By James Knight and Katrina Manson
Monday, December 18, 2006; 7:23 AM
FREETOWN (Reuters) - The Hollywood movie "The Blood Diamond" about gem smuggling in Africa could hinder Sierra Leone's postwar recovery as its struggles to legitimize its vital diamond exports, officials in the West African state say.
The Oscar-tipped film, which has taken in $18.4 million so far in the United States, stars Leonardo DiCaprio as an ex-mercenary involved in gem smuggling in 1990s Sierra Leone.
It plays out against a backdrop of the former British colony's 1991-2002 civil war, fueled by the trade in illicit stones and notorious for mutilations meted out by RUF rebels.
"I am worried the film may be detrimental to the industry in Sierra Leone," said Mohamed Swaray Deen, minister of mineral resources.
"People need to know that when they are seeing atrocities, the country has moved very, very far away from the pictures they see in the movie. But the consumer might be affected by this."
Diamonds have the potential to transform Sierra Leone, which has the world's highest rate of child mortality. Currently, the government relies on aid for almost half its budget -- much of it from former colonial power Britain.
Sierra Leone's war helped prompt the U.N.-organized Kimberly Process launched in 2003 to ensure "blood" or "conflict" diamonds are not sold on the black market to buy weapons.
Kimberly has kickstarted the industry in Sierra Leone: diamond exports boomed from $10 million in 2000 to $141 million last year. The government receives 3 percent of exports, worth $4.23 million last year.
Since 2001, the government has set aside a quarter of gem revenues for the Diamond Area Community Development Fund, which fosters development in mining areas.
"A lot of development has taken place since the war and the movie needs to include this," Deen said.
SHOT IN MOZAMBIQUE, SOUTH AFRICA
Other officials expressed disappointment that producers of the $100 million Hollywood film opted to shoot on location in Mozambique and South Africa, rather than coming to the impoverished West African state.
"I wish at least it had been filmed here," said Cecil Williams, general manager of the National Tourist Board.
"Much as it is negative about our country it could also have portrayed the beauty of Sierra Leone," he said. "We have a unique landscape, and the presence of a large film crew would have provided economic benefits."
Sierra Leone has much to offer tourists, ranging from pristine beaches, jungle and animal species including threatened chimpanzees, rare birds and the pygmy hippo.
Before the war, there was a thriving tourism industry, with 98,000 people visiting in 1990. Latest figures from the U.N.'s World Tourism Organization show that Sierra Leone received only 44,000 visitors in 2004, many of them expatriate workers.
Five years after peace was restored, U.N. troops withdrew successfully at the beginning of 2006, and a U.N. Special Court is putting on trial those accused of the worst atrocities.
Presidential elections are planned for July and the country is trying to portray itself as open for business to lure desperately needed investment.
"Perception is a very powerful thing. In seeing that film you will believe the war is still happening here," said Williams. "We brought in five journalists from Hungary to showcase the country but prior to them coming two backed down because of what they thought might happen to them here."
"When people meet me for the first time they expect my hands to be chopped (off)," he said in reference to one of the brutal practices common during the war.
"Sierra Leone is now a safe country but it has become synonymous with war."
LESS THAN ONE PERCENT
"The Blood Diamond" has prompted a charm offensive by the international gem industry to prevent consumers deserting a multibillion-dollar trade. An estimated 65 percent of stones are mined in Africa.
Conflict diamonds now account for less than 1 percent of gem sales, down from as much as 15 percent in the mid-1990s.
Some small scale diamond smuggling continues in West Africa, but only in war-torn Ivory Coast can "conflict diamonds" still be said to exist, experts say.
A U.N. report in October said diamonds were being smuggled out of the rebel-held north of Ivory Coast, in violation of a U.N. embargo, generating between $9 million and $23 million.
Experts say some smuggling persists in Sierra Leone, but the very low tax rate encourages traders to go the official route.
"It's very difficult to say what the rate of smuggling is now," said Deen. "But if your legal exports are increasing in the way they are, then you can say your illegal exports are at least decreasing."