COLOMBIA'S GLITTERING GREEN CURSE

Emeralds Have Brought Riches And Violence

"This is a business for crazy people because no one really knows where the
emeralds are located."

- -Nestor Ramirez, emerald buyer

Coscuez, Colombia - Hunched over, their faces streaked black with dirt,
hundreds of miners dig day and night with picks and sledgehammers in search
of the sparkling green gemstones that-after coffee and cocaine-are
Colombia's most famous export.

Nestled between the craggy mountain peaks of central Boyaca state, Coscuez
is an emerald city. It is dominated by a series of shaft and open-pit mines
that have helped to make Colombia the global leader in emerald production.

This is the zone where miners uncovered the 7,000 karat "Emilia," one of
the largest emeralds in the world. It is also the home of Victor Carranza,
the "Juan Valdez" of Colombian emeralds, who uncovered his first gem at the
age of 10 and is now one of nation's richest men.

"These hills are full of emeralds. If you dig long enough, you will find
them," said Itamar Avinami, an emer ald dealer in Bogota, as he removed a
gleaming specimen, worth about $10,000, from a piece of tissue paper.

But like much of Colombia, the emerald industry has been racked by violence
and corrupted by drug traffickers.

Just last week, government agents captured Carranza on charges of
organizing paramilitary death squads to protect his emerald mines. The
arrest occurred as experts gathered in Bogota for the first World Emerald
Conference, a forum designed to erase the industry's outlaw image and
attract new investment.

Although Colombia still provides 60 percent of the world's emerald supply,
such troubles have discouraged new investment and exploration. And analysts
fear that several of the mines are just about tapped out.

"We are still exploiting the same mines that the Indians discovered during
the time of the conquistadors," said mining magnate Pablo Elias Delgadillo.

Emeralds are among the world's most precious gems and are 10 times rarer
than diamonds. In some cultures, they symbolize fertility, luck or eternal
love. Experts have identified 64 shades of emerald green.

Spanish explorers searching for salt stumbled upon Colombia's emerald mines
in the Andean highlands. The resulting war with local Indian tribes lasted
60 years.

In the 1970s, state-run mines were bleeding money due to widespread
smuggling and were eventually turned over to private operators. But
left-wing guerrillas and drug traffickers, led by Gonzalo Rodriguez Gacha,
known as "El Mexicano," soon tried to muscle their way in.

The mines were coveted for their wealth and strategic location adjacent to
Antioquia state, the home of Gacha's onetime ally, the late drug lord Pablo
Escobar. The business also became a favorite way to launder drug
profits-through fake gem companies or in collusion with emerald dealers.

The miners, led by Carranza, formed private armies and fought back. At the
height of the war, drug lords stuffed a labor leader into a burlap bag and
dropped him from an airplane flying over the mining town of Muzo. By the
time an informal truce was reached in 1990, more than 3,500
people-including Gacha-were dead.

"When there is so much money involved and a long history of violence, it's
very difficult to talk of a lasting peace," said Miguel Maza Marquez, who
was director of Colombia's equivalent of the FBI during the so-called Green
Wars.

Indeed, the chaos of the 1980s and the absence of government authority in
the mining zones haunt the industry today.

Billions of dollars in stones have been smuggled out of the country without
taxes being paid on them. The domestic jewelry business was never fully
developed, thus 85 percent of legal exports are rough stones, which are
less profitable than crafted emerald rings and bracelets.

International prices have fallen. And except for a few Canadian mining
concerns, foreigners have largely avoided Colombia.

Of the 1.6 million acres that geologists have identified as potential
emerald veins, only 7,052 acres are being mined. Part of the problem is
that it is impossible to confirm the presence of emeralds without a major
excavation.

Developing new mines "is very risky and requires a large investment," said
Jose Antonio Duran, president of the industry group Fedesmeraldas in Bogota.

Delgadillo said he recently sank $3 million into a 1,600 yard tunnel mine
but has yet to find a single emerald.

"This is a business for crazy people because no one really knows where the
emeralds are located," said Nestor Ramirez, an emerald buyer in Coscuez.

One of the main topics at the Emerald Conference last week in Bogota was
the establishment of an emerald bourse in Colombia to stabilize prices and
regulate the quality of the gems.

Fedesmeraldas will unveil a publicity campaign similar to the diamond
industry's highly successful print advertisements.

Mining veterans say the industry has already started to rebound.

"I have seen huge transformations," said Javier Guerrero, a sociologist who
recalled his visits to the mines in the 1980s, when nearly everyone carried
a gun.

"They are making a big effort to legalize the business, attract investment
. . and become legitimate businessmen," he said.

Yet the trade's shady image is hard to shake. It even inspired a sultry
Colombian soap opera called "Green Fire."

The highest export figure recorded for the industry is S456 million in 5,
but Delgadillo says money laundering may have accounted for more than half
of that.

Last year, exports dropped to about S130 million, and Duran estimates that
10 percent of production is smuggled out of Colombia.

Carranza, the grand old man of the industry, is hardly a role model for
modern businessmen.

The man who controls two of the top four emerald mining companies has been
linked to a series of violent crimes-though he has never been convicted. In
December, a prosecutor from the northern city of Barranquilla ordered his
arrest on charges of organizing illegal paramilitary groups; Carranza
ignored the warrant.

Guerrero praised Carranza's jailing as a sign that no one-not even the
emerald czar-is above the law. Yet it could cause temporary panic within
the industry, which is extremely loyal to Carranza, and it left the World
Emerald Congress without its marquee attraction.