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By JONNY HOGG
Associated Press Writer

19 November 2007
ILAKAKA, Madagascar (AP) - Everyone plays for high stakes in Ilakaka. You can get rich or you can die. Even for experienced gamblers, the odds of getting killed are high.

This city at the heart of Madagascar's sapphire mining industry is estimated to produce at least 30 percent of the world's sapphires -- worth at least $30 million a year. And in the Wild West lifestyle of shady casinos and banditry that swaggered into town on the tail of the fabulous mining wealth, speculators are dropping dead at an alarming rate -- with up to 30 murders a year in a town of 20,000.

One of this year's victims was Osama bin Laden's brother-in-law. Muhammad Jamal Khalifa was gunned down in January, presumably because of his sapphire business.

The latest victim was a Madagascar businessman shot dead in September whom police identified only by his first name Ernest. He had just bought a sapphire worth $30,000.

"He was in his hotel room at seven in the evening when the bandits attacked. Bang, bang, bang and it was finished," said mine owner Jean Noel Andrianasolo.

Madagascar, a former French colony set in the Indian ocean far off Africa's southeast coast, is one of the world's poorest countries -- but Ilakaka is booming due to its famous pink and blue sapphires.

Mining consultant Tom Cushman said it's difficult to know exactly how much money Ilakaka's sapphire industry generates because some of the best stones leave the island "in people's pockets."

Big business has driven development. Ten years ago, Ilakaka was no more than a collection of huts. Now, since the discovery of major sapphire deposits in 1998, it is a thriving town with a riot of makeshift homes and ramshackle casinos, bars and shops which spill onto the road and jostle against gleaming new offices where the gems are bought and sold.

"People are going to Ilakaka with a suitcase full of money and leaving with a briefcase full of stones," said Cushman, who consults for the World Bank.

"All of the money goes straight back into the community and gets circulated again and again. It's maybe a better development opportunity than all the aid projects in the country put together."

But banditry, corruption and insecurity are a major obstacle to further development.

"Of course we have a big problem with insecurity," said Andrianasolo, who was among a handful of people willing to speak on the record to a reporter, noting that even that could get him killed.

People are reluctant to say who the bandits could be. Some insist police are helping them or committing banditry themselves.

"There are lots of policemen here, lots of army too. It's full. So why haven't they captured the bandits? That is the question," said Andrianasolo.

Philibert Andrianony, the young and energetic head of Ilakaka's police force, said he is determined to stamp out the violence. But he agrees with Andrianasolo that police are not preventing, but causing, some problems.

"It exists, it exists," he said. "Police salaries are very low and we cannot stop policemen who decide to work with the bandits."

He also noted that despite their visible presence, police are ill-equipped to deal with crime. They don't have radios or much needed four-wheel drive vehicles. And the bandits are more heavily armed.

Andrianasolo said the violence means people are coming to Ilakaka in smaller numbers, put off by the danger.

"People have a choice; they can stay at home and have no money or they come here and risk their lives."

But dreams of making a fortune still attract poor miners.

"I know all about the violence here and the people who do it," said Fensoa, a miner who would give only his first name for fear of retaliation. "I am afraid, but I must stay here despite my fear."

With just one lucky find, Andrianasolo said, a miner could make $10,000 in a country where most people earn less than a dollar a day. Fensoa makes two dollars a day, even if no sapphires are found at the mine where he works.

Ilakaka, which sprang up on Madagascar's rocky interior plain, exudes a ramshackle energy. Attracting gem buyers from around the world, it has a cosmopolitan feel. Sri Lankans, Thais and Indians control much of the market.

There are strange contradictions in its development.

This key business center has no airstrip, no bank and is not on the national power grid. Most of the town is powered by generators. Yet it's possible to watch French satellite TV in one of its bars.

Andrianasolo employs 60 people at his mine, a great trench 12 meters deep and 20 meters wide (40 by 66 feet), snaking through the baked orange earth. The perils of the backbreaking work under a scorching sun are compounded by the risk of bandits attacking the mine site.

It is getting more difficult to find sapphires on the surface, but even children are in on the rush. Some returned from a swim in the river clutching handfuls of precious stones scooped from the water.

"Violence is the reality here," Andrianasolo said. But "Ilakaka will continue to grow because there are still sapphires."