Economic Relations Between the Western Balkan Six Countries

48Regional cooperation between the western Balkan countries is the key factor that will lead those countries towards the EU perspective. Improving relations of the Western Balkan countries is a goal that should be fulfilled. The improvement of these relations is a commitment made by the countries themselves at the EU-Western Balkans Summit of Zagreb (2000) and Thessaloniki (2003). Regional cooperation is the way towards regional economic prosperity, social and economic stability.

It is very obvious nowadays that the responsibilities and benefits of the western Balkan countries are tied to the development and bilateral cooperation. Cooperation is an issue applied in different fields, the ones of cross-border nature, to political understanding, addressing to a social and socio-economic prosperity.

Regional cooperation is an important strategic approach of building positive relations. The Western Balkan countries should be opened to collaborate towards a sustainable economy, regional collaboration and partnership as factors of vital strategic importance of building positive relations among them.

I will do the analysis of the impact of such collaboration in in the economic cooperation, achieving economic stability and identifying the respective competitive advantages, strengthening regional market integration and mutual elimination of non-tariff trade barriers. In specific, in this paper I will focus on bilateral economic relations between Albania and Serbia in the frame of integration process.


“We note increasingly stronger support among the countries of the region for the development of regional ties. It is very encouraging that the areas of trade, energy and transport are among those where regional cooperation is the most substantial. Economic development is crucial if the region is to produce the jobs needed for its people. Further efforts are needed to increase trust and cooperation between peoples and countries. In the area of justice and home affairs, the countries need to enhance regional cooperation to achieve results.

Extended regional cooperation in south-eastern Europe is essential, regardless of the different stage of integration of the various countries, and an important criterion for the European course of the western Balkan countries. The stability, prosperity and security of the region are of significant interest to the EU. The EU will continue to foster all endeavours to promote regional cooperation.”

Perhaps the most tangible achievement of all lies in the fact that most of the Western Balkan countries are on a path towards European Union accession, something that seemed far off in the 1990s. It is incumbent upon us not to understate the serious challenges that lie ahead, both in terms of macroeconomic stability and even more so with regard to longer-term development. A key contribution of this book is to underscore the incomplete reform process in the region. We should be worried about this, as without further reforms the lackluster growth of recent years could become the norm, imperiling the convergence of living standards towards Advanced European levels, and denying employment opportunities to many in the region.


According to David Lipton, IMF first deputy managing Director, he transition from socialism to capitalism and democracy was less smooth than in other parts of Emerging Europe. But once the war ended and peace returned, these countries did more than rebuild: they began a transformation into market economies, liberalizing prices, privatizing many state- and socially-owned enterprises, and building the institutions needed to support a market economy.

On his report analyses the main economic developments and achievements in the Western Balkan countries, and lays out the key macroeconomic policy challenges for the future. While the collapse of communism 25 years ago marked the start of the transition to market economies for all Emerging Europe, the economic transformation of the Western Balkans really got going only after the conflicts that engulfed the region in the 1990s subsided. Hence, the past 15 years are the main focus of this report. The report is structured as follows. The overview chapter surveys the key findings and policy recommendations. Individual analytical chapters then focus in depth on the following key thematic issues: growth and structural reforms, macroeconomic developments and policies and the role of the IMF in the economic transformation, and the financial sector. Each analytical chapter concludes by outlining the key challenges that the Western Balkans face and suggests possible policy responses. Given that the Western Balkan countries are following the path previously taken by New Member States to become members of the European Union, the analysis relies heavily on comparisons between these two subregions. In compressing the experience of more than 17 countries over 15 very eventful years, the report inevitably focuses on broad themes, and cannot do justice to the nuance and diversity of individual country narratives. While the report highlights the role of the IMF during the economic transition, the Fund is only one of a number of agencies that have supported these countries over the past 25 years. In particular, the IMF may have taken a lead role in the early phases of transition, but for some Western Balkan countries the prospect of accession to the European Union has also been an important catalyst for reform. Other key players include the European Bank for Reconstruction and Development, European Central Bank, European Investment Bank, and World Bank, as well as bilateral country donors and private and voluntary sector institutions. But whether external assistance comes from the IMF or others, its impact pales in significance to the importance of domestically-driven reform and development, which is the principal subject of the report. The report was prepared by a team from IMF headquarters in Washington DC, IMF offices in the region, and the IMF’s Joint Vienna Institute (JVI). The views presented are those of the authors.


Regional cooperation is a principle of the highest importance for the political stability, the security and economic development of the western Balkan countries: Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, and Serbia and Montenegro (including Kosovo, under the auspices of the United Nations, pursuant to UN Security Council Resolution 1244 of 10 June 1999). Many of the challenges facing the western Balkan countries are not only common to them but also have a cross-border dimension, which involves their regional neighbours.

Since the enlargement of 1 May 2004, the EU and the western Balkans have become even closer neighbours, and so the situation in the western Balkan countries, their progress on the road to European integration and their present and future relations with the EU really are of immediate concern to the EU itself. When Bulgaria and Romania become EU members, the entire western Balkan region will be surrounded by Member States of the European Union. This will have important repercussions for both the countries of the region and the EU in a number of areas, in particular where the free circulation of goods, services and persons are concerned. These challenges have to be addressed in the broader context of south-eastern Europe.

The different set of reasons – political, economic and security – for which regional cooperation in the western Balkans is crucial, are closely interlinked: for instance, regional stability and security are needed for economic development, which in turn favours stability and security in the region.

