surfaced primary deposits through millennia of water erosion, and subsequently spread out over vast areas. Currently the known and operated diamond deposits in Liberia are of this second type. Because of the vast areas in which a limited amount of diamonds can be found, these deposits are usually uneconomical for large-scale, capital-intensive mining companies. However, since such alluvial diamonds can be found only a few meters deep, they can be extracted using only the most rudimentary of tools. Depending on local contexts, this may or may not be seen as an economically worthwhile activity [49]. Indeed, what is now loosely termed ‘artisanal and small-scale mining’ or ‘ASM’ has, historically, been the predominant form of natural resource extraction, practiced by the first diamond miners in southern India, by the ‘fortyniners’ looking for gold in California, and by the contemporary ‘diamond boys’ in search of a better life in Liberia and so many other impoverished parts of the world. Given the vast areas over which secondary diamonds are often dispersed, and the lack of detailed geological sampling and analysis, it is difficult to predict whether a prospective artisanal miner will be able to make a profit, lose most of his paltry savings buying shovels, sieves and food for his ‘diggers’ or ‘boys’, or become heavily indebted in the process, usually to diamond buyers acting as ‘middlemen’ between individual miners and land owners and diamond exporters. However, if the average cost of extraction per carat is low enough, and the area that is being worked is sufficiently rich in diamonds, ASM can become a relatively profitable livelihood. Indeed, for many diamond miners, the guarantee of being able to eat several times a day and, depending on the arrangements made, getting paid a small daily wage or a fixed percentage of the value of gold and diamond recoveries, means having money to spend on non-food consumption articles and preserves the ever-present hope of ‘striking it rich’. Although expressions of the latter sentiment were initially regarded as the predominant motive behind the growth of ASM activities throughout the developing world, a view perhaps contaminated by Western perspectives on luxury commodities like gold and diamonds, the ‘get rich quick’ narrative cannot adequately explain the enduring success of ASM as a livelihood, its complex links with smallholder agriculture, nor the fact that for every successful miner, others are seemingly stuck in an economy of survival [21,22,32]. As several scholars have noted, traditional African smallholder agriculture has come under tremendous strains the past three decades: the removal of subsidies on farming essentials such as fertilizers; the sharp devaluation of cash crops; and the dismantling of state-run schemes to support rural agriculture [6,10]. With the added challenge of seasonality, the ability of smallholders to compete and generate an adequate income in a liberalized agricultural market is severely limited. Many smallholders have thus started to ‘branch out’ into other rural non-farm income generating activities to supplement their meager incomes. In areas with known mineral deposits, ASM has quickly become the most dominant among them, often leading to de-agrarianization and the development of distinct mining career paths [7,25]. Despite reported findings as early as 1906, interest in diamond mining in Liberia started to soar only after the discovery, in 1957, of the Lofa river deposits; this sparked the country‘s first diamond rush. Although its own estimated geological diamond deposits are relatively modest, Liberia was already a major exporter by that time, exporting over 1 million carats in 1956, but only a small fraction of these were actually Liberian diamonds. Greenhalgh [19], in his pioneering study of diamond mining activities in West Africa, explains how Liberia attracted smuggled stones from neighboring countries due to its usage of the US dollar as national currency and negligible restrictions and tariffs on imports and exports. The author estimates that in the 1950s, only one-tenth of diamonds exported from Liberia had their provenance in that country. Indeed, as early as 1954, President Tubman is quoted as saying that Liberian diamond exports consisted mainly of diamonds from Sierra Leone, something which was seen as evidence of Liberia’s favorable business climate at the time. Similarly, cash crops such as coffee were commonly smuggled into Liberia during this period, to take advantage of higher prices paid for produce [41,44]. In this sense, the export of Sierra Leonean ‘conflict diamonds’, under Charles Taylor’s presidency, was simply the perpetuation of a trend. As a result, reliable estimates of Liberian diamond production are hard to come by – an issue that has posed problems for the Liberian Government as well. Indeed, a study commissioned by the Liberian Government after the civil war in preparation for its membership in the Kimberley Process, optimistically estimated annual production capacity at 200.000 carats [45]. This was based on an incorrect reading of past official Liberian diamond exports, and failed to adjust for smuggled diamonds which had been inflating official Liberian diamond exports since the 1950s. In 2011, during a conference organized in Monrovia to attract foreign investment in the resource extraction sector,2 a senior Liberian government official formally acknowledged this error. While the current situation cannot be compared with the dramatic ‘production’ during the decades before the civil war, diamond smuggling continues to be widespread in Liberia and its neighbors. Given the significant role played by Sierra

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The first Liberian Mining, Energy & Petroleum Conference & Exhibition. Held in April 2011, at Monrovia City Hall.

