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On the motives to establish the diamond industry in the USSR

06 november 2018

The overwhelming majority of the historians in Russia and abroad consider that the Soviet diamond industry was established mainly to overcome the dependence of the USSR on the import of industrial diamonds. Prior to the onset of the Yakutian fields development in 1957, the Soviet industry – first of all, the defence one - supposedly incurred persistent deficit in the industrial diamonds and diamond tools, that worsened due to the constant threat of a diamond embargo that was really imposed by the West in 1950 (according to some opinions, in 1938). Severe ‘diamond shortages’ suffered by the booming Soviet industry was the reason for the development of the diamond geology in the USSR, the discovery and development of the Ural and – later on – the Yakutian diamond deposits. No need to give references because this thesis is self-evident practically to all the authors who study the history of the Russian diamond industry and the same has been repeated in various ways in hundreds publications of the past half century.

This motive to establish the diamond industry in the USSR has been for a long time and - unfortunately - remains to be a basis to explain the major events in the Soviet diamond saga and to make their logical relationships, all the key facts and dates of the Soviet rough and polished diamond sector were based on it. Alas, this motive is a false one. And the historical studies vector set by this motive leads to a blind alley full of unresolved contradictions that make both the right interpretation and the search for new data impossible.

Let us see the facts in evidence.

In 1938, diamond issue became a subject of high state level – the Diamond bureau was set up at the Committee on Geology under the CPC (Council of People's Commissars) of the USSR and the intensive diamond exploration started in the Ural area. What was the situation with the industrial diamonds in the country at that time?

In 1940, Malyshev V., Chairman of the Council on Machine Building under the CPC of the USSR, submitted a detailed note for information to Mikoyan A., Chairman of the Economic Council under the CPC of the USSR, on the consumption of industrial diamonds by the Soviet industry1. In the document, England and Holland were indicated as exporters, and the main consumers in the USSR were the Councils of People's Commissars on the aviation industry and on the medium machine building [Editor’s note: dealing with the USSR nuclear engineering and industry], and the demand in the industrial diamonds for 1940 was estimated as 3.5 mn gold roubles. At that time, the exchange rate was 5.3 gold roubles to US$1. The cost of one carat of industrial grade diamonds in the world market was about US$2.5. So, the USSR demand in the industrial diamonds in the pre-war year was about 260 000 carats. In the same note it was mentioned that the real consumption of the industrial diamonds in the USSR was estimated as 2.5 mn gold roubles in 1937, 3.23 mn gold roubles in 1938 and 2.063 mn gold roubles in 1939. There was no slightest hint of the diamond shortages or any import problems or outstanding requests made by the Councils of People's Commissars, etc. – industrial diamonds were imported in quantities required and paid at the world prices.

During the Second World War, the consumption of the industrial diamonds by the USSR industry fell down considerably. In 1946, a confidential Note on the Consumption and Production of diamonds was submitted to Mikoyan A., who supervised the coordination of the work on the elaboration of the regulation of the Council of People's Commissars of the USSR On the Development of the National Diamond Industry, that said that the average annual consumption of the industrial diamonds by the Soviet industry in 1941-1945 was actually 109 600 carats2. This document also showed that “the total requirement of the national economy was satisfied by means of import deliveries only”3. The paradoxical – at first sight – integral decrease in the consumption of the industrial diamonds during the war was attributed to both a sharp drop in the industrial production due to the shutdown and subsequent evacuation of factories from the western regions of the USSR at the initial stage of the war and the significant introduction of the machines imported under the Lend-Lease programme that were at first equipped with necessary diamond tools. 38,100 state-of-the art machines were supplied from the USA and 6,500 ones from England. There exists convincing evidence that the machine-tool fleet of many USSR major defence enterprises was 50 per cent equipped with the machines received under the lend-lease programme.

In spite of the fact that the national industrial diamonds consumption slightly exceeded 100,000 carats per year, the USSR received annually 620,000 carats in 1941-1945 under the Lend-Lease programme4. The discrepancy between the actual consumption given in the above note submitted to Mikoyan and the data of diamonds supplied under the Lend-Lease programme shows that the USSR made a significant stock (up to 2.5 mn carats) during the war years. This figure does not include the diamond tools supplied along with the machines under the Lend-Lease programme and the diamonds and diamond tools captured from the enemy’s well-equipped machine building factories in Germany and its satellites located in the zone of Soviet occupation.

So, by the beginning of the ’Cold war’, the USSR had the industrial diamond reserves sufficient to satisfy the needs of the national industry at least for 5 years without importing them even if their consumption would grow 2-3 times as compared to that during the war years. However, with such great reserves, the purchase of the goods after the war on the foreign market continued in fantastic quantities that exceeded the pre-war levels by 2 to 5 times. The purchases peaked in 1952 when a sum of 20 mn gold roubles was spent for industrial diamonds, that sum was 5.7 times higher than in the pre-war 1940!

As a result of such an import policy, a colossal industrial diamonds reserve was made by 1953 sufficient to meet the industry needs for various diamonds for 6 to 15 years taking into account an annual 10% consumption growth5. Nevertheless, the diamond purchases continued up to 1957 in quantities higher than the pre-war ones. That said, all those deliveries from England and Belgium were legitimate. Moreover, the Soviet Block countries – GDR, Czechoslovakia and even Romania – purchased the industrial diamonds in Europe, Brazil, Africa without any obstruction.