Since the Stability Pact was founded, the heads of state and government of the south-eastern European countries have met regularly for consultation. At the Bucharest Summit in February 2000, they adopted a ‘Charter on Good Neighbourliness, Stability, Security and Co-operation in South-eastern Europe.’ A range of co-operative relationships has replaced bilateralism. Most Stability Pact projects and activities were proposed and are carried out by two or more countries of the region.

Previously every country of south-eastern Europe had a big brother outside, and most of the countries of Europe had a preferred partner in the Balkans. That was the reason for many conflicts, sometimes even proxy-wars, or a reason why conflicts in the Balkans became wars in Europe. The Stability Pact is the political answer to this outdated political approach from the nineteenth century. The Pact has created an upward spiral of mutual trust and practical steps. But both sides are still mistrustful, watching to see that the other side delivers, gives indications of confidence-building and that the conditions are fair. Seems that the region is about to choose a positive and successful path: day by day, the Pact is building the new, wider Europe.

Why did the Western Balkans converge more slowly? One possible explanation is that the closer physical distance of the New Member States to advanced EU economies may have offered advantages in terms of access to markets and investments, and facilitated the transfer of knowledge. These relative advantages are only recently partially offset by improvements in infrastructure links between the Western Balkans and Advanced EU economies. Yet even after controlling for the physical distance, econometric evidence suggests that, except for the postwar recovery period, the pace of convergence in the Western Balkans has been slower than in the New Member States. This is partly due to the absence of convergence within the Western Balkan region, because poorer countries such as Albania and Bosnia and Herzegovina failed to grow significantly faster than the richer countries, such as Croatia. What other factors may have constrained faster convergence? There is a growing literature on the impact of structural factors on convergence, though mostly on larger panels of countries. Findings suggest that domestic financial development speeds up convergence and that human capital is more important to growth for countries that are less developed. Better institutional infrastructure and selected labor market reforms have been shown to facilitate convergence at the regional level (Che and Spilimbergo 2012). Reform priorities for sustaining convergence have been found to vary with income levels. Empirical evidence suggests that in lower-middle-income countries, priorities should be reforming banking and agricultural sectors, reducing barriers to FDI, increasing competition in product markets for a more vibrant services sector, improving the quality of secondary and tertiary education, and alleviating infrastructure bottlenecks. In upper-middle income countries, boosting productivity growth would require deepening capital markets, developing more competitive and flexible product and labor markets, fostering a more skilled labor force, and investing in research and development and new technologies (Dabla-Norris and others 2013). Finally, a survey of various studies that focus specifically on the transition process concludes that institutional quality and market liberalization policies to promote private sector growth have a positive impact on economic growth, despite their initially disruptive effect. In line with these findings, the analysis here shows that improving the quality of governance, and developing market-oriented institutions, a strong human capital base, and deeper financial systems help poorer countries catch up. In contrast, the dominance of the public sector in the economy hinders the catching-up process. And the Western Balkans have lagged behind the New Member States in these areas. In light of the critical importance of economic transformation, the next section explores progress to date.

The implementation of the economic collaboration is the way towards progress, standing for a multilateral agreement successfully applied in those countries. This framework should be assisted and monitored. This monitoration should include evaluation of the economic outcomes as far as provide a full vision of the potential benefits and on reducing the trade costs and increasing trade.


Reforms are considered potential drivers to regional market development and integration.

1. Institutional Reforms.

The protection of property rights is a common problem in most of the Western Balkan countries, particularly relative to the EU average, though to a lesser extent in FYR Macedonia. Indicators related to corruption and government inefficiency also point to reform gaps in most countries. Compared to NMS, inefficient government spending appears to be an important constraint in Serbia, Albania, Croatia, and Bosnia and Herzegovina. In Serbia, and to a lesser extent in Croatia, Bosnia and Herzegovina, Albania, and Montenegro, reform needs are large in areas linked to corporate sector performance. Specifically, this includes the strength of reporting standards, efficacy of corporate boards, and protection of minority shareholders. Encouragingly, Albania, Bosnia and Herzegovina, FYR Macedonia, and Montenegro score relatively well in terms of burden of government regulation, even compared to the EU average. For Croatia and Serbia, however, the gaps in this area remain large.

2. Infrastructure.

The analysis of specific reform gaps within the broader infrastructure pillar suggests that the Western Balkan countries have had a mixed performance when assessed vis-à-vis their peers. In terms of overall quality of infrastructure, Croatia ranks better than its New Member State peers, while the largest overall quality gaps exist in Bosnia and Herzegovina and Serbia. All Western Balkan countries, except Croatia, lag behind the EU by a wide margin. The gap analysis points to important reform potential in railroad infrastructure in Albania, FYR Macedonia, and Serbia. Compared to the average EU country, road and air transport infrastructure gaps are large in all countries, though to a lesser extent in Croatia.

3. Goods Markets Efficiency.

The results of the analysis suggest that the Western Balkan countries impose a relatively low tax burden on businesses. Total tax rates are well below those of NMS and EU average in FYR Macedonia, Montenegro, and Bosnia and Herzegovina. Similarly, all countries but Bosnia and Herzegovina perform well or are broadly at par in terms of procedures and time to start a business. Gaps in competition policy, measured by the intensity of local competition and the effectiveness of anti-monopoly policy, point to potential reform needs in this area.

Gaps in trade barriers, tariffs, and impediments to foreign ownership and foreign direct investment (FDI) are relatively moderate in most Western Balkan countries, but almost always negative. Rules on FDI and foreign ownership seem to be stricter in Croatia and Serbia. Agricultural policy cost seems to be a significant burden for the economy in Croatia and Serbia, and to a lesser extent in Albania.

