May 11, 2005

Diamonds are Forever

The smell of rokok kretek was thick in the air as we stepped into the lobby of the Dusit Mangga Dua Hotel in Jakarta that morning. I sat down with Dr. Z. on the sofas on the far right side of the lobby in the corner as we waited for his contact and the others to arrive in from Bogor. The waitress came over to take our orders. Dr. Z had a coffee and for me, kopi o tampa gula (black coffee without sugar) You could always order kurang manis (less sweet) if you wanted, but it really makes no difference. Unless you are interested in dropping dead from diabetic shock, you'll know better than to order a regular coffee in Indonesia. They like their coffee very sweet with an inch of condensed milk in the bottom of the cup. It would be a half hour still before Dr. Z's contacts arrived in from Bogor.

After a few cups of coffee and some cigarettes, Dr. Z's contact, a Chinese Indonesian, Mr. Wong from Bandung arrived in with two of his Indonesian associates from Bogor. We all shook hands and sat down. Mr. Wong apologized for being late as he had to stop by Citibank on the way over and as usual, the traffic was bad. Mr. Wong then proceeded to make a telephone call and a Chinese man who had been sitting in the lobby at a table nearby suddenly got up and walked over. "This is Mr. Ling from Hong Kong". Once again we all stood to shake hands and then sat back down again.

Mr. Wong then asked one of this bodyguards for a black satchel they were holding and took out an envelope containing US100 dollar notes explaining that he had to change rupiah at the bank and wanted to make sure the rupiah notes were good. Mr. Ling then took out an envelope and opened it up and took out three diamonds that were individually sealed in little plastic squares. Dr. Z, Mr. Wong and one of the Indonesians picked up the diamonds to look at them with everyone nodding their heads in approval. Mr. Wong then handed the envelope containing US10,000 to Dr. Z and the satchel to the Indonesians. Mr. Ling then handed the rest of the envelope to containing diamonds to Mr. Wong. The Indonesians then stood up, shook everyone's hands and then left with two bodyguards. The deal was completed. By now it was lunchtime and Mr. Wong then suggested that since the Indonesians were now gone we could go for lunch and have a few beers.

To circumvent efforts to cut off their financing, groups such as Al Qaeda and Jemaah Islamiyah have now resorted to the trade of diamonds and other commodities to finance their operations. I would find out later from Dr. Z that the envelope from Mr. Ling contained over half a million dollars in diamonds. That is quite a large amount of money to fit is small brown envelope and easy to transfer and trade.

I am of the opinion, that our efforts to cut off financing to terrorist related organizations and their supporters is nothing more than an exercise in futility. Terrorists and their supporters have learned and will continue to learn how to adapt to each and every reactive approach that we take. Thinking that we can control the flow of money, and now commodities worldwide is like sticking our finger in the dike hoping to stop the flood. In the long run, we end up hurting ourselves and those attepting to do legitimate business more than we affect the terrorists.

Not only is a completely different non-financial approach needed, but our efforts in this new unexploited area need to be proactive rather than reactive. There is a better way and if you ask me, it begins with a nice hot bowl of chile con carne. ;-)

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