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Leonean diggers as well as diamond buyers in Western Liberia, it is likely that significant numbers of Liberian diamonds end up being smuggled into Sierra Leone instead of being exported through official Liberian channels, although it is very difficult to assess the magnitude of this cross-border trading. The Liberian Government estimates that up to 30% of rough diamonds leave the country this way, highlighting how the country’s highly porous borders make stopping this extremely difficult. However, similar amounts may be entering the country near the Ivorian border: the Kimberley Process is currently analyzing in detail the records of diamond production in the northeast, where a significant spike in recorded production, coupled with relatively low levels of visible mining in the region, raised suspicions that Ivorian conflict diamonds might be entering the country in defiance of a UN and KPCS embargo [48, pp. 16–17]. Although there are junior mining companies presently exploring for primary deposits – much like they did in the 1950s – it is unlikely that this will significantly alter the dominance of ASM in Liberia‘s diamond sector in the next decade. While geologists remain optimistic, arguing that Liberia‘s vast amounts of unexplored kimberlitic pipes and dykes hold great potential, previous explorations have failed to discover deposits that were economically viable for large-scale mining; the potential transformation of exploration activities into significant large-scale diamond mining operations will take several years at least. In August 2013, a junior exploration company announced the discovery of a kimberlite pipe, located in an area that has been a historic hotspot of artisanal diamond mining activity [9]. However, it remains to be seen whether this kimberlite pipe will turn out to be an economically exploitable one, and if so, how this will affect local artisanal mining operations, as well as the delineation of a planned transnational protected forest area to link Liberia’s proposed Gola National Park (currently a National Forest exists) with Sierra Leone’s Gola Rainforest National Park and transform the collective areas into a Transboundary Peace Park [3]. Notwithstanding this and potential future geological findings, diamond mining activities in Liberia will most likely remain predominantly artisanal in nature over the next decade. As is the case in many other sub-Saharan Africa, many artisanal miners operate outside of established regulatory frameworks. While only a small minority of miners deliberately mine illegally, most still lack the necessary legal paperwork and are therefore classified as illegal. In reality, however, we find that many miners operate in the gray zone between legal and illegal status, a space where miners, customary authorities, and government representatives are engaged in a constant negotiation over governance of the artisanal mining activities. Because of this high degree of informality, and because the Liberian legal framework does not require the registration of individual workers but only of the ‘miner’3 or pit owner, reliable estimates are hard to come by, but Hinton’s [24] calculations point to between 50.000 and 100.000 men and women directly involved in mining activities. Factoring in indirect labor and dependent households suggests that around 750,000 and perhaps up to a maximum of 1.5 million men, women and children are directly and indirectly reliant on artisanal diamond (and gold) mining for at least a portion of their cash income. Indeed, in the diamondiferous parts of rural Liberia, it is hard not to meet artisanal miners or persons benefiting in some way from the industry. While the Liberian population totaled around 4 million in 2010, it is important to note here that a significant number of diggers are foreign nationals, notably Sierra Leoneans. Often, these are experienced miners who specifically came to Liberia to work in its diamond and gold mining areas. A recent UN report suggested that the number of Sierra Leonean miners working in Liberia ‘‘is now in excess of 10,000’’ [55, p. 30]. After the end of this period of civil war, Liberians resettled in a country that was, and remains, mostly devoid of meaningful income-earning opportunities, especially outside of major urban areas. Diamond and, increasingly so, gold mining, have become some sort of lifeline in that regard. Many Liberians, especially young, mobile and often unattached men, have resettled in diamondiferous areas in Grand Cape Mount, Lofa, and Gbarpolu counties in particular. As Hilson and Van Bockstael [22,23] explain, work arrangements have been forged between landowners or those with local land use permissions and groups of mostly itinerant laborers: in exchange for a place to sleep (usually at the mining site), a cup of rice and a Maggi (soup) cube, they are hired to mine for diamonds. When the miner has sold the diamond(s), usually 50% of the proceeds are divided amongst the diggers or ‘diamond boys’. Although significant diamond finds, especially of gem-quality stones, are sometimes few and far in between, these people have security, assured of being fed (or otherwise paid a small amount of money) every day. 3. The legal framework The Liberian mining industry is governed by the Mineral and Mining Act (MMA), enacted in 2000 during the country’s second civil war under the Presidency of Charles Taylor. Like most other countries in the world, Liberia’s mining code was primarily written with the interests of large-scale resource extraction in mind: operations falling under Class A Mining Licenses and the Mineral Development Agreements. The section relating to less capital-intensive ways of mineral extraction only vaguely distinguishes between Class B and Class C Mining Licenses, and to date, no specific mining regulations have been developed. In a country where only a very small minority of diamonds and gold is unearthed by (semi-) industrial mining operations, the MMA fails to offer a clear definition of what ASM is, let alone provide any detailed legal frameworks by which artisanal miners should be held to account. Indeed, the law does not even make reference to ‘‘artisanal mining’’. Instead, the Class C

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Hereafter, if ‘miner’ is mentioned in the text, it relates to the person responsible for a given claim.