Labor Market Efficiency Performance of regional labor markets, when benchmarked against New Member State peers, is relatively mixed, as measured by indicators on the flexibility of setting wages, flexibility of hiring and firing, and redundancy costs. All of the Western Balkans lag behind their peers in at least one of these three areas. Croatia has relatively more inflexible hiring and firing rules, and stronger tax disincentives to work but relatively more flexible wage setting. The labor tax wedge is also relatively large in Serbia. In contrast, Albania and Bosnia and Herzegovina score lower in terms of flexibility of wage setting. Most of the Western Balkan countries (except Albania and Montenegro) compare less favorably to the New Member States in terms of retaining and attracting talent, contributing to skilled labor shortages. In these areas, as well as in professional management and cooperation on labor-employer relations, gaps tend to be larger vis-à-vis the EU. In other areas, differences with respect to the EU are less important, reflecting significant labor market rigidity in both sets of countries.

The economic development is certainly tied to the political stability which make the direct approach to the regional cooperation. This kind of approach builds strong relations between the western balkan countries. The non-tariff trade is a way of having a sustainable future not only for the country itself, but even for the region. Accompanying that to the other key factor of political stability, sees to be the right way of non forced, natural cooperation towards the bright economic future of these countries.


The event on February 24th – the first all-inclusive Western Balkans summit at the EBRD – will provide an ideal opportunity for business leaders and international companies to learn more about the countries and the Bank’s role in them.

“The idea is to present this region as a whole as an investment destination,” said the EBRD’s Senior Political Counsellor Oleg Levitin. “We hope that this conference, besides facilitating much needed foreign investment, will send a very strong political message about the maturity and stability of the region.”Regional integration through road corridors, gas pipelines, expansion in the manufacturing sector and other projects will be at the top of the agenda.”We believe that regional integration needs to be made a priority,” said Claudio Viezzoli, the EBRD’s Director, Western Balkans.

The EBRD sees supporting and promoting the Western Balkans as particularly important to foster the region’s development by strengthening its potential. The countries benefit from the IFI Joint Action which includes more than €30 billion of joint commitments for the period 2013-2014 in Central and South Eastern Europe as a whole.In the Western Balkans and Croatia alone the EBRD invested in more than 80 projects totaling more than €1.2 billion in 2013. This was a new record. Over the years, the total of EBRD investments in the region has reached €10.5 billion.

The Bank is active in all sectors of the economy but has a targeted approach in each country, based on the individual country’s needs and priorities as defined in the respective country strategies. A major goal of the EBRD’s increased engagement in the region in recent years has been to support the countries in their response to and overcoming the financial crisis which had hit the region hard.

After a protracted period of contraction, in 2013 the countries again registered growth of 2 per cent on average and prospects for growth in 2014 are similar. Particularly interesting for investors are the significant catch-up potential and the efficiencies of increased cross-border economic activity.

The attractiveness of the region for foreign investment has increased thanks to improved political stability and progress in the Euro-Atlantic integration in recent years. Croatia became a member of the European Union in 2013, and Montenegro and Serbia are in the process of membership negotiations. Other countries are continuing on the course of EU approximation. At the same time intensified regional cooperation has significantly brightened economic prospects and the region’s stability.

The EBRD sees itself as a supporter of these processes, a promoter of the interests of the Western Balkans and a door-opener for international and regional investors contemplating an engagement in the region.The countries have a lot to offer: from fertile soil to a strong industrial tradition, from vibrant entrepreneurship to a proud history of innovation, from rich natural resources to a skilled and educated labour force and to stunningly beautiful landscapes – the Western Balkans have it all. The Western Balkans investment forum offers a unique opportunity to learn more about the countries and the region and to get in touch with key decision-makers and business representatives.

Having a stability in politics and regional cooperation make the Western Balkan countries interesting to generate new employments as a result of positive impact in the economy. The gain in this case will be more collective than individual. Negotiations should be strengthened. There are lakes and rivers shared by these countries, therefore specific regional cooperation is needed.


Free trade

Regional trade liberalisation is progressing. A network of bilateral free-trade agreements among the countries of the region, including Romania, Bulgaria and Moldova, has been established, thus creating a free-trade area of 55 million consumers. This sends an important signal to the investor community, which will find a market of high absorption potential for industrial and consumer goods. To reap the full benefits of trade liberalisation in the region, the free-trade agreements need to be fully and efficiently implemented. The countries of the region committed themselves to complete the network of free trade agreements. Regional trade across south-eastern Europe is fully in keeping with the EU perspectives of the different countries in the region, independently of where they stand on their way to membership. Trade liberalisation and facilitation is one of the pillars of the stabilisation and association process (SAP): a main instrument of the SAP is the autonomous trade measures that the western Balkan countries enjoy – free access, without quantitative limit, to the EU market for practically all products.

Energy and transport infrastructure

Significant progress is being made on forming a regional energy market and rebuilding infrastructure. The projected south-eastern Europe regional energy market, which should provide modern and liberalised gas and electricity systems, will be key to a regional energy market based on European standards, transparent rules and mutual trust, and it will set the right environment for the optimal development of the energy sector. The agreement governing energy trade will substantially contribute to attracting investment into this strategic sector. Where transport infrastructure is concerned, an integrated regional transport strategy, consistent with the trans-European networks and taking into account the pan-European corridors, is a high priority. The EU also supports projects of regional significance and regional initiatives in the areas of environmental protection, science and technology, information and communication technology, and statistics.

