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How the diamond legend was created

09 january 2019

In 1973, the Memoirs by Arseniy Zverev, a prominent People's Commissar (Minister) of Finance of the USSR, who held this position from 1938 through 1960, were published. There is one interesting paragraph about diamonds in this book “One of the aspects of my activity in my new position which I have never faced before was a constant need to keep the track of events about the accumulation of state treasures. There was no information about the Diamond Fund of the USSR that is known to everyone nowadays. However, it did not remain the same but was continuously replenished. Just in 1938, when I focused on this, some diamonds were discovered for the Fund, truly speaking, these were small sized ones from the Urals. At that time, nothing was known about the famous now Yakutian diamonds.”1

The average weight of the diamonds mined in the Ural area when Zverev was the Minister of Finance was 0.5–0.625 carat (100–125 mg). Were they ‘small-size diamonds’? And this is about the ‘famous now Yakutian ones’ “As expected, the diamond content in the Vilyui diamondiferous alluvial deposits was higher than in the Ural fields. However, the local diamonds ranked below the Ural ones in size. The average diamond weight in the Vilyui alluvial fields was from 20 mg in the ‘Sokolinaya’ Kosa [tongue of land] up to 8-9 mg in the ‘Rybachya’ Kosa.2  

Zverev was very well aware of the Ural diamond sizes and quality which is confirmed by his correspondence on the creation of the collection of the Geological Museum named after A. P. Karpinsky, the Academy of Sciences of the USSR.3 What led him to make such a strange ‘mistake’ in his Memoirs?

In 1979, a monograph ‘The Diamond Fund of the USSR’ was issued in Moscow, and Nikolai Baulin was among the authors, he was in charge of the Gokhran [State Precious Metals and Gems Repository] from 1949. This is an excerpt from this treatise “In the ‘сold war’ years, the imperialistic monopolies - in an attempt to retard the post-war revival and development of the Soviet Union - banned diamond sales to the USSR. At that time, the Ural alluvial mines not rich in diamonds were the only source of this mineral raw material that was of most importance for the national economy and defence.”4

We wrote several times about banning the diamond deliveries to the USSR in the ‘cold war’ years. It should only be reminded that those diamond deliveries peaked in 1951 to 1953, when the Soviet Union’s diamond imports outstripped the pre-war level by far and away.5 Today, it can also be documented that the Uralalmaz did not supply a single carat to the industry, including the defence one. Baulin could not fail to be aware of those facts because the Gokhran headed by him took part in the diamond export-import operations and was a ship-to party for the Ural rough diamonds. What made Baulin and his co-authors write such outright lies?

In 2014, the memoirs by Vladimir Leshkov, who was the Assistant to the Chairman of the Council of Ministers of the USSR on the rough and polished diamond industry in 1974 to 1988, were published as part of ‘the Diamond Book of Russia. Volume 1’. Touching upon the diamond mining in the Urals, Leshkov said that “The first tens and later on hundreds thousands carats of the Ural excellent quality diamonds started to come to the country’s State Fund, part of which were used to decorate the USSR marshals’ insignias and the highest decoration of the great power – the Order of Victory.” 6

There are about twenty documents in the State Archive of the RF that allow to accurately determine what polished diamonds were used to decorate the marshals’ stars and Orders of Victory. There are neither hide or hair of the Ural crystals there. All the polished diamonds for this purpose were taken from the Gokhran inventories made owing to the gems confiscated from the ‘persons having unearned income’ and bought up by the Torgsin from the population. Leshkov was one of the most informed Soviet officials about the diamond industry and there were no secrets to him about this. Why did he indulge in really wishful thinking?7

Publicly available sources on the diamonds in the USSR time, and often the contemporary Russian ones have much ‘information glut’: false, misrepresented and undoubtedly made up data. Moreover, this ‘infoglut’ often comes from those people whose service records do not allow making a question of their absolute awareness. What was going on?

Here, we have to touch the notions ‘industry legendizing’ and technical counterintelligence. This topic is very ’sensitive’, there were no historical studies in this line in the RF at all (to say nothing of the USSR). In recent years, a paradoxical situation has arisen: in the former Soviet republics, especially in the Baltic countries, the KGB archive documents were partly declassified and are freely available, for example, the documents like order No.00136 signed by the Chairman of the KGB of the USSR ‘On the participation of the local KGB authorities and the branches of the Central USSR KGB authorities in legendizing of the defence enterprises and defence activities’, but in Russia, such documents are still ‘top secret’, which makes their review in public sources impossible.

So, without getting into specifics of the industry legendizing process, we shall only note that it was automatically applied in the USSR to the enterprises and activities that were top secret. A sort of technical counterintelligence services (the name was different, here we use the most common one) were simultaneously established along the whole production hierarchical arrangement: ministry – amalgamation – enterprise that tackled the legendizing tasks. Information classification level of the activities related to diamonds was assigned after the discovery of the first Ural alluvial deposits. Once that decision was taken, the leading ministry (at that time it was the Committee of geology under the Council of People's Commissars of the USSR) together with the Diamond Bureau should establish the respective technical counterintelligence services and set up their representative offices in all the hierarchy of the related subordinate enterprises. From that time forth, all the information about diamonds that came to the publicly available Soviet sources was nothing else but a really industry legend, a professionally distorted version of the real motives, events, ties.

What information was protected thanks to this legend? If we sum up the memoirs by the major representatives of the Soviet diamond industry cited above, we can receive the situation as follows: in the attempt to bring the USSR to the knees, the cruel imperialists turned off the ‘taps’ supplying diamonds, and the meager small-size diamonds recovered at the Ural mines could not satisfy the appetite of the ‘national economy’ at all and was sufficient for the state regalia decoration only. And the same picture - to put it mild, dissonant to truth - was repeated in all the publicly available Soviet sources: memoirs by various officials, historical researches, opinion journalism. What is not given in the public sources, what is not mentioned in any Soviet publication? The diamond export-import operations.

