Jul 5, 2009
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Taliban cash in on Pakistan's untapped gem wealth

Jul 5, 2009

PESHAWAR, Pakistan, July 5, 2009 (AFP) - In the narrow lanes of a market in Pakistan's northwest capital Peshawar, dealers squat on carpets and spread out a rainbow of precious gems on the floor for potential buyers.

Photo: AFP/A Majeed

Chunks of bright blue lapis lazuli, and rough rocks studded with flashes of light and colour clutter window displays, but no one is buying in a city hit by a wave of deadly bombings blamed on Taliban militia.

A treasure trove of precious stones is locked in the rocks of Pakistan's rugged northwest. Violence, legal tussles and state mismanagement have deterred investors but allowed the Taliban to cash in on the bounty, dealers say.

"God has given us enormous wealth in terms of emeralds from Swat, rubies, pink topaz, beautiful tourmaline," said Ilyas Ali Shah, a gemologist with the government-run Pakistan Gems and Jewellery Development Company.

Shah said that if Pakistan properly mines these deposits the impoverished country could reverse its hefty foreign debt: "But we need peace."

In February this year, Islamist extremists waging a bloody insurgency to expand control opened three shuttered emerald mines in the northwest Swat valley around the main town Mingora and invited villagers to blast away.

The military says it has reclaimed all Swat mines from the Taliban during a fierce offensive, but for at least three months proceeds from emerald sales lined the rebels' coffers and helped bankroll their insurgency.

"They would collect the emeralds and there would be an open tender every Sunday," said Azhar ul Islam, a 44-year-old gem trader from Swat. "The profits were divided up -- two-thirds for the miner and one-third for the Taliban."

Pakistan and neighbouring Afghanistan are believed to hold up to 30-40 percent of the world's emerald deposits, Shah says, with the precious stone fetching up to 2,000 dollars per carat depending on quality.

Azhar told AFP the Taliban earned about four million rupees (50,000 dollars) a week from Mingora's main mine -- shuttered since 1995 because of a legal battle -- money he said was spent on "buying explosives, making weapons."

"I was frightened what would happen if the government re-established control, so I didn't buy those emeralds from the mines, but most of my friends bought these emeralds from the Taliban," he said.

At the Namak Mandi market in Peshawar, another dealer from Swat who did not want to be named estimated that the rebels made between five and six million rupees a week from the stones.

No one in the market would admit buying Swat emeralds from the Taliban, but one dealer said he procures green garnet from a Taliban-owned mine over the border in Afghanistan, where the militants are also waging an insurgency.

"We don't like the Taliban, we don't buy it because we want to help them, but we want the stones," 30-year-old Ali Akbar told AFP.

He says his business has been crushed by spiralling insecurity in Pakistan since the September 11, 2001 attacks on the United States thrust the nuclear-armed nation into the heart of the "war on terror".

"For five months I had no customers," he said.

Shah says Pakistan's gem-industry profits have plunged up to 50 percent in one year because of the instability, with foreign investors staying away.

Most of the country's gems, including emeralds, garnet, pink topaz, spinel and tourmaline are located underground in North West Frontier Province (NWFP), the heartland of the Taliban insurgency.

Experts say the Federally Administered Tribal Areas (FATA) -- a mountainous area largely outside government control along the Afghan border and stronghold of Pakistani Taliban chief Baitullah Mehsud -- hides deposits of rare quartz and precious stones.

"I think we have explored three percent of the whole of NWFP. We have large areas of FATA that are not under control, so we have a lot of precious material untapped which needs to be explored and exploited," Shah said.

Pervez Elahi Malik, former chairman of the main gem exporters' association, blames the local NWFP government for not sorting out legal tussles and getting potentially lucrative mines up and running under state control years ago.

At the moment, local villagers and tribesmen blast away at the rocks and transport their haul to Namak Mandi -- a damaging mining process that experts say can destroy 80 percent of the stones.

"We are lacking in technical knowledge, we are lacking stability in the country," said Shah. "Our mining is not technically sound and safe -- we are destroying our wealth."by Charlotte McDonald-Gibson

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