Fight against organised crime and corruption

Organised crime and corruption are threats to security and democratic stability, and obstacles to the rule of law and economic development in the region. Combating organised crime and corruption is a key priority for the governments of the region. Particular focus is being placed upon fighting all forms of trafficking, particularly of human beings, drugs and arms, as well as smuggling of goods. Strengthening the regional operational cooperation for police and prosecution is considered a key priority for the countries of the region.

EU assistance

To promote regional cooperation in priority areas, the EU is providing political support, practical/technical guidance and financial assistance through the CARDS programme (Community assistance for reconstruction, development and stabilisation), which is one of the main instruments of the stabilisation and association process.

Priority areas where regional CARDS assistance will be focused for 2005-06 are listed below.
• Institution building: this priority focuses primarily on strengthening the administrative capacity of the countries, and support to public administration reform, through instruments implemented regionally.
• Justice and home affairs: actions in this field have a special focus on the fight against organised crime and corruption, and include enhanced police regional cooperation and judicial regional cooperation.
• Cross-border cooperation: by promoting economic and social cooperation of border regions, including support to networking activities and the involvement of civil society. The EU supports the development of cross-border cooperation between the western Balkan countries, as well as between these countries and EU members, acceding and candidate countries.
• Private-sector development, by facilitating foreign direct investments in the region.
• Infrastructure development, through initiatives in the sectors of transport, energy, environment and information society.

Considering that in the Balkan countries exist multi-ethnic societies, should be a positive thing in terms of trade, because minority groups should be seen as an added value for the implementation of the non-tariff trade. The elimination of the barriers is an important factor that is representing the approach of positive relations between those countries.

Cross-border finance is the future of Western Balkan countries. Although traditional trade barriers such as tariffs have come down, and innovations in transportation and communications technology have shrunk the distance between nations, trade costs remain high, particularly in developing countries. High trade costs isolate developing countries from world markets, limiting their trade opportunities and impeding growth. High trade costs also appear to disproportionately affect small and medium-sized enterprises (SMEs), time sensitive products and goods produced in global value chains. Trade procedures that are more cumbersome than necessary and delay the movement, release and clearance of goods constitute a significant part of these trade costs. Trade facilitation is intended to relieve these bottlenecks at the border. The WTO’s Trade Facilitation Agreement (TFA) represents an important milestone by creating a multilateral framework for reducing trade costs. While changes in trade procedures can be implemented unilaterally, a multilateral agreement on trade facilitation brings added value. It provides greater legal certainty to the changes in measures. It helps reforming governments to marshal support from domestic constituents. Finally, it helps with the adoption of similar or compatible approaches to trade procedures and coordinates the provision of donor support for capacity-constrained developing countries.

Cooperation in the region represents a key element for the development of the Western Balkan in general, and a powerful collaboration towards an integrated market. Stability Pact has played an important role in the cooperation between the countries of Western Balkans. It is obvious that it many initiatives in order to promote democratic stabilization and economic development in the Western Balkan countries.

A Never Solved African Drama

47Easily concealed, immensely valuable and largely untraceable, stones from rebel-held mines have raised billions of dollars on world markets to finance insurgencies in several african countries against the legitimate governments. The United Nations defines conflict diamonds as ‘diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally recognized governments, and are used to fund military action in opposition to those governments, or in contravention of the decisions of the Security Council’. These diamonds are also referred to as ‘blood diamonds’.

For years these illegal market has allowed rebel leaders to arm and equip their armies in violation of UN weapons and financial sanctions. Rebel armies in Angola, Sierra Leone and the Democratic Republic of the Congo exploited the alluvial diamond fields of these countries in order to finance wars of insurgency. Alluvial diamonds, unlike those mined in the deep kimberlite ‘pipes’ of Botswana, Russia and Canada, are found over vast areas of territory, often only a few inches or feet below the surface of the earth. Alluvial diamonds have proven difficult to manage and to regulate. Because of their high weight-to-value ratio, the ease with which they can be mined, and endemic corruption in the global diamond market, alluvial diamonds became a ready target for rebel armies.

The trade in conflict diamonds began in the early 1990s with Jonas Savimbi’s National Union for the Total Independence of Angola, but was quickly copied by the Revolutionary United Front in Sierra Leone, with assistance from Liberia’s warlord president, Charles Taylor, who is now being tried in The Hague for war crimes and has recently showed up in western newspaper for having allegedly gifted top-model Naomi Campbell with a few illicit stones.

Even if the diamonds industries used to inscribe the commerce of conflict diamonds in an optimistic 4% figure, NGOs involved in the fight against this trade like Partnership Africa Canada stated that as much as 15% of the world’s $10 billion annual rough diamond production fell into the category of conflict diamonds in the late 1990s.

A most important trade sector for South Africa

Today diamonds are mined in about 25 countries but roughly 49% of diamonds originate from central and southern Africa, while significant sources of the mineral have been discovered in Canada, India, Russia, Brazil and Australia. South Africa is the fourth diamond producer country in the world by value.

The story of diamonds in South Africa begins in 1866, when 15-year-old Erasmus Jacobs found a transparent stone on his father’s farm, on the south bank of the Orange River and Kimberley, the present capital of Northern Cape, became ground-zero for the South African diamond industry.

The largest company to operate a diamond mine in South Africa during the diamond rush was the De Beers Company, founded by Cecil Rhodes. The De Beers empire was started on a farm owned by two Boer War settlers, brothers D. A. and J. N. De Beer. Around 1873 the De Beer brothers sold out to a group of mining syndicates who later merged with Cecil Rhodes’ pumping company to form ‘De Beers Consolidated Mines’.