Nowadays, we have declassified documents that allow us to definitely state that the USSR did not have the slightest problems with importing industrial diamonds both in the pre-war period, during the war and after the war. Moreover, from 1946 to 1957, the imports were permanently excessive and exceeded manifold the needs of the Soviet industry.

All the supplies were official and there was no smuggling. So, the known opinionating about the ‘diamond embargo’ and other ‘miracles’ like illegal delivery channels via Lebanon were just bogus stories having nothing to do with the reality.

So, we have to admit that the major motive that still is the basis for creating all the historical documentation of the Soviet diamond industry is totally fictitious. There was never any ‘diamond shortages’ in the Soviet industry, there was no notorious ‘diamond embargo’, there was no Soviet diamond smuggling. What was a real motive to explore and develop the diamond deposits in the USSR territory?

A well thought out answer is not possible without evaluating the role Anastas Mikoyan played in the establishment and development of the Soviet rough and polished diamonds. He became the People's Commissar of the Foreign Trade of the USSR in 1926 and since that, all the official rough and polished diamond export operations in the USSR had been made through him. (There was another specific branch of the Soviet rough and polished diamonds traffic through the special services but we shall discuss this in our next publications). From 1926 through 1953, all the import supplies of the industrial diamonds and diamond tools went through Mikoyan, too. He kept a check on all the information and generated the most important decisions on the diamonds: above 90% of key documents in this sphere were either addressed to him or were signed by him. Mikoyan was neither geologist nor miner nor manufacturer. His connections with the western prominent people made him a key figure, as well as his understanding that the rough and polished diamonds were one of few Soviet assets ensuring their quick sale in the west. However, this asset was not only able to generate convertible currency, the persistent deficit in which always existed in the USSR. This asset, like no other, was suited for confidential deals based on lobbying services and corruption schemes, and Mikoyan was a wizard at this - one has only to think about the story how the objects of great rarity from the Hermitage Museum were sold to Mellon, US Secretary of the Treasury.

In spring 1946, Stalin appointed Mikoyan as the coordinator of the work on the elaboration of the regulation On the Development of the National Diamond Industry. The first thing Mikoyan did as the coordinator was the order to the Amtorg, the then leading Soviet operator on the polished diamond market, to write a market review on Gems6. In the Survey, the Amtorg experts made quite a well-reasoned and unequivocal conclusion: the supply of the gem quality rough diamonds in the market was considerably behind the demand, so, a strong price growth for gem quality roughs could be expected. The minimum diamond size recovered by the Teplogorsk diamond mine was 0.5 carat and the stones featured excellent gem quality, while industrial small-size diamonds were not mined in the Ural area at all7. That was how a real major motive for the development of the USSR diamond industry was formed: rough diamonds at whatever the cost, even at the cost of the prisoners’ labour. But not for the industry, there were excessive quantities of roughs in the industry, but for export. For confidential, targeted, personalized, non-budget export.

The shift in the major motive for the establishment and development of the USSR diamond industry is of critical importance: many mysterious events could be explained that were connected with the USSR integration into the global diamond market, and new interesting personalities could come on the historical scene. And, probably, the historical research becomes of prognostic value as the events of the early 1950s are somewhat similar to our today’s reality.

Sergey Goryainov, Rough&Polished 

1State Archives of the Russian Federation. Ф. 5446. О. 24а. Д. 965. Л. 2,3.
2 State Archives of the Russian Federation. Ф. 5446. О. 48а. Д. 825. Л. 102.
3It should be noted that the Teplogorsk diamond mine started commercial production in the Urals in 1941. In accordance with the cited document it can be said that the Ural diamonds were not supplied to the industry.
4R.N. Yuzmukhametov. On the role of party and Soviet authorities in the acceleration of works for diamond exploration in the USSR. The Bulletin of the Samara University. 2012. № 2-2 (93). Pp. 149-154.
5 State Archives of the Russian Federation. Ф. 5446. О.86.а. Д. 1113. Л. 2,3.
6 Russian State Archives, Economy. Ф.413. О. 13. Д. 5114. Л. 6,7.
7 State Archives of the Russian Federation. Ф.5446. О. 48а. Д. 825. Л. 101.

Rough&Polished starts to publish a collection of declassified documents that permit to have an adequate insight into the history of establishing and developing the diamond industry in the USSR and Russia: 

1. 1952. Vneshtorg’s [Foreign Trade] Letter to Mikoyan A. on the additional purchases of industrial diamonds. State Archives of the Russian Federation. Ф. 5446. О. 86ф. Д. 1442. Л. 6.


2. 1952. Letter of Zverev A., Minister of Finance of the USSR, on the industrial diamonds reserves. State Archives of the Russian Federation. Ф. 5446. О. 86ф. Д. 113. Л. 2-3.


3. 1952. I. Stalin’s order regarding the additional purchase of industrial diamonds. State Archives of the Russian Federation. Ф. 5446. О. 86а. Д. 1113. Л. 6.


4. 1953. Letter of Tevosyan I., Minister of Metallurgical Industry of the USSR, on the additional purchase of industrial diamonds. Russian State Archives, Economy. Ф. 8153. О. 5. Д. 1401. Л. 35.