Commodities and Terrorist Financing: Focus on Diamonds

Commodities, trade, and natural resources have long been part of the political economy of conflict, as soldiers and militants usually employ accessible means and methods to raise funds unless there is a clash with honestly held religious or ideological positions. Reports about the role of commodities in the financing of terrorist groups cover many areas of legal and illicit trade, foremost among these diamonds. A brief background to the diamond industry, with particular attention to vulnerabilities and their exploitation in conflict areas, provides the necessary context for two case studies about al-Qaeda (AQ) and Hezbollah. These utilize primary and secondary data to explore the linkages between diamonds and these particular groups. We found conflicting and weak evidence as well as vague language to describe interfaces between terrorist groups and the diamonds trade. We conclude that while there is cause for concern that this industry can be used to support terrorist activity, deeper factual grounding, meaningful context, and a more nuanced understanding of the diamond industry are necessary to fully inform policy makers and law enforcement about the connections between terrorist finance and the commodities trade.Research on which this paper is based was sponsored by a National Institute of Justice (NIJ) grant for a study of "Terrorist Finance and the Nexus with Transnational Organized Crime: Commodities Trade and the Social Organization of al Qaeda Groups," grant no. 2003-DT-CX-0001. We would like to thank Christian Dietrich and an anonymous peer reviewer for their very constructive comments.