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mining license is described as giving a license-holder the right to ‘‘conduct mining predominantly as a small-scale operation’’, with the explicit mention that those who are not ‘‘predominantly engaged’’ in small-scale operations (i.e. those who should have Class B licenses) can be penalized by the government. It is only in the 2004 addition of a 40th chapter in the law, providing for controls on the export and import of rough diamonds as per the minimum requirements of the KPCS, that ‘‘artisanal’’ mining is mentioned at all. This is problematic, not least because of the myriad ways a word like ‘predominantly’ can be interpreted. Many advanced artisanal miners who wish to use earth-moving equipment for a limited amount of time have complained that they are required to apply for the far more costly industrial Class B licenses. In an attempt to address this grievance, the Liberian Ministry of Lands, Mines and Energy (MLME) has paved the way for cooperatives to use limited earth-moving equipment on Class C mining licenses. There are only a handful of cooperatives, however, in operation. Furthermore, the ability of this measure to encourage illicit miners’ formalization is limited, as it is only feasible for those who already possess significant amounts of capital to even consider using such equipment. In contrast with other countries, such as the DR Congo, the Liberian Government only requires the legal registration of every separate mining claim, not of every person working in it. ‘Diggers’ or ‘diamond boys’ are considered to be employees of the miner, and have no further legal obligations. Another sign that the mining legislation was seemingly not written with the realities of Liberia’s artisanal mining sector in mind was that, in contrast to most other countries where artisanal mining can legally take place, the Class C license covers an unrealistically high 25 acres,4 and is annually renewable at a cost of 150 USD. If it is the first time a miner requests a license for a certain claim, the MMA requires that it be demarcated by a licensed land surveyor, at an additional cost of 150 USD. Not only are such fees, to be paid in a lump sum, prohibitively expensive for most miners,5 but the fact that Liberian citizens are allowed to possess up to four Class C licenses further underscores the policy disconnect with the realities of artisanal mining operations in the country. The cost of the mining license, the demarcation fee, the trips to Monrovia to process the license at the MLME, and the numerous bribes that have to be paid to various representatives of the officialdom along the way, have proved exorbitant, and the entire process, time-consuming. However, this may change in the future. The 2000 MMA is now generally considered to be outdated. In 2010, the World Bank’s multi-donor Extractive Industries Technical Advisory Facility (EI-TAF) recommended updating the Mining Code to enhance the effectiveness of mining sector regulation in Liberia. Furthermore, since the MMA was enacted, several legal and regulatory changes and innovations have impacted the mining sector. These include the National Environmental Policy (2003), the Public Procurement and Concessions Act (2008; amended 2010), the 2010 Mineral Policy, the Revenue Code (2009), as well as the 2011 Act that created the National Bureau of Concessions. The MMA has not been amended to reflect these changes, barring the 2004 amendment bringing Liberia into the KPCS, and therefore partially contradicts more recent legislation and policies. Supported by the German development agency, GIZ, a process to revisit the Mining Code is currently underway [35]. A final, and rather crucial, element in Liberia’s resource governance framework is the existence of a Government Diamond Office (GDO). As required by the Kimberley Process, all participating countries need to have an advanced level of oversight over any and all diamond mining activities occurring on their territory. This is a relatively easy task for countries where primary diamond deposits, exploited by large-scale mining companies that have a security presence around the mining areas, and monitor their workforces for diamond theft. Countries where secondary diamond deposits occur, and where economic development levels are sufficiently low so that artisanal mining becomes an appealing livelihood economically, however, have a far more difficult task. Not only are the deposits spread over vast areas, but the easy access and the structural poverty enabling ASM as a livelihood make it almost impossible to monitor all instances of diamond mining, especially given that the same poverty also results in governments with diminished capacity to enforce its laws across its territory. In practice, this means that the weakest governments participating in the KPCS – including the conflict-affected countries on whose behalf the Process was initiated in the first place, are the ones who face the most uphill struggle in establishing effective and credible internal controls. In Liberia, this is the responsibility of the GDO, which has several offices in the different diamondiferous mining areas. While the MLME has officers in place in the same areas, these Mining Agents are charged with monitoring ongoing mining activities, and assisting operators with their requests for a mining license. The GDO officers’ sole responsibility is related to the KPCS: all diamonds recovered in any given area must first be declared at the corresponding GDO office, where it is weighed, described, and thus entered into the record, using a system of vouchers. Copies of this voucher are given to the miner who registers the diamond, with an extra copy for the diamond buyer, and a copy for the MLME in Monrovia. When a diamond dealer presents a parcel at the MLME for exports, the GDO then reconciles the corresponding voucher with those that are periodically collected from all local GDO offices. In practice, most miners have a hard time understanding why they need to present every diamond to the GDO, and brokers frequently use licensed miners’ claims to register diamonds recovered and bought from illicit miners.