Today De Beers alone mines about half the world’s annual diamond output. It also controls as much as 80% of global diamond sales through its Central Selling Organization, which purchases and stockpiles diamonds from other suppliers to keep availability low and prices high. De Beers was known to be a major purchaser of conflict diamonds from Angola, Sierra Leone and other African conflict zones.

Through the years, Kimberly lost its relevance in the production of diamonds, but is still the De Beers’ headquarter and the start point of the movement which involved the major diamond companies and was aimed to put an end to the trade of conflict diamonds.

The Kimberley Process Certification Scheme

Since 1998, UN’s Security Council has mounted a determined campaign to halt the trade in conflict diamonds, launching investigations into the illicit trade in uncut diamonds, naming individuals and countries suspected of trafficking in the stones and pressuring the secretive diamond industry to adopt measures to keep the gems out of the international marketplace.

Against a widening debate about the humanitarian and economic impact of comprehensive trade sanctions on civilians and neighbouring states, the Council’s diamond campaign was part of an ongoing UN effort to make sanctions more selective, better targeted and more rigorously enforced instruments for the maintenance of international peace and security.

It is extremely difficult to distinguish one uncut diamond from another, making it easy to mix illicit diamonds with legal stones. Moreover, the principal world market for uncut diamonds, Antwerp, is legendary for the laxity of its regulations on the handling of the stones. According to a study on diamonds and conflict in Sierra Leone by Partnership Africa Canada, Antwerp dealers routinely settle multi-million dollar transactions in cash and rarely offer receipts.

Since the South African leading cartel De Beers had successfully resisted boycott pressures from anti-apartheid activists in the 1970s and 1980s, there seemed little reason to believe that the UN would be more successful.

In contrast to previous efforts, however, there was growing consumer awareness of the link between diamonds and African conflicts in the US and Europe, where the overwhelming majority of diamond jewellery is sold. NGOs, including Partnership Africa Canada and Global Witness, had begun to campaign against blood diamonds in industrialized countries. Graphic press reports tying diamonds to the brutal insurgency in Sierra Leone began to appear in fashion magazines, threatening the industry’s expensively nurtured image in its core consumer base.

The industry wanted to avoid backlashes such as those against the fur industry in the 1990s and was more receptive, therefore, to Security Council calls for a global tracking system for uncut diamonds that would identify the origins of the stones, confirm their legal export from the country of origin and establish a paper trail of ownership. Addressing industry leaders at the World Diamond Congress in Antwerp on 18 July 2000, UN Ambassador Robert Fowler emphasized that the Council was eager to avoid damaging the legitimate diamond trade but ‘the diamond industry must take the lead, and be seen to be taking the lead, in demonstrating publicly that its products are conflict-free’.

On the following day the two principal industry associations, the World Federation of Diamond Bourses and the International Diamond Manufacturers Association, adopted a joint proposal to establish a global certification programme for uncut diamonds. They declared that ‘the solution to the conflict diamonds problem is a moral imperative above all others’.

In 2002, the UN approved the Kimberley Process Certification Scheme (KPCS) aimed at preventing conflict diamonds from entering the legitimate rough diamond market. Yet major diamond-producing countries remain worried about the impact of the conflict diamond campaign on the legitimate trade.

Former South African Minister of Minerals and Energy Affairs Phumzile Mlambo Ngcuka failed to attend a meeting in London in October 2002 to discuss UK proposals for an international treaty on diamond sales. The reason for her absence, South African UN Ambassador Dumisani Kumalo told the UN commission Africa Recovery in early December the same year, was that ‘the London conference was called to discuss a formal treaty’ on conflict diamonds.

‘If you go the [UN] treaty route you open it up to 189 countries, most of whom have nothing at stake.’ For South Africa, Namibia, Botswana and Angola, he continued, ‘the diamond industry is our lifeline. Many thousands of people are affected. So it is important for us to protect the industry as such’.

How effective the Kimberly regulations has been in keeping conflict diamonds off the fingers of consumers is also a subject of debate. Ambassador Fowler told Africa Recovery that, while no controls can be 100% effective in blocking items as small and as valuable as gems, they would help. The campaign, he asserted, has already hurt the rebels. ‘The traders know we are watching, and those who still buy are demanding a higher risk premium.’

On the other hand, Mr Jakkie Cilliers, head of the South African Institute of Strategic Studies, told the media that the real issue is arms, not diamonds. ‘If the major powers were serious about ending African conflicts they would halt the trade in arms. But the major powers produce arms, so they go after diamonds instead. They have a conflict of interest.’

Failure or success?

After the implementation of the Kimberley Scheme, the trade of conflict diamonds has swollen to less than 1% of the entire market. ‘Through the worldwide implementation of the Kimberley Process Certification Scheme – said in a statement Ambassador J.D. Bindenagel, Former U.S. Special Negotiator for Conflict Diamonds – we have begun to fulfil the international community’s obligation to those who have suffered in Africa’s wars by banning the trade in conflict diamonds. We have eliminated conflict diamond financing in Sierra Leone and are committed to bring the proceeds from the diamond trade to benefit the people of Sierra Leone, Angola and Liberia as well as all other diamond producing countries such as Botswana to help themselves support economic development of their countries.’

Sierra Leone, which exported less than $2 million worth of diamonds legally in 2000, now exports between $100 and $150 million annually, earning the concomitant tax revenues (PAC Annual Review 2009). There have been similar positive changes in other countries.

