Ruby Tuesday

Hypocritical nonsense or necessary measure to save the world? On Tuesday, July 29th the so-called Tom Lantos Block Burmese JADE (Junta's Anti-Democratic Efforts) Act of 2008 came into effect which entirely bans the import of Burmese rubies and jade into the USA.

So America has once again decided to rid the world of an evil dictatorship. By a close embargo of Burmese rubies and jade the local junta, which in 1997 renamed itself SPDC (State Peace and Development Council), shall be deprived of its income and thus be brought to its knees.

By the by, I hold the former name State Law and Order Restoration Council for onomatopoetically much more appropriate. SLORC reflected the people's view of their regime much better than the featureless SPDC.

Also noted, as an aside, a few marginalia concerning the driving force behind the bill:

Tom Lantos was a congressman from 1981 until his death in February 2008 and involved in bringing a demonstrably false witness to speak in front of the congress in October 1990. The alleged nurse testified to atrocities committed against infants in a Kuwaiti hospital by Iraqi soldiers. Nurse Nayirah later turned out to be the daughter of the Kuwaiti ambassador to the U.S. She was not present in the said hospital at the time.

Ex-FBI whistleblower Sibel Edmonds mentioned Lantos and several other high-ranking officials in connection with illegal trade in narcotics, arms and nuclear technology as well as terrorism and money laundering. Mrs. Edmonds later filed suit against the FBI and the Department of Justice for wrongful dismissal from the FBI in retaliation for reporting criminal activities of government officials. Edmond's case was dismissed for reasons of national security…

What´s it all about

The new bill is an amendment of the Burmese Freedom and Democracy Act of 2003 which banned the direct import of Burmese rubies and jade. The old bill had proven quite ineffective since by far the most Burma rubies are transported into Thailand and exported from there.

As of July 2009 this loophole has been closed. Whoever now wants to import rubies into the USA has to produce a certificate attesting the non-burmese origin of the gems. This obviously raises the question whether US customs officials have the expertise and the equipment to verify the declarations of origin given in the certificates. Or will the GIA (Gemological Institute of America) now open branches at all major US airports?

Apart from that, many renowned authorities in the trade think the new bill rests on controversial, if not altogether false assumptions.

Contrary to American belief, Burmese ruby mines are predominantly in private hands. Most rubies find their way to Thailand via labyrinthine paths which often lead through territory controlled by rebel forces which profit directly from the toll they levy from the ruby runners.

Allegations of the junta earning $ 300 millions a year in revenues from gemstone auctions are grossly exaggerated. In fact most lots auctioned off are privately owned. The junta only collects 10% tax on exports. To jazz this up to one of their main cash cows is plain nonsense.

The prevailing belief of the members of the international gem trade is that a boycott would mainly hit the numerous small miners, cutters and traders and deprive them of their livelihood. Does anybody out there seriously believe, this will stop the junta from feathering their own nest and give way to democracy?

Besides, Burma has many more natural resources. Apart from other gems, like Peridot, sapphire, spinel etc., Burma holds 60-80% of the worlds teakwood and considerable amounts of copper, tin, tungsten, antimony, lead and, last but not least, natural gas, oil and coal.

Apropos natural gas: US energy giant Chevron holds a 28% share in Burma's Yanada gas field and pipeline. Burma's trade volume of natural gas and crude oil grew a staggering 300% in 2007 and adds up to about ten times the volume of the gem trade.

Section 15 of the new bill exempts American investments in the Burmese oil and gas business from the embargo. It is merely stated that United States companies ought to be held to a high standard of conduct overseas and should avoid as much as possible acting in a manner that supports repressive regimes such as the Burmese Government.

Honi soit, qui mal y pense, or, as some jester once put it, "pluralism in the USA means that the president and the vice-president come from different oil companies."

The future of the ruby trade

Given the fact that Burma rubies have a world market share of about 90% and the fact that there are far too few rubies from other sources that could match their quality, I venture to predict the following:

- Burmese ruby mines will not cease operation

- Burma rubies will continue to find their way to Thailand and, to a lesser extent, China

- shortly it will be found that the number of rubies being certified to come from non-burmese locations will grossly exceed the number of rubies actually being mined at these locations

- in particular ruby exports from Vietnam will rise dramatically because of the similar geology of the two countries and the fact that thus Vietnamese rubies can hardly be distinguished from Burma rubies

- Thai, Indian, Sri Lankan and Chinese rough traders will compete for non-burmese ruby rough

- competition as well as rising costs due to the necessary certification will drive up ruby prices

In Thailand, which exported gems and jewellery worth 4.5 billion euro in 2008, more than 19% of which to the USA, the industry seriously worries. What the embargo will do to the Thai labour market remains to be seen.