4 Slightly over 10 ha, it is a completely unrealistic proposition that such a vast area can be mined by artisanal miners: in Sierra Leone an artisanal mining license gives the right to mine one half hectare. While parts of the licensed claim can be subdivided and leased to other miners, interviewed licensed miners generally prefer to directly control all mining activities within their claim. 5 In recent years, Liberian GDP per capita has gradually risen to 422 USD in 2012 (GNI: 370), compared to 131 USD in 2003 (GNI: 80) (http:// data.worldbank.org).

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4. Informal arrangements: at the heart of the mining economy While Liberian diamond miners can be differentiated to some extent, depending on their ability to raise capital, incur the initial cost of formalization, and the degree to which their operations are mechanized, most miners can be considered subsistence that bear no resemblance to the individual mining entrepreneurs that the MMA seems to envisage. They are instead people who have access to a plot of diamond or gold-bearing land, but who mostly lack the capital needed to finance initial earthmoving operations, the latter of which can take several weeks. While there is definitely a sub-group of professional miners who have developed impressive networks and are able to raise capital independently, the mining operations they command are usually run on behalf of Monrovia-based diamond dealers,6 through the intermediary services of licensed diamond brokers. Although some licensed brokers readily admit to financing illicit as well as licensed miners, many miners are forced to look for funding among informal middlemen who are called ‘supporters’.7 Being connected in such a way to diamond buyers significantly reduces the miners’ independence. If a miner is being ‘supported’ (i.e. given some money/equipment/foodstuffs to support operations), he or she is required to offer all recovered diamonds to the supporter, and accept the ‘proposed’ price. Although it is important to consider the economics of supporting, whereby the high degree of insecurity associated with diamond mining means that prices offered to miners are the result of a balancing act in which profitable mines have to make up for non-profitable ones under the same supporter’s control, there is no question that artisanal miners are often taken advantage of. While not legally codified, such rights of first refusal are strongly insisted upon, and in cases of disputes, defended by government authorities. One such instance revolves around a widow who, after inheriting her late husband’s licensed claim, had recovered an almost flawless 80-carat diamond. Her supporter offered to pay 20.000 USD, a low price: word quickly got out of the major discovery, and a bidding war started with other diamond brokers, with offersof up to 1.000.000 USD. As the woman refused to sell to her supporter, government officials were brought in to negotiate, and the supporter finally agreed to offer 500.000 USD for the stone [50, p. 126]. In cases where the supporter is unlicensed, and it is less of a need to seek the assistance of government officials, interviewees suggested that threats of violence are often used to pressure miners into honoring their agreements. Because of their illegality and the fact that news about discovered diamonds travels very fast in mining settlements, illicit miners are forced to sell their diamonds quickly. This leads to them being offered significantly lower ‘bush prices’, making it difficult for them to accrue the necessary funding in order to obtain the required papers, creating a cycle that is hard to break. Indeed, it can be argued that it is the legal status of the person to whom a miner sells the recovered diamonds, which in turn strongly determines the legal status of the mining operation. In the case of gold mining, the fixed and (fairly) easily determined price of gold gives a much larger degree of independence to the miner, who is able to exact a greater share of the final export value, and is thus not as exposed to wildly varying price offers. Becoming a licensed artisanal miner is currently beyond the capacities of many Liberians, who have been forced to either abandon mining, or continue to do so informally. Given the role of ASM as a coping strategy in a difficult economic environment, the majority of would-be miners have opted for the latter. While a small number have chosen to mine deep in the bush to deliberately avoid government officials, the majority of unlicensed mines cannot be considered ‘deliberate’ illegal operations, but rather situated in between legal and illegal. Because they have secured local permission to continue mining, their lack of official legal status is compensated by their local legitimacy. Indeed, unless the mining occurs deep in the jungle, no one can mine without first securing the permissions of landowners and local authorities. While traditional authorities play an important role initially in these negotiations, government officials are involved as well. In most mining areas, this is typically the Mining Agent, and one or more Patrolmen under his command. In many towns, the so-called Mining Chairman fulfills an important role as well. This is a local miner, supposedly elected by his peers but typically designated by the mining agent, who works as an unpaid volunteer to assist the mining agents and patrolmen of a given mining agency in their duties. Given the large areas of responsibility for each mining agency, these volunteers perform an important intermediary role. The role of the GDO in these negotiations remains unclear: given their specific responsibilities, their role in legitimizing mining occurs at a later stage, when