But the Kimberley Process is a regulatory system and is not designed to deal with some of the fundamental underlying problems of diamonds that are mined artisanally in large parts of Africa and South America. The peer review system is highly dependent upon the regular participation of a few countries. The two NGO KP members, Partnership Africa Canada and Global Witness, bore the disproportionate expense of financing a civil society team member on each review until 2007, when a Civil Society Fund was created to help alleviate this responsibility.Worse, when confronted with overt examples of obvious and serious non-compliance in Brazil, Guyana, Ghana, Venezuela and elsewhere, the Kimberley Process seemed to have become paralysed.

In a speech on the opening day of the November 2006 KP Plenary in Botswana, PAC Research Coordinator, Ian Smillie, expressed his severe judgement. ‘We meet at a moment of great importance for the Kimberley Process, the diamond industry, and the people whose lives depend not just on a prosperous diamond industry, but one that cannot be used to threaten peace (…) we have seen more and more examples of how criminals and diamond dealers and smugglers and even governments have been able to bypass, subvert and ignore the KPCS with almost complete impunity.’

Greg Campbell, an award winning journalist and author of Blood Diamonds: Tracing the Deadly Path of the World’s Most Precious Stones, the book who inspired the Oscar nominated movie with Leonardo Di Caprio, gives his qualified opinion in his blog: ‘It’s true that diamonds from Sierra Leone, the subject of my book, no longer need to be avoided. There hasn’t been conflict in the country for nearly a decade. To varying degrees, the same is true in diamond-rich Angola and Democratic Republic of Congo, although the latter has more ill-gotten precious resources than just diamonds to concern consumers.’

But the truth is more complicated. As Campebell points out, ‘none other than the KP itself has used the very term “conflict diamond” to cover up atrocities committed in the mining areas in another African country, the Marange diamond fields in Zimbabwe’. There, civilians have been murdered, assaulted and threatened into mining diamonds for its corrupt military, but ‘diamonds mined by a ruling government, no matter how brutally, don’t fit the KP’s narrow definition of “conflict diamonds,” which specifies that only stones produced on behalf of a rebellion or guerrilla movement in order to fund an overthrow qualify for the term’.

Africa’s blood diamonds producers

Angola. After the blood diamonds financed the rebel forces for years, now the country is trying to implement new regulations for the artisanal diamond production. But the new law does little to improve Angola’s Kimberley Process compliance. It outlines no concrete procedures for tracking artisanal production, and no mechanisms for collating, analysing or publishing data on artisanal trade and production. Angolan officials say, however, that the government takes its KP responsibilities seriously, and plans to tighten things up during implementation.

Democratic Republic of Congo. Diamonds are present throughout much of the Congo’s conflict zone, both in Orientale province on the border with Uganda, and in the provinces of North and South Kivu. The volume of diamonds that come into rebel possession is likely quite low, but they are, nevertheless, conflict diamonds. While the volume of diamonds falling into rebel hands appears currently to be quite low, there is nothing in the DRC system that would prevent any rebel group from laundering their diamonds into the ‘certified’ KP diamond stream.

Sierra Leone. The country’s mining still needs effective regulations and diamonds are yet to benefit the local population. Even before the economic crisis, the country granted extraordinary concessions to mining companies, with tax agreements that resulted in minuscule government revenues, just 5-6% of the value of mineral exports. A National Advocacy Coalition on Extractives study documents ‘massive problems’ associated with governance: lack of transparency, capacity, monitoring mechanisms in the mining sector, gaps in regulation, and the prevalence of corruption.

Republic of Congo. the only country ever expelled from the Kimberley Process for reasons of serious non-compliance. A KP review team visited the Republic in 2004 and there was little evidence to support the export volumes, and there were no official imports. In fact, diamonds had been flowing with impunity across the river from the Democratic Republic of the Congo, and were no doubt helping to sustain conflicts in both countries. Readmitted in 2007, there is oddly no information available to the public or to KP participants about the Republic of Congo on the KP website.

Zimbabwe. In 2009, Partnership Africa Canada published an investigation of the country’s diamond scene, Zimbabwe, Diamonds and the Wrong Side of History. It described growing evidence of smuggling, the militarization of diamond resources and the killing of at least dozens of unarmed diamond diggers by the police and armed forces. It remains to be seen whether the KP will have the strength and the will required to impose effective measures that will bring Zimbabwe into compliance with KP minimum standards and the observance of basic human rights in its diamond industry.

Guinea. Diamond areas are almost a thousand kilometres from the capital, Conakry, and government control and reporting mechanisms are understaffed and under-equipped. Systems exist, but there are major gaps, and in fact there is virtually no way of tracing artisanally produced diamonds that show up at Conakry for export. In the last four years there has been a rash of false Guinean KP certificates showing up in various countries and very little information has become available about what the new government is doing to improve matters.

Ghana. The diamond mining sector is still reeling from the knock-on effects of temporary Kimberley Process sanctions imposed in 2007 due to the alleged incursion of conflict diamonds from Côte d’Ivoire. In spite of the gloomy situation, however, administrative measures instituted in 2008 to strengthen Ghana’s internal controls in accordance with the Kimberley Process Certification Scheme made substantial progress.

Liberia. Over the past year, Liberia has made significant progress in its internal diamond control systems. Commendably, the government has invited additional civil society members to sit on its Presidential Diamond Task Force which is similar to the Diamond Board recommended by the KP Review Visit which took place in May 2009. However, some foreign exploration companies are actually mining diamonds. The threat posed by this activity is enormous. Government and communities lose revenue, and the practice creates a breeding ground for diamond smuggling, because only mining license holders can approach the KP system for valuation and certification.

