The young woman in a red and green dress clutched a fistful of grubby notes in one hand. The other clung to her boyfriend, who was leaning against a fence in mirrored sunglasses and bright blue shirt, with a Glock pistol stuck into the waistband of his jeans. Antoinette and Christophe were standing in front of a corrugated tin shack. On display were glistening blue and pink stones - products of some of the busiest sapphire mines in the world. Trade was brisk; a sign on the shack next door proclaimed: "Big boss buys big stones for big money."

The Indian Ocean island of Madagascar has gained strategic value in recent years not only because of its geographical positioning in America`s "war on terror", but also its vast untapped deposits of mineral wealth, some of the richest in the world. Apart from sapphires, there are rubies, garnets, amethysts, aquamarines and zircons. Precious stones provide more income than all other industries put together. There are also other minerals - titanium, aluminium and graphite - as well as offshore oil.

Yet Madagascar is one of the poorest countries in the world, with 72 per cent of the population living below the poverty line. Lack of clean water and sanitation remains one of the biggest problems, and the island has become a focal point for projects by the international charity, Water Aid.

Gems and minerals should provide a way out of poverty. But the way the mining is being carried out, conservationists warn, is causing irreversible damage to the unique ecosystem which makes Madagascar one of the world`s most biodiverse countries. Decades of deprivation has wiped out almost 90 per cent of the rainforest, along with it dozens of species of flora and fauna.

The business-friendly Malagasy government, led by the self-made millionaire Marc Ravalomanana, has recently given the mining giant Rio Tinto permission to start work in the region, a move described by the director of Friends of the Earth, Tony Juniper, as "very sad and very bad news for the people of Madagascar". The mining town of Ilakaka was, less than a decade ago, just a dot on the vast expanse of red earth. It is now the focal point of a mining rush which has turned it into a latter day Klondike or Ballarat, with a population of 100,000.

The miners are mostly indigenous Malagasy, but dealers have flooded in from Thailand, Sri Lanka, South Africa, the US, Hong Kong and Europe. The money has brought with it both guns and crime. People are shot for the cash-filled briefcases they bring to buy gems, and for the gems they bring to sell at market. And outsiders have been killed for asking too many questions.

Tom Cushman, a 52-year-old American, is one of the most prominent names in the Madagascar gem business. Mr Cushman is involved with a training programme, started with £17m funding from the World Bank. "There is no reason why in the future Madagascar should not become a centre for gemology. The revenues that it gets can be used for all sorts of things, like the environment."

But for the dispossessed of Madagascar, the damage to the environment is now a matter of life and death. The country`s main canal, the Pangalene, is clogged with pollution, and a source of disease. Water Aid is helping to provide fresh water for people living on its shore.

Hamady Rassanirina has seen each of his three children become acutely ill with stomach ailments. "What is the good of having all these treasures underground when we have people dying on the ground?" said Mr Rassanirina. "They say our country is a paradise. Maybe it is, but not if you are poor."
By Kim Sengupta in Ilakaka, Madagascar - Additional reporting by Nizar Hakim
(The independent, 03/11/2006)
http://news.independent.co.uk/world/africa/article1951269.ece