N e w s

Armies of bureaucrats may earn a pack by the stones circulation, "including that for the state".

No other industry is so closely watched by the executive power as the diamond-mining. The industry is a sure favorite in the number of Presidential and Prime Minister's decrees and directions that concern its functioning, the reason being the "diamond fever" which struck Russian bureaucrats.

Each ministry and department is trying to contribute to the management of rough diamond and brilliant flow. There no power institution, besides the Defense Ministry, which did not have a department for fighting with the breaking of rules for precious metal and stone circulation. Recently such a right was given to the Federal Tax Police. Each subject of Russian Federation has gained a right to establish its own Gokhran and fight the illegal metal and stone circulation.

The new bill of the government is a new contribution to the "statification" of diamond-mining complex. The Economy ministry is celebrating - now they have joined the Finance Ministry in developing suggestions on export quotas for rough diamonds. Until recently this was done by the President administration, a department in the Government, Gokhran, Finance and Trade Ministries.

The monopoly of Gosplan (state planning) was brought down, but its idea is well and alive. The total triumph will come with the ratifying of the "Order of setting the volume of supplies for rough natural diamonds". According to it, the Economy Ministry will be collecting requests on the amount needed from all over Russia with the purpose of designing a plan for output distribution in June and July. In August - September lapidary plants are going to substantiate their requests. And in October - November the plan will be set. The output will be distributed in strict accordance with the plan, including the amount, assortment and prices. This is far from being a fruit of the author's imagination but rather is a straight logical consequence of the Government resolution # 215 dating March 10, 2000.

This principle of distribution is a complete contradiction to the market economy. The statement of Valery Rudakov, head of Gokhran and deputy finance minister, that the state has a right to distribute Alrosa's output because it holds 32% of the company's shares, contradicts the Federal law, according to which the extracted output belongs to the company. As the owner of contol shares, the state can only dispose its dividends but not th output. The company's losses in case of non-market distribution are estimated at 8-9 billion rubles. The gain not received by Alrosa is operated by the institutions and is the main reason for criminalization of diamond business. Despite all the efforts to put an end to illegal circulation, its volume is still very significant. Thus, in 1999 Alrosa was able to realize at the internal market diamonds of total $700 million, illegal export was estimated by Vyacheslav Shtyrov at $100 to $200 million.

The desire to have their hand in diamonds seems to deprive the actions of government executives of logical motives. And Valery Rudakov is right when criticizing the Alrosa management for promoting lapidary processing at the company's subsidiaries. By selling the material to the "daughters" on privileged terms Alrosa stops them from taking part in honest competition. Can we hope than, that this touchy care of armies of bureaucrats and state privileges will not deprive Russian cutters of motives "to take part in honest competition".

The essence of the development concept for diamond complex seems to be in allowing the institutions to speculate precious metals and gems not in the state's interests but at the state's expense and, here, at the expense of Alrosa.

The new resolution makes clear all the absurdity of the current law in that the bureaucrats and only them jave the right to decide to who, how many, what kind of diamonds and at what price should Alrosa supply the diamonds. They all want to became the market participants, and this is the only way "to earn money, and for the state as well".

Vladimir Sanko

Source: Nezavisimaya Gazeta