actual diamonds are being produced. It is also at this stage that a miner may be increasingly pressured to apply for an official Class C mining license, if the recovered diamond(s) prove to be of sufficient value to sustain, financially, such an application. However, given that many GDO officers have now started to use their time to ‘encourage’ illicit miners to formalize, it is reasonable to assume that they, too, have developed such mutually beneficial arrangements. One of the most frequently deployed strategies to legitimize informal mining is the so-called ‘clearance fee’, a 50 USD payment made by a prospective miner to the local Mining Agent. Ordinarily, a miner requests a certain claim be registered to him/her, and pays a clearance fee to the local Mining Agent. In return, the mining agent guarantees that the claim in question will not be taken over by a third party, while the prospective miner is in Monrovia arranging his Class C mining license. While a clearance fee is supposedly only valid for three days, enough time for someone to formally start the application process for

6 Only dealers are allowed to export diamonds. On the other hand, they are not allowed to go into the mining areas themselves to buy diamonds, so they mainly rely on a network of brokers, or have contractual arrangements with selected miners, who have the capacity to undertake regular trips to Monrovia, or are Monrovia-based themselves. Evidently, this rules out most subsistence miners. 7 A supporter can of course be a licensed broker. The wide usage of the term also denotes the lack of clear distinctions between legal and illegal diamond buyers. Furthermore, the broker license is only available to Liberian citizens, thereby excluding foreign buyers from attaining legal status.

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a mining license, in practice, this is often used as a temporary mining permit, on average valid for three months. Many interviewed miners claimed to be operating using this kind of ‘license’, as it presented them with an alternative to paying for the costly licensing process up front. Using one or more successive clearance fees, they could commence mining, only applying for a license whenever they have recovered the necessary funds to pay for their license with the diamonds they had recovered. This is the strategy that is most closely associated with the normal process for obtaining a mining license but there are other alternatives that are remarkably less so. For example, underscoring how closely local legitimacy is aligned with perceptions of formal legality, several interviewed miners insisted on showing us their mining licenses: these varied from vintage documents dating back to the 1980s in one particularly egregious example, to documents clearly produced by the local Mining Agent, instead of the small credit-card sized photo ID issued by the MLME as proof of a valid Class C license. We argue that a significant proportion of unlicensed artisanal miners in Liberia, have at some point entered into an informal agreement of this kind with local mining officials, giving them at least tacit approval to commence or continue mining. Such practices not only provide an alternative to paying for a license upfront but also shield miners from incurring great losses if a claim turns out to be uneconomical. While these dealings can without question be described as corrupt practices, recent anthropological research on corruption has resulted in a more nuanced view of such informal arrangements, whereby corruption can also be seen as a way of coping amidst administrative confusion and the dysfunction of public services. Rather than viewing corruption as something inherently negative, Blundo and Olivier de Sardan, in their ethnography of ‘everyday corruption’ note that the analysis of what is termed ‘corruption’ serves to uncover the ‘real’ rules and procedures that govern everyday public life. In their view, corruption is ‘‘a social activity which is regulated de facto and in accordance with complex rules, and tightly controlled by a series of tacit codes and practical norms’’, with the latter differing ‘‘significantly from public codes and official or legal norms’’ [4, p. 5]. Likewise, Roitman [54], in her study of economic regulation in the Chad basin, rather than accepting standard divisions of society between formal and informal, and legal and illegal, stresses how interconnected the legal and illegal economies really are. Going further, she argues that through the connections between political figures and military leaders on the one hand, and smugglers on the other hand, the state is quite intricately entangled with the shadow side of the economy: ‘‘the state is at the very heart of the proliferation of unregulated economic exchanges as well as the pluralization of regulatory activity’’ [54, p. 204]. It is important to note that, just as miners continue to mine informally out of necessity, because the current legal framework is inhibiting their formalization, so are mining officials scattered across the country hampered by the woeful lack of resources at their disposal, strongly interfering with their ability to conduct their professional duties. Indeed, the willingness of local mining officials to engage in negotiations with illicit miners cannot be wholly equated with egoistic financial motives, or explained using the ‘‘laconic shortcut’’ [5, p. 62] of viewing poor salaries as the main cause of corruption, but should be interpreted within its social environment. Even though mining officials receive very little logistical support from the MLME, many Mining Agents possess some form of transportation,8 a generator and sometimes even a laptop and printer: things that are impossible to