MAC: Mines and Communities

Rubies in the dust: can a Burma boycott work?

Published by MAC on 2007-11-27

Rubies in the dust: can a Burma boycott work?

27th November 2007

Reports of Burma's gems bazaar, held last month, indicate that calls for a boycott didn't have the impact many had desired. What it did, apparently, was raise further questions, both inside and outside the industry, as to whether sanctions could work.

Or - even if they did - would significantly dent the military's illict power.

Associated Press (AP) said that "imposing sanctions will be fraught with problems, particularly since as many as 90 percent of the world’s rubies come from Myanmar."

One might reasonably expect the oppositive to be true: that Burma's pre-eminence in the market would make a boycott comparitively easy, avoiding the complex investigations and costly policing, required to implement the Kimberley Process applied to "blood diamonds"

"The industry would almost have to ban the trade in rubies altogether for the embargo to work," according to one academic, pointing out that: "It will be difficult to get all countries involved. China, India and Southeast Asia are the key”.

But surely it's the consumer who's the key - along with those who market these "blood gems."

After all, the fairly effective (if still not watertight) staunching of the flow of conflict diamonds couldn't have happened unless De Beers had, for its own reasons, declared it wouldn't handle them in the first place.

[Comment by Nostromo Research].

Myanmar wraps up gem auction amid boycott calls: report

Agence France Presse

27th November 2007

Military-run Myanmar has wrapped up a gem auction, a major money-spinner for the junta, state media said Tuesday, despite sanctions and calls for a boycott following its deadly crackdown on protests.

A total of 3,618 lots of jade, gems and pearls were sold during the 13-day auction, which ended Monday, the official New Light of Myanmar newspaper said. It did not say how much was earned off the sale.

Poverty-stricken Myanmar is the source of up to 90 percent of the world's rubies, and each auction of precious stones rakes in more than 100 million dollars, making it a key source of revenue for the military regime.

The most expensive jade lot at the auction was worth 80 million euros (120 million dollars), according to state-run Myanmar Gems Enterprise (MGE), the country's third biggest state enterprise.

The newspaper did not say whether that pricey green stone was sold during the auction, but noted the military government "honoured" the highest bidder of jade lots without giving further details.

The latest gem sales were held as Myanmar faces global pressure over its violent clampdown on peaceful protests which began in August, with the United States and the European Union tightening sanctions aimed at the top generals.

US First Lady Laura Bush urged companies to shun the auction, while top jewellers Tiffany, Cartier and Bulgari said they would refuse to sell Myanmar gems.

But the official paper said more than 3,600 gem merchants, including nearly 2,300 foreigners, had attended the auction despite global calls for a boycott on Myanmar's gems and tightening Western sanctions.

Nearly 90 percent of the foreigners were from jade-crazed China, one of Myanmar's closest allies and a major weapons supplier to the regime, with others from around the world, state media said this month.

China has been widely criticised for not taking tougher action after the crackdown on the mass protests, the biggest challenge to the regime in 20 years.

Myanmar used to hold gem auctions twice a year but has been holding them with increasing frequency in a bid to raise much-needed foreign currency amid tightening sanctions against the junta. It held four auctions in 2006.

Despite the US sanctions, which ban direct imports from Myanmar, the country's gems are cut or polished in third countries, often Thailand, for jewellers, and then shipped to the United States under a legal loophole.

Mixed signals from gem emporium

Mizzima News

27th November 2007

Burma's latest gem emporium came to a close yesterday, following a nearly two-week bazaar held under international pressure to ban the import and sales of gems originating from the strife-torn nation.

While legislation is currently in the works in the United States and elsewhere aimed at outlawing the sale of Burma's blood jewels, human rights organizations such as New York-based Human Rights Watch had been outspoken regarding the moral duty to boycott the latest trade show due to gross human rights violations surrounding Burma's gem industry.

However, judging by state statistics, the final numbers from this latest drive to bring in foreign currency to the cash-strapped nation appear to point to a limited impact of looming sanctions and calls to boycott.

According to the state-run New Light of Myanmar, going into the final day of sales the emporium had documented some 3,330 lots of precious stones sold. This compares more or less equitably with the volume of sales during the March event, prior to the mass protests and violent crackdown of September, which witnessed a reported 3,652 lots sold.

Further, though a majority of traders in attendance came from regional neighbors such as China and Thailand, the state run press was eager to point out that buyers also arrived from a host of international countries, including the United States, Britain, Australia and Japan.

Yet the projected sales look to fall well short of a goal for sales proclaimed by state officials prior to the auction, of some 5,500 lots to be sold. This prediction may have stemmed from the success of a special sale in July, in which over 4,600 lots were purchased.

The exact value of hard currency earned from this latest sale is not yet known, though the March sale garnered a reported $185 million.

In addition to large quantities of jade, Burmese rubies are estimated to account for 90 percent of all rubies on the world market.

Gem dealers push to ban Myanmar rubies - Mick Elmore

Associated Press

26th November 2007

The rich red hue of Myanmar’s prized rubies is a reminder to many gem dealers of the military government’s bloody crackdown on democracy advocates, and talk of a boycott is increasing.

“There is a growing awareness that it is a fascist regime,” said Brian Leber, a third generation American gem dealer.