Society’s Role In Combating Substance Abuse

46The Failed War On Drugs

Throughout the world drug abuse is reaching an all time high. In the United States, inner-cities are reporting multiple drug-related deaths and injuries everyday. The pervasive “illicit drug trade”, continues to gain a strong hold on the global market. Children are using drugs at record numbers, partly due to easy accessibility. The cartels fight among themselves for the lion’s share of the immense profits.

Global criminal justice agencies, cannot contain the narco-trafficking effort. Corruption is an important by-product that keeps the industry solvent. Innocent people are peripheral casualties, as cartel wars continue and bullets fly. Producer countries will continue to offer the “cash crops”, and consumer countries will buy these drug commodities. A symbiotic relationship between producer and consumer, is at the very heart of this global drug cataclysm. Herein lies our moral dilemma.

These factors are all contributing to the deadly street wars, taking place in various locations throughout our world. Despite the successes international agencies may have, in terms of apprehensions and arrests, the illicit drug trade prevails.

I’m not suggesting giving up, and allowing these vicious cartels to win. However, the time has come for an all-inclusive international dialogue. Back in the nineties, the US assisted the Columbian government in eradicating coca agriculture, helping to bring some cartels to their knees. The initiative managed to slow down the production and trafficking of cocaine. In truth the effort was short-lived, as other producer countries filled the void.

Time to Re-Examine Our Approach?

Alcohol has been legal in many countries for years. We should use the lessons we have learned about alcoholism, while we look for solutions to today’s problems. The illicit drug trade is a global issue, and had better be addressed by all participating countries. Producer countries could not exist, if the consumer countries would not cooperate. Countries are products of their citizenry and actions speak louder than laws.

The United States is the number one “consumer” country of illicit drugs worldwide. This may be due to our large middle class, and the freedoms that Americans enjoy. As China and Russia continue to grow their healthy middle-classes, they are experiencing a rapid and significant rise in substance abuse. They are well on their way to becoming huge consumer countries as well. Money motivates people and may lead to criminal behavior. As one cartel falls, there are countless others waiting to take their place.

What appears an endless cycle, will continue until all governments, show true leadership. Controlled substances are not legal for use or sale, but who’s “controlling” these substances? Cartels! Yes, there are many drug seizures made constantly, but consumer countries remain saturated with these substances.

Is there an Answer?

The “G20”, made up of the United States, United Kingdom, Canada, Japan, China, Russia, Argentina, Australia, Saudi Arabia, India, Germany, Indonesia, Mexico, France, Brazil, Turkey, European Union, South Korea, Italy, and South Africa, are the major world economies. They are all to some degree, consumer countries. The only country that’s a member of the G20, and is also a producer country, is Mexico. The producer countries are, but not limited to, Afghanistan, Myanmar (formerly Burma), Vietnam, Laos, Thailand, Mexico, Columbia, Peru, and Bolivia.

The revenue of these cash crops play an important role for these producer countries’ respective economies. All fore-mentioned countries must sit at the “solutions table”. There are other countries involved providing the processing of narcotics, trafficking, and the like. This issue is of great importance, for all responsible governments, and their citizens.

The Power of Mankind

Drug addiction is a weakness of character, a disease of the brain, and more recently, a pre-dispostion from birth? Scientist will continue to research this disease. Some people will drink themselves to death, while others enjoy alcohol only during holidays. The primary by-product of this industry, will always be the violence it generates. Addiction, death by over-dose, and domestic crimes are back-page news stories. Apathy is prevalent.

Granted we’d like to help those languishing within the self-imposed prison of addiction, but that’s a healthcare issue. Or it should be!! Mankind continues to fight wars, against each-other, for a host of arbitrary reasons. People, nations, humanity have shown great strength, while coming together to survive natural disasters. We the “G195”, must combine our power and join forces, to eliminate the illicit drug trade forever.

Legal Steroids – The Alternatives

45Steroids have been illegal for some time now and everyone knows the potency of the real thing but legal steroids and their alternatives are quickly catching up as a viable alternative to the black market illegal steroids.

Over the last few years the serious body builders have been using the alternative legal steroids and achieving amazing results. Legal steroids like Androstenedione ( andro), 1-AD,1-test and 4-Androstenedione are the closest thing to real steroids and these are available legally. These alternative steroids when used correctly are both a safe and effective way to enhance and boost strength, energy and muscle recovery.

The first legal steroid that body builders used and promoted was Androstenedione. This is also known as a prohormone and was first used by East German athletes to enhance their performance and was their secret weapon for some time.

Andro works in the following way. As a result of an enzyme conversion in the liver Andro exerts an anabolic effect. The enzyme in the liver acts on the molecular structure of Andro and from this reaction it converts, in a completely natural process, the andro into testosterone.

Since the introduction of Andro which was considered to be the first steroid alternative there have been many other related products over the last few years. There has and is much debate whether increasing the amount of Andro will increase the effect but as with any drug it is dangerous to start altering the dosage unless supervised by qualified people.

On January 20th, 2005 the US Federal Gorvenment’s ban on prohormones took effect. This included the Androstenedione ( andro), 1-AD. Body builders must now look to other alternatives to enhance their programs.

DHEA Pre-Cursor Hormone is one of the alternatives at the present. As a pre-cursor hormone, it leads to the production of other hormones and as a supplement has shown some awesome results. DHEA supplements act as an anti aging by maintaining the levels of DHEA that occur naturally in the body that decrease as we get older.