obtain without bankrupting themselves on their official salaries. While some officials we interviewed were more circumspect about this, claiming to be supported by affluent relatives, or that patriotism prompted them to invest considerable sums of their own savings into their job, most interviewees freely acknowledged that, in order to have some of the resources necessary to do their job, they had to rely on the people they were expected to monitor. And so we saw miners in a mining settlement collect tin roofing to refurbish the house where a newly appointed Mining Agent would be residing, or allow the latter to use their motorcycles while on patrol. Obviously, this naturally forces mining officials to make certain pragmatic concessions in the application of the law. Similarly, when miners act upon rumors heard of new mining activities in the bush, when they do decide to investigate, they are inevitably at several hours walking from the nearest village and place to spend the night, and are often forced to accept the hospitality of the miners they came to intercept. On the other hand, money ‘made’ through ‘corrupt’ practices can also be put to use toward facilitating official duties. Just as Beninese policemen use this supplemental income to buy extra uniforms or mend existing ones, or use their personal phones or motorcycles in support of their official duties [52], so are Liberian mining officials re-channeling such funds to make up for their lack of logistical support. While an argument can certainly be made in favor of what one could call a ‘locally grounded formalization process’, whereby the formalization takes place solely at the local level, this practice remains at odds with the current legal framework. Bako Arifari’s claim that one of the facilitating factors of corruption is the ‘‘systematic rejection of legality or the overexploitation of the weaknesses of the legal system by various actors’’ [1, pp. 210–211], can easily be translated into a Liberian context, whereby the formal mining legislation is being subverted by miner and official alike, because said legislation is incompatible with reality. Or, as Hinton has argued, ‘‘informality begets informality’’ given the ‘‘piecemeal, ad hoc manner with an imbalanced emphasis on punitive measures’’ in which the ASM sector is being targeted [24, p. 43].

8

Unlike the Mining Agents, the GDO officers generally use a government-supplied motorcycle.

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5. Future perspectives The Liberian Government is required, through its participation in the KPCS, to credibly monitor and govern all diamond mining and trading activities in its territory. This requirement is enshrined in the Liberian Minerals and Mining Act. Unfortunately, it is beyond the capacity of the government to adequately implement this legislation, as has been repeatedly warned by the KPCS and the UN Sanctions Committee on Liberia. Given the continued popularity of artisanal mining as a key rural livelihood among its neighbors and peers, who are generally more affluent, the current mining regime will certainly persist unabated in the next decade. What does this mean for the Liberian economy, and how should policy-makers act on this information? As diamonds have a high value to weight ratio and are therefore considered a highly ‘lootable’ [28] commodity that are easily smuggled across national borders, there is a limit to what artisanal diamond-producing countries can demand in terms of taxation. In the wider Mano River Union region, a paltry 3% export royalty on rough diamonds is common, although the Sierra Leonean Government increased this royalty rate for industrially mined diamonds, as well as stones of exceptional quality. This policy has probably resulted in some Sierra Leonean diamonds entering the Liberian diamond value chain [48]. Without risking increased smuggling and a loss of revenue, increasing this royalty rate for alluvial diamonds is not an option that is open to policy-makers. Because of specific geological (secondary deposits), political (porous borders, weak governments) and economic (widespread poverty making ASM an attractive livelihood) circumstances, the traditional position of the legislator to induce compliance with the law by top-down regulation and enforcement is simply not a viable option, the realization of which is only slowly beginning to gain currency in policymaking circles. In such cases, the aim of the legislation should be to encourage compliance, making it an attractive option to ‘opt-in’, when the government is in no position to force anyone to do so [8]. Liberia’s earlier experiences show this clearly: although it started out very positively, the initial formalization campaign after the end of the second civil war, in preparation for Liberia’s accession to the Kimberley Process, stalled after it became obvious that the government not only lacked the capacity to coerce miners into compliance and sanction those who continued to mine illegally, but also did not have the resources to make good on its promise to increase welfare in diamond mining communities, as it clearly lacked the funds to do so [50]. It is clear that the current system of attempted formalization has reached its limits: those with the capacity and willingness to do so have become licensed miners, while others have been negotiating their right to mine informally. Indeed, despite the rhetoric of illegal miners stealing the country’s resources, the overwhelming majority of operations occur with local government officials’ tacit acknowledgment. While this poses significant problems for Liberia’s credibility as a participant in the Kimberley Process, which, in turn, undermines the KPCS itself, this ‘really existing’ formalization, whereby local mining officials, although forced to negotiate their authority, play a gatekeeping role, should be treated as a starting point to further legalize informal mining activities. Given Liberia’s international obligations, it is unlikely that discourses stressing the need for formalization will be abandoned, even though many critics have questioned the underlying assumptions for ASM to become profitable, efficient, and legally formalized [2,14,33]. Recognizing that existing informal institutions are internally functional leads to the suggestion to work with these existing structures as much as possible. ‘Regulating reality’ [13] in this sense, should begin by removing penalties for the informal sector while simultaneously incentivizing formalization. In a similar vein, Siegel and Veiga [42] have referred to De Soto’s theories on the extralegal economy to emphasis how a successful formalization of ASM should be about finding the means to absorb existing informal practices into a country’s official legal framework. Incidentally, this is precisely how the various informal governance systems developed by groups of artisanal gold miners in the American West were eventually integrated into a coherent legal framework by the US federal government [42, p. 53]. Nevertheless, it can be questioned whether this need for legal property rights is indeed so pressing: Gilbert’s critique of De Soto stresses the importance of perceived tenure security, gained through informal sources, rather than legal titling [16]. Lowering the cost of annual mining licenses is probably the easiest and most cost-effective measure to increase the degree of formalization in the artisanal mining sector [30]. Even though this is not an easy message to put to cash-strapped governments, we argue that artisanal mining should not be regarded as a potential source of direct government revenue (except for export royalties) but rather as an opportunity for rural poverty reduction. Mining policy should be reoriented toward encouraging the formalization of ASM, rather than blindly trying (and failing) to enforce it, especially with limited means. In the Central African Republic, since lowering the price of a mining license in 2010, the number of licensed miners has nearly doubled, and although the price of the license is now 36% cheaper, due to the increased number of applications, the Treasury reported 25% more revenue in 2012 than 2010 [36]. It is crucial, as part of the ongoing reforms to the 2000 MMA, that future legislation be better adapted to the realities of mining in Liberia. While the attraction of Foreign Direct Investment through large-scale mining investments is an understandable priority of the Liberian Government, it is important that the major contribution of ASM is duly reflected in a new mining code. Furthermore, additional attention needs to be given to the role and activities of brokers and informal middlemen. While official discourse remains focused on the enforcement of the law with regard to illicit miners, recognizing the crucial role of brokers and informal supporters in providing operational capital and equipment to miners, and putting more effort in monitoring their activities, will likely have a greater impact on encouraging formalization and curbing smuggling than targeting individual illicit miners. UN experts have drawn attention to the practice among licensed gold dealers (exporters) in Liberia to declare only a small proportion of the gold they are exporting, in order to avoid large royalty payments. Reporting to the UN Security Council’s Liberia Sanctions Committee, the experts allege that this is a way in which

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the Liberian Government is being systematically defrauded [48]. It is highly likely that similar tactics are being used by diamond buyers: a controversial negative assessment of the MLME by the Liberian General Auditing Commission in 2010 showed a concerning lack of institutional knowledge and capacity to monitor the activities of brokers and dealers in particular [12]. While diamond mining and trading is an important sector of the ‘real’ Liberian economy, it does not result in significant financial income for the Liberian Treasury. However, despite the sector’s modest contribution to the Liberian state, given the country’s violent recent past and the widely publicized role of ‘blood diamonds’, membership of the Kimberley Process has been strategically important. The Liberian Government has showcased its KPCS membership, together with its inclusion as one of the first EITI-compliant countries (even though most parts of the resources sector were not included in the initial EITI assessments leading to the compliance, given the lack of advanced industrial operations) in order to demonstrate to the outside world, and the international business community in particular, that Liberia is ‘‘open for business’’. While the KPCS has allowed the Liberian Government to spread a positive message as a country emerging from civil war, and notwithstanding the conflict preventive role associated with the KP’s control over the world trade in rough diamonds, the KP has not delivered more tangible benefits. In other countries with sizeable deposits of alluvial diamonds and a local informal economy geared toward exploiting this resource, such as the Democratic Republic of the Congo, participating in the KPCS has typically led to a significant rise in the amount of carats exported annually (i.e. a drop in smuggled diamonds), leading to increased government revenues. In Liberia, however, the geological reality is not as kind. As one of the smallest diamondproducing countries in the world, Liberia’s membership in the KPCS annually costs the