A Workable Proposal to Regulate Antiquities Trade

044

Since 1967, more than 11,000 archaeological sites have been robbed within Israel’s pre-1967 borders, according to members of the Anti-Plundering Task Force of the Israel Department of Antiquities.^a

The government’s Department of Antiquities proposes a radical solution: Proscribe all sale or trade in antiquities; put the licensed dealers out of business.

This legislation won’t work. I have a proposal that will.

The problem is not the trade in artifacts, but the extensive plundering of ancient sites. The pilfered objects often are lost forever to scholars. The moral outrage of archaeologists, conservationists and the general public is understandable and justified.

Moreover, it is generally recognized that the current law is arbitrary, without substance, and unenforceable. It prohibits commercial trade in antiquities unless they are represented to have been uncovered prior to 1978. Dealers naturally represent pre-1978 discovery dates when any doubt exists (and it usually does); and the temptation to transfer a pre-1978 registry number from artifact to artifact is obvious. Plainly, something needs to be done.

The Department of Antiquities’ proposed legislation to ban trade in antiquities, however, will be no more successful in disrupting either the demand or the marketplace for antiquities than are analogous laws prohibiting the sale of illegal narcotics or firearms. If the innate demand exists for a given commodity, and it is coupled with substantial profit motivation to the supplier, trade will occur. This is an inevitable truism of economics and human nature that cannot be legislated away. The trade simply goes underground or, in many cases, offshore. Experts agree that public policy dealing with illicit narcotics, firearms and prostitution has, with painfully few exceptions, failed miserably and often has led to serious corruption at the police and governmental levels. Indeed, it is not surprising to learn from antiquities dealers that the trade in artifacts is completely achievable, even among the Mediterranean countries with “strong” antiquities laws, provided that the necessary payoffs are made.

Unfortunately, there is absolutely no empirical evidence to suggest that the prohibition of antiquities trading lessens the extent of site-plundering. It will surely not decrease demand, but it will probably increase prices and, therefore, will probably have negligible, if any, impact in deterring the robbery of sites. Moreover, the law proposed by the Antiquities Department will require an increase in public expenditures to expand an already burgeoning bureaucracy, and will entail the subsequent and inevitable corruption of some members of the same bureaucracy. Israel cannot afford either, particularly if the ultimate objective (the reduction of plundering) is not achieved.

Nor should we underestimate people’s ingenuity in moving small valuable items across national boundaries. History has demonstrated their extraordinary knack in doing so.

In short, as long as the demand and prices remain high worldwide, smuggling and payoffs will bring the artifacts to market. The intended effect will not be achieved.

The legislation proposed by the Department of Antiquities would have other negative effects:

• It would put an entire industry out of business. In purely economic terms, the sale and trading in artifacts provides jobs and income to Israel’s private sector. Moreover, the people and businesses in this sector pay taxes. Sales to foreigners produce badly needed foreign exchange. If the Department of Antiquities’ proposed legislation is enacted, many of these private sector jobs, the associated incomes and foreign exchange earnings will simply move overseas. Part of this industry will go underground into the hands of organized crime and escape the tax rolls. These are clearly undesirable costs, 045especially when one considers that some of this lost revenue could be designated to guard, as well as legally excavate, the archaeological sites.

• Another negative effect of the Department of Antiquities’ proposal relates to its impact on museums, especially in Israel. It is common knowledge that Israel’s museums are direct beneficiaries of extensive collections donated gratis by benefactors who originally purchased the item in the private marketplace. When this occurs, there is a double benefit: (1) The original purchase provides economic and tax benefits as described above, and (2) the ultimate gift to the museum provides a direct contribution to society. It is reasonable to expect the bulk of the important, currently traded artifacts to land eventually in the public domain—and at no cost! Moreover, this will occur without adding to the bureaucracy.

If the loss of these benefits were to result from a law that substantially reduced site-violation, many of us would accept this cost. Unfortunately, that is not the case with the Department of Antiquities’ proposal. It will not achieve its intended goal, but will simply create derivative problems and costs.

I have an alternative proposal that I think will work. It is based on a system utilized in the United States for market-traded items of a national interest, for example, U.S. government securities and bullion coins. In these cases, governmental agencies extend a special license to private firms designated as “primary dealers.” This license provides a franchise of sorts with clear economic rights, and concurrently, special obligations. With special economic incentives (amounting to oligopoly^b and oligopsony^c), these primary dealers maintain an orderly marketplace and follow various mandated public policy procedures as a part of the government’s agenda.

As applied to antiquities sales in Israel, the government would license “primary dealers” in antiquities.

Such firms would have to demonstrate professional experience in the sale and trade of antiquities and have a certain minimum capitalization. Their professional staffs must be free of past antiquities violations and must successfully pass a licensing examination that tests specific knowledge of archaeology, ancient art history, numismatics, fraud detection, the antiquities laws and the professional ethics enunciated by the Department of Antiquities.

The heart of this proposal would be the establishment of a government-sponsored auction program, conducted on a periodic basis, for artifacts discovered in authorized excavations, but that are redundant to the collections of the national museums and not needed for further scholarly research. However, as in the U.S. example, only primary dealers may bid at these auctions.