Intergrating Illegal Immigrants

44Is this newly scripted and revealed Presidential program to deal with illegal immigrants by embedding them as “Guests Workers”, more or less going to be best for America? That is really the main question. Not what is best for you, although you do vote that way, and perhaps you should, but putting the country first before self is an old habit of mine. Thinking this way, and being a Christian, causes me to do more thinking than is necessary, I suppose, however, it causes me also to see things from a different perspective. I can’t help but ponder the direction this countries leaders are leading us. I am of course not comfortable with the “Just take them out to International waters and drop em!” solution. Nor am I about to accept the Presidential “Prescription”. There is both a better way, yet human, while saving tax dollar First though, what is the end results of the Presidents new stated policy to deal with illegal aliens.

A massive influx of Illegal Immigrants is one thing. Hidden cash society is not a good thing when you look at it from the governments perspective. Not only are you missing out on controlling your borders,but all the tax money will be missed. And then you will have to provide the same services for illegal Immigrants as for any citizen of America. Welfare; Health; Human Services take a huge toll uponour country strength, but must be done to establish this countries health!

So what is the answer to this problem from the Administrative view?Giving “status” of different levels will create another level of citizenship.Having doubled the voting membership, one can only sense an outcome from the voting boothof both Catholic inspired social influences and a further melding of both countries. Is this the planned outcome?

If you allowed a huge influx of any socially similar group of legal or Illegal Immigrants, you would get the same results, that is, you would have to absorb within your present society all the baggage of; social, economical, as well as education, and philosophy, imported along with those persons. You see, this is America after all, and they must be given a vote, a say, in the direction of their new country. Catholic is no different than any other religion, in that all religions have inculcated within any person of its persuasion it own “brand” of looking at the
human experience. Thus, I am pointing this out in this vein. Political Planks, such as Birth Control, Abortion, and Immigration Law, would have serious impact upon this nation.

If anyone were to leave America for other lands, as the early English did historically wheneverthey came to this shore, the society and landscape of law and politics was changed to their idea of how things should be. Their “footprint” never changed, only the place of residence. Knowing this to be a human trait not yet extinguished, a “mixing” of Mexican and South American philosophy is to be expected. Can you accept this change? Would you want to? Too bad if you don’t because it is now “Policy” due to the influx of persons who might vote in unison!

To heap tracking upon any Illegal Immigrants now having dual citizenship, AFTER they have been granted permission to stay in America. is itself ILLIGAL. Unless you heap it upon all of our citizens! You can then look forward to the soon coming day when you are tracked. Is the stepping up of patrolling the border with Mexico to keep the Illegal Aliens from coming into America? To keep the “Terrorist” from infiltrating? Or is it also to keep you Prisoner? I think only two of those questions is answered positive. You can stop some terror from infiltrating America. You can keep its citizens prisoner. But no patrolling will stop Illegal Immigration! I know this from past experience.

As a member of a River Patrol Section (Patrol Boat River PBR’s), with the joint work of Seal Teams; Army and others was my assignment. Using night vision optics; Phyc war events; helicopters; hover craft; Swift Boats; spies; South Vietnamese Troops (who were supposed to know the terain);mortar batteries (with pre-set firing coordinatates); B 52 bombers; f16’s and lots of other assets in place, (and remember, all were attended by trained experts),still we did not prevent thousands of boats filled with hundreds of thousands of VC from crossing the rivers! What makes you think the National Guard, stretched to the limits, will accomplish the same objective? Simply put, they can’t! Then what can be done to stem this tide of humanity? Is the Presidents program the only solution? No!

To stop Illegal Immigration from Mexico in one day, and save tax dollars, while remaining human to others you need to;

1) Place a levy the Mexican Government $1,000 US dollars for every Illegal Immigrant caught crossing, or caught in this country. Place a bounty upon all Illegal Aliens that would reward anyone that called Authorities (Available to U.S. citizens only! Without hindering a person themselves, such action is against the law and you will be prosecuted for it!) about the whereabouts of any Illegal Immigrant!

2) AND subtract the $1,000 US dollars, or whatever the balance is of dealing with this persons illegal entry. That is, for an example, having to place him into prison for 10 years would lessen our Billions of dollars in aid we send to Mexico and South America by the amount it cost us to incarcerate the person and handle the case.

Now! How fast do you think the Mexican Government would place its own border patrol or National Guard along its own border with America? But of course, that is not the way to shift dollars from the American Taxpayer to the coiffeurs of Big Business. Buying hardware, such as Motion Detectors is! Bringing in millions of Illegal Aliens is!

Would such a program be implemented by any administration? Yes. If the people vote for it! And if the people, the voting populace, act quickly, before there is all to apt to be a negative vote from new dual citizens!

In summation, what we have here is not failure to communicate! Nor the power to think. Nor do we lack the power to contol our own borders to a greater degree, using political negotiation. What we have here is something very much different! What we have here is indeed a conspiracy between the President of Mexico and the President of the United States of America, and others, to the hurt of America! Intolerable.

Dan Bunch

copyright 2006 Dan Bunch

DAN BUNCH BIO Copyright by Dan Bunch, Dan Bunch, a Cherokee; Choctaw, and “Brass-Ankle” Melungeon, whose mother was a naturalized citizen born in Hong Kong. His father was born in Texas, a Cherokee-Melungeon, who served in the Army during WWII.

Dan Bunch grew up in Whitewright, Texas, where he played football, baseball, and boxing. He enlisted in the United States Navy Reserve while still a junior in high school.

He has had a multitude of experience in the business world. He has been in insurance, real estate, finance, and a builder of custom homes. He has always been a writer, and cartoonist. He attributes his interest in many subjects to his early career as a newspaper boy.

He married his high school sweetheart Gayle, with whom they have two children and five grandchildren.