government in excess of 400,000 USD, the annual operating budget of the GDO9 [48, p. 16]. Since the removal of the UN export ban in 2007, annual revenues from diamond export royalties have consistently been below this amount. Clearly, the fact that the Liberian Government is consistently spending more money on controlling the diamond sector than it receives in revenue from it is problematic. The fact that its failure to adequately control illicit artisanal production is often publicly criticized, by virtue of the continued existence of a UN Sanctions Committee that monitors such things, even though the situation in other countries is similar, has caused understandable resentment in the past. The Liberian Government seems willing to shoulder this burden – at least for now. However, it is unclear what the future will bring. The role of spoilers should also be taken into account. Interviews with various stakeholders in Liberia’s diamond industry suggest that the current status quo, whereby a large part of diamond mining occurs informally, but with the paid acquiescence of local government officials, is also benefiting senior government officials in Monrovia, who are regularly receiving ‘their share’ of the money paid for such informally agreed mining ‘permissions’. Likewise, the distinction between Class C and Class B licenses continues to be blurred by several mining operators, visible transgressions that often remain unpunished. Furthermore, past MLME leadership has been implicated by the UN Panel of Experts in two cases of suspicious behavior by Class A diamond mining during the period of transition, when exports of Liberian diamonds were still banned by the UN. The fact that the Liberian Government undertook no visible disciplinary action can be seen as an indication of the continuing influence of personal connections, and the embeddedness of the private usage of public office powers in Liberian political culture. The lack of credible oversight of a crucial class of (often politically well-connected) actors, namely the brokers and dealers, further underscores this. As a result of the current political acquis in Liberia, the presidency has aimed at co-opting rather than dismantling these networks, given that a rigorous execution of a ‘zero tolerance’ policy against corruption could have destabilizing effects on the government, and the loyalty and trust of the officials needed to govern. Given the absence of credible, functional bureaucratic institutions, personal political networks have continued to play a crucial role in the exercise of presidential power [15, pp. 214–222, 243–246]. Indeed, in the past three years, several ministers and deputy ministers (not only of the MLME) have been either fired or not re-nominated but the administration rarely elucidates the reasons behind such dismissals, despite press reports detailing many such exits as anything but respectable [26]. A telling example of the lack of interest in serious reforms is the fate of a promising USAID development project, one of the few development projects worldwide that was completely focused on artisanal diamond mining. Having been rather successful in the Central African Republic, a pilot project was launched in Liberia but prematurely canceled in 2012, ‘‘in turn due to budget cuts combined with poor responsiveness on the part of the Ministry of Lands, Mines and Energy in Liberia’’ [37]. It is unclear to what extent this withdrawal is due to the fact that artisanal diamond mining policy is not a particularly pressing concern to the Ministry, given its lack of economic relevance, and to individual spoilers’ interests in keeping the status quo. With the latter explanation related to the former, in the current Liberian political climate, it is not inconceivable that a presidential push for credible reforms would require the spending of political capital that can be put to more productive uses elsewhere. Nevertheless, the future of artisanal mining in Liberia will not be determined by the lack of reform-minded government officials, but by the ways in which miners, diggers, brokers, dealers and local government officials find ways to continue mining and trading. Recognizing the interests and motivations of miners, while also keeping in mind the crucial role of buyers and various middlemen, all the while being aware of the geographical realities which present serious challenges to traditional notions of inducing compliance with the law, will be the major challenges for the Liberian state. Revising the legal

9 This does not include costs associated with several MLME employees who, by virtue of their job descriptions, deal almost exclusively with artisanal diamond mining.

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framework so that it is more properly aligned to miners’ interests should be the first step taken by the Liberian Government; recognizing the artisanal mining sector as an important rural livelihood in development planning is a long-awaited second step. Unless these preliminary steps are taken, most Liberian diamond – and, for that matter, gold – production will continue to take place outside of the legal framework. Because of the KP, most of the diamond production will still be gradually ‘formalized’ up the value chain, through to official export. For gold production, however, which can easily outclass diamond exports in terms of fiscal revenue in the near future, no such mechanism exist. Large quantities of Liberian gold will, therefore, continue to find their way abroad, with or without taxes paid. Acknowledgements The author wishes to thank the editor of this special issue, and two anonymous reviewers for their helpful comments. References [1] N. 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