If one man
can be said to control the world's diamonds it is Harry
Sitting across the desk from Oppenheimer,
however, it is hard to imagine that this small, shy
man dominated a multi-billion-dollar empire. He spoke
quietly, but with great precision. He had a distinct
Oxford accent, and as he explained an issue he tended
to punctuate his answers with a self-effacing, smile.
He was far more candid in discussing his business than
I would have expected someone in this position to be,
and I assumed that this disarming openness proceeded
from his confidence in his control over his immediate
universe. His interlocking businesses did after all
account for over half of the industrial exports of southern
Africa. The heart of this complex is located at 44 Main
Street in the heart of Johannesburg'. The block-long
building, with its imposing neocolonial facade and marble
entranceway, looked much more like a government institution
than the headquarters of the mining company. As it turned
out, it housed in its offices far more power than most
government buildings. Indeed, Oppenheimer even had a
private treaty with the Soviet Union, although the terms
have never been publicly revealed.
Oppenheimer explained that it was
no secret that De Beers acquired through subsidiaries
all the uncut diamonds that the Soviet Union wanted
to sell on the open market. "We have of course no reason
for concealing this arrangement other than the Russians
prefer not to receive any public attention for obvious
reasons," he said almost apologetically. The "obvious
reasons" for obscuring the arrangement with De Beers
were that the Soviet Union had for some fifteen years
called for a total boycott of South Africa and South
African businesses, and its dealings with De Beers,
if made public, might prove embarrassing.
But how long could such an unholy
alliance last? The Soviet Union apparently had ambitions
of its own in southern Africa, and at some point geopolitical
considerations might take precedence over business considerations.
I asked how he could be sure that the Soviets would
renew the deal.
"We paid the Soviet Union more than
half a billion dollars last year," he answered. "This
is not a sum it can easily replace, and I can see no
conceivable reason why it would want to abandon such
a profitable arrangement." His logic was brutally direct:
De Beers provided the Soviet Union with its single largest
source of hard currency (only petroleum was a more important
export for Soviet trade in 1977)If the Soviet Union
withdrew its diamonds from De Beers, it would have to
find other outlets to sell its uncut diamonds. And if
it precariously dumped these diamonds on the market,
the price would collapse, and the Soviet Union would
lose an important source of foreign exchange. "What
could the Russians possibly gain by competing with us?"
he asked rhetorically.
He further pointed out that De Beers
provided the Soviets with certain types of industrial
diamonds that were important for drilling and producing
electronic wiring. Its Siberian mines apparently did
not produce these strategically important diamonds.
By selling gem stones to De Beers, the Soviet Union
received the credits for importing the industrial diamonds
The Soviet Union also had considerable
influence in other diamond producing areas in Black
Africa, such as Angola. I wondered if the logic of the
arrangement between De Beers and the Soviets required
the Soviets to use their power in those countries to
help De Beers retain its control over diamond mines
there. "You will have to address that question to the
Africans concerned," he replied abruptly. The tone in
his voice made ii clear that there were aspects to the
Soviet arrangement that he decidedly did not want to
African revolutionary movements
had also been perceived as a threat to the stability
of the diamond cartel. T here had been particular concern
expressed about the safety of De Beers mines in Namibia,
which were the world's single largest source of gem
diamonds. Technically, Namibia was then a United Nations
trusteeship. In fact, however, South Africa administered
this diamond-producing territory as if it were a province
of that country. This had led to a potentially explosive
situation. The United Nations had demanded that South
Africa recognize SWAPO, the guerrillas group battling
for independence, and hold elections under the auspices
of the UN. If South Africa failed to comply with this
ultimatum, the United Nations threatened to impose economic
sanctions, including possibly an oil embargo. To buy
time, South Africa decided to stage its own election
in Namibia excluding SWAPO. Since this election would
not lead to a change in the status of Namibia, or elect
anyone to public office, it was being staged for the
benefit of the world press. Condemned by SWAPO as a
"charade," it was scheduled to begin later this week
"What the South African government
hopes to accomplish by this exercise is beyond me,"
he commented. He suggested that even if the South African
government turned out massive vote, it would only delay
the movement toward independence in Namibia.
If independence was inevitable, De
Beers might eventually find that its diamond mines there
would be controlled not by a friendly government in
South Africa but by a SWAPO revolutionary government.
Would this pose a threat to De Beers' diamond monopoly?
"We are prepared to deal with any
legitimate government that comes to power there," he
replied unernotionally. The fact that SWAPO had announced
that it planned to nationalize De Beers' diamond concessions
in Namibia did not faze him. "We now pay about 8o million
dollars a year in taxes on those diamonds, and that
provides the territory with most of its revenues," he
explained, and then added, "whatever government eventually
comes to power they will need this revenue to survive."
His point was clear: Namibia needed De Beers' money
as much as De Beers needed Namibia's diamonds. He was
confident that SWAPO, or any other group in Namibia,
would accept this bargain.
Oppenheimer was concerned with the
possibility of the United Nations imposing economic
sanctions against South Africa, since his empire exported
billions of dollars worth of South African commodities.
He did not believe, however, that they could affect
the diamond trade. "I can think of no commodity less
susceptible to dangers from UN sanctions than diamonds,"
he said. He was stating the obvious: diamonds were after
all one of the most convenient commodities to transport
across borders. For example, an entire month of production
of diamonds from the Namibian mines, worth $40 million,
could be smuggled out of Namibia in an attache case.
Oppenheimer also gave little credence
to the fear that De Beers might be running out of quality
diamonds. He pointed out that De Beers was developing
vast new mines in the Botswana desert, which he planned
to visit the next day. These Botswana mines would provide
the world with an ample supply of diamonds well into
the I 99os.
I asked Oppenheimer whether this
move into the independent country of Botswana was meant
to make De Beers less dependent on South Africa for
According to the development plan
that he had outlined, Botswana would soon be producing
more diamonds than South Africa. He scoffed at the idea
that the mining of diamonds in Botswana would have "any
significant effect in divorcing De Beers policies from
political and social problems in South Africa." He emphasized,
"We are, and will remain, a a South African company.
It was clear, however, that in the
198os De Beers would come increasingly dependent for
its diamonds on African countries. In light of the continuing
and intensifying confrontation between South Africa
and Black Africa, it seemed questionable how effectively
De Beers could operate mines in these independent countries
with hostile regimes. Oppenheimer insisted that the
black-white confrontation in Africa would not present
a problem for De Beers. He termed the arrangement between
De Beers and Black African nations "Mutually advantageous."
He further suggested that it might be useful for me
to inspect at first hand some of De Beers' mining operations
in independent nations to more fully understand how
the "arrangement" works. He offered to provide me air
transportation and access to the mines in Botswana,
Lesotho and other independent nations.
I accepted his offer.