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Gem dealers push to ban Myanmar rubies

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.
/ Source: The Associated Press

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.

Boycott of 'blood rubies' difficult
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.

How a stone becomes a ruby
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.

Firm nets $300 million in sales
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.

Embargo hurts small companies
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.”