Revenues obtained from the sale of these public-domain artifacts would go directly to the general budget of the Department of Antiquities and, of course, could be used to expand the activities of the Anti-Plunder Task Force. In as much as these artifacts were uncovered from authorized digs by approved archaeologists, they may be certified accordingly. The accompanying certification of these artifacts would probably create a two-tier pricing structure: (1) a premium upon those artifacts with the certification of origination, and (2) a discount for similar artifacts without the certification. Since illegally plundered artifacts would not be certified, we could reasonably expect this program to reduce the market price to the site robber. The extent of the deterrence value of this market mechanism is difficult to gauge, but the overall economics are substantially better than prohibiting the trade in antiquities altogether.

This auction program provides a potentially enormous opportunity to raise revenue on behalf of the Department of Antiquities and a valuable “price discovery” mechanism^d for these redundant antiquities.

The government-sponsored auction program may also allow the listing of any other artifact within general market circulation. A typical seller’s fee of, say, ten percent can be charged by the Department for this commercial service, providing additional revenue for archaeological purposes. But only primary dealers may place items in this auction program.

Accordingly, individual clients and nonprimary dealers, both within and without Israel, must use the primary dealer community to utilize this centralized auction system. This will clearly establish an important franchise and, by extension, a vested interest on the part of the primary dealers to follow the government’s policy agenda.

Thus, if a private party approaches a primary dealer with an artifact for sale, the dealer under this program will be required to use “due diligence” to determine its status. If, after careful scrutiny, the artifact and appurtenant information offer no clue that it derived from a recent illegal excavation, the primary dealer is free to purchase the item, or to take it on consignment, under existing free-market practices.

Another component of the primary dealer’s “due diligence” function would be to ascertain whether a given artifact is a particular rarity and a part of the “want-list” of any of the public institutions or museums in Israel. When this occurs, the dealer, for a fee, would act as middleman between the institution and private party, and a price will be negotiated.

The most potentially sensitive question is what happens when a primary dealer is presented with a plundered artifact, or one that gives some indication of having been plundered. Under my proposal, the primary dealer would be encouraged to take possession of the artifact and interview the party directly to obtain as much archaeological information as possible. In this process, a relationship analogous to lawyer-client privilege would go into effect: The client’s identity would remain completely confidential. The dealer, acting as agent for the private party, would turn over the artifact and any supplementary archaeological information to the Department of Antiquities for further research. The artifact would subsequently be sold at a future governmental auction on behalf of the listing dealer, and the proceeds (less commission) would be paid to the anonymous client. While these artifacts would be provided to the national auction program, they would not be accompanied with a certification of origination. The one exception would be when a “want-list” item is involved, in which case the dealer would act as the negotiator, outside of the auction format, between the private party and public institution.

Some critics may argue that this is tantamount to governmental cooperation in the economics of site-robbery. The reality is quite different. The site-robber will always find a market regardless of what the government does or doesn’t do. The proposed procedure provides a system whereby the site-robber is encouraged to bring artifacts to a primary dealer, who can be instrumental in acquiring residual, and perhaps vital, archaeological information, which otherwise might not see the light of day. Furthermore, this process may, in some cases, lead to the location of the site, resulting in action by the Department of Antiquities to protect against further 046violation, or to initiate an authorized survey of a heretofore unknown archaeological site. The most salient public policy objective is to preserve as much archaeological information as possible. Protecting a seller’s anonymity via the primary dealer format is a logical way to achieve this objective.

Critics of this plan may argue that when a primary dealer is confronted with an artifact with some indication of recent discovery, he would be motivated to ignore the signs and treat the artifact as being within existing circulation. This is not the case. Neither client nor dealer, under this proposal, stands to earn any less by treating the artifacts as “recently discovered.” Yet, there is of course no certainty to the notion that site robbers would always bring their goods to a primary dealer. However, two incentives exist:

(1) The robbers would recognize that the auction format is economically fair, and that to participate as sellers, they would have to put the goods in the hands of a primary dealer anyway. Why use an extra middleman? And there is no reason to deter them from using the national auction program, since adequate publication and centralization would lead to the realization of an expected price similar to one from an auction in New York or London.

(2) Dealer-client privilege from a legal point of view is guaranteed. A non-primary dealer would have the option of turning the party over to the authorities or testifying in court. Under this structure we can reasonably expect most site robbers to develop a commercial relationship with one or more primary retailers. Under this proposal, society has determined that the acquisition of residual archaeological information and critical “want-list” artifacts are the most significant factors in this situation. Furthermore, a primary dealer caught turning a blind eye to reasonable evidence may have his or her license revoked.

This proposal is designed to co-opt and regulate the private sector of the antiquities trade and to formulate a market-oriented approach to serving the public policy agenda. Market-oriented solutions have far more long-term potential for success, while lessening the drain on public funds. Indeed, through the process of the government-sponsored auction program, combined with tax revenues from the antiquities trade itself, the government will be more economically prepared to protect archaeological sites from plunderers, and may even dry up their market.

It is better to put the trade into regulated, taxable, private hands, than into the lap of organized crime. This is the sober and practical lesson economists have learned from centuries of experience in observing the trade of valuable commodities.

Since 1967, more than 11,000 archaeological sites have been robbed within Israel’s pre-1967 borders, according to members of the Anti-Plundering Task Force of the Israel Department of Antiquities.a