“Considering what this regime has done to its own people, we’re troubled to see that a precious stone is offering such a great source of cash for them,” he said in a telephone interview from the Chicago suburb of Western Springs, Ill.

“Trade in these stones supports human rights abuses,” New York-based Human Rights Watch said in a statement this week. “The sale of these gems gives Burma’s military rulers quick cash to stay in power.” Myanmar is also called Burma.

But a successful boycott of what activists call “blood rubies“ will prove difficult. More than 1,500 people from more than 20 countries registered for a gems auction that opened Wednesday, despite the boycott calls. While some rubies are exported legally, many also are smuggled out of Myanmar.

The ruby trade puts money in the junta’s pocket, since it controls mining concessions, but the scale of the profit is hard to assess. Secrecy shrouds both the gem trade and the country as a whole.

In 1964, Myanmar introduced an annual gem auction, and starting in 1992 the sale was held twice a year. In more recent times, a special third auction has been held each year.

First lady Laura Bush issued a statement Friday calling for a boycott of the event by the gem industry and urging consumers to reject any stone from Myanmar.

“These funds prop up the regime, allowing it to continue to harass, arrest and sentence peaceful activists who seek freedom of speech, worship and assembly,” she said. “Every Burmese stone bought, cut, polished and sold sustains an illegitimate, repressive regime.”

The government has taken other steps to increase earnings, including an effort to cut smuggling. The country’s New Gemstone Law, enacted in 1995, allows people in Myanmar to mine, produce, transport and sell finished gems and jewelry at home and abroad — as long as they pay tax, which smugglers don’t.

Most rubies are trafficked as rough stones. They are dug out of mountainsides in the Mogok and Mong Hsu areas of northeast Myanmar. From there, they are carried on a long, perilous journey over mountains, through jungles and insurgent-prone areas, changing hands several times on their way to Thailand.

There, the rough stones are heat-treated with chemicals at high temperature for long periods to bring out the brilliant color and clear away small cracks.

Once cooked, cut and polished, the gems are sold to foreign wholesalers, who distribute them to jewelers around the world.

The biggest determiner of the final price is the success of the heat enhancement. If done improperly, the process can split a stone and make it almost worthless; done right, a ruby can become more expensive per carat than a diamond.

The best large stones fetch millions of dollars. The Christie’s auction house, on its Web site, lists a ring set with an 8.62 carat ruby which sold for $3.6 million — a record per carat price of $425,000 — in February 2006.

The vast majority, however, are stones of up to 2 carats which miners in Myanmar sell for just a few dollars. They end up in jewelry shops with price tags ranging from a few hundred to several thousand dollars.

The smuggling bypasses the state-owned Myanmar Gem Enterprise that oversees the industry and runs the gem auctions in the city of Yangon.

The Myanmar Gem Enterprise said it generated sales of nearly $300 million in fiscal year 2006-2007, according to Human Rights Watch.

The agency did not respond to questions from The Associated Press sent by e-mail.

Dealers in Bangkok estimate the generals earn at least $60 million annually from gems, but some say the amount could be as high as 10 times that.

Whatever the figure, a growing number of dealers want to deny the junta any windfall from rubies.

But imposing sanctions will be fraught with problems, particularly since as many as 90 percent of the world’s rubies come from Myanmar. Most go to the United States, Europe and Japan. Myanmar also exports jade, sapphires and pearls.

The industry would almost have to ban the trade in rubies altogether for the embargo to work, said P.J. Joseph, a teacher at the Asia Institute of Gemological Sciences, a school and lab in Bangkok.

“Things are stacked against the embargo working. The generals are pretty used to divide and rule, and it will be difficult to get all countries involved. China, India and Southeast Asia are the key,” he said, adding that these would probably not join.

Arnold Silverberg, who owns AJS Gems in Bangkok, said an embargo hurts all the mom and pop businesses in the industry.

“The amount of money the generals get from gems is minuscule compared to the money they get elsewhere. The generals don’t give a damn, they have all the money in the world,” he said.

Silverberg said those pushing the boycott “are just trying to make themselves feel good. But we’re starving the people, not the generals. I feel bad for the Burmese people.”

Jewelers of America supports the ban of Myanmar rubies, advising its more than 11,000 members to “to source their gemstones in a manner that respects human rights,” the group’s president, Matthew A. Runci, said in a statement released last month.

Sanctions didn’t work well before.

American companies stopped buying rubies in 2003, when the United States banned imports of all Myanmar products under a law enacted in reaction to the ruling generals’ human rights abuses.

The following year the U.S. Customs Department created a loophole, exempting gems cut or polished in other countries from the ban. More than 90 percent of Myanmar’s gems are exported in rough form.

Most colored stones from Myanmar are cut and polished in Chanthaburi, Thailand, a global gem center. Often those that arrive cut and polished are done over because the skill level in Myanmar is inferior to Thai workmanship, dealers in the southeast Thai town say.

But even during the total ban on Myanmar gems, many passed under the radar by being sold as coming from Vietnam or Sri Lanka. When the loophole was introduced they started being Myanmar rubies again.

Despite such problems, Leber, the Illinois dealer, disagrees with the boycott opponents. “It’s not a question if it’s going to be effective. It just feels wrong to sell rubies from Burma.”


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