Really, there is no indication in any public statistic data book (to say nothing about other publications) issued in the USSR in 1922 to 1991 about the slightest traces of the rough and polished diamond exports and imports. But why should there be not a word about it, why those operations were safeguarded by a state secret and should be protected by a legend? Really, diamonds were a strategic raw material, but the Soviet Union exported many types of important strategic raw materials, like chromium and manganese ores, and the information about such supplies was published in the press and on a regular basis. And the Ural diamonds ‘were supplied to the defence industry’, ‘mounted in the orders’ and supplied to other places but within the Soviet country only. Even after the discovery of the enormous Yakutian fields, when every schoolchild knew that the diamond production greatly exceeded the internal needs of the USSR, all the information about the diamond exports was still confidential. What was the reason? The main diamond foreign trade partner!

The diamond industry legend had a unique feature – it had two authors. From the Soviet side of the ‘iron curtain’, those were the experts from the respective technical counterintelligence services, and from the external side – the experts of the de Beers marketing intelligence service.

In early 1952, several news appeared in the English-language publications – in South Africa and Great Britain – that the USSR had made an illegal channel used to supply African industrial diamonds to the Soviet Union by diplomatic bags via the officials of the Soviet Embassy in Lebanon. Notwithstanding that no high levels of proof were presented, those reports in the press drew the attention of the CIA and gave occasion to a number of informants’ reports, where the South African and British sources were cited, and also became an integral part of all the English-language historical publications relating to the establishment of the Soviet diamond industry, for example, “Old traders in Beirut – the town many illicit dealers in Africa send their diamonds to - recollect that the diplomatic bags sent to Moscow by the Soviet Embassy in Beirut were often filled with rough diamonds.”8

Cross citing of these publications over the years resulted in the situation that the ‘facts’ of the Soviet diamond smuggling were not disputed but, on the contrary, they were used as a convincing ‘cast iron proof’ that a diamond embargo had been imposed on the USSR by the Western countries. Really, why was large-scale smuggling required if not for getting over the embargo?

Let us not divert our attention to the piquant details, for example, how the ‘old Lebanese traders’ could poke their hooked noses into the ‘suitcases’ with the Soviet diplomatic mail, but let us focus on the main event on the diamond market at that time. In summer and autumn 1952, the USSR purchased a huge amount of industrial diamonds in London. The amount was so huge that the Ministry of Foreign Trade had to address A. Mikoyan (the then Stalin’s Deputy for Foreign Economic relations supervising all the diamond industry) with a request to promptly provide additional equipment to the Trade Representation in London for diamond sorting and weighing.9 Analytical balances were not sufficient to weigh that huge quantity of diamonds – so that is what ‘embargo’ really was! It was that record purchase that bogus stories in the English-language press covered up for and that became a significant element of the diamond legend for many years. And who was behind all this?

In this episode, the USSR and De Beers played together against the USA. The CIA was ‘taken in’ by a fake about the Soviet smuggling and focused on discovering a channel that did not exist. Meanwhile, the deal of the century held in London went unnoticed by the Americans. Moreover, the intelligence memorandum ‘The World Industrial diamond Production and Trade’ elaborated by the CIA for the US government stated that the industrial diamonds reserves made by the USSR by 1952 were sufficient to last from six months to one year. It means that the mistake was about 10 to 15 times as for various diamonds categories. This protocol was one of the reasons for dismissing Walter Smith, Director of the Central Intelligence Agency, in 1953.

It is difficult to blame the today’s historians and publicists that they became the victims of an industry legendizing trap. The diamond legend was an excellent quality product. How was it possible to doubt the memoirs by the Soviet ministers and top officials? It was set down in black and white in the long-run books: here was the embargo, here was the deficit in industrial diamonds, the defence industry just did not keep up, the crystals were removed from the jewellery pieces because of the need to make diamond cutters… . and everything was proved on the other side of the ‘iron curtain’: the embargo was in place, smuggling was there, and the contacts with De Beers started from 1959 only, and before that - not the least bit … What doubts could be entertained?

The diamond legend - as distinct from other industry legends invented in the USSR and ceased to exist long ago – turned out to be very strong and keeps on explicitly and implicitly influence seriously the quality of historical researches and journalistic studies. It is not a strained interpretation to say that the industry legend has set a canonical paradigm for the national diamond industry history and the professional historians - wishing or not – try to place all the new data on the Procrustean bed. A case in point is the known episode with the letter written by M. Shestopalov to Stalin. Really, Shestopalov wrote to the leader “Without losing any time, the USSR should get rid of the dependence upon diamonds as a strategic raw material as soon as possible … .” The most interesting new declassified document at first sight complied with the legend perfectly well! That is why no critical look was taken at it, no serious insight into it was provided but it was cited in tens wildly enthusiastic publications. Sure thing, a brave young man from the masses took initiative, the leader approved it, read inefficient ministers a lesson, the ministers woke up in no time and the diamond industry surged forward! And such a great motive – to get rid of the damned dependence –and all the people, from an ordinary geologist to the leader, were in the first flush of enthusiasm! Alas, as it turned out, the real Shestopalov’s motive was different (he was saving his life), there was no any ‘Shestopalov’s report’ in the Kremlin, and the ministers were just debating - whether to shoot the ‘brave man’ for theft and sabotage or not. The truth was rather far from the canonical version.

Understanding that the information about the diamond industry was not just classified but legendized – by the joint efforts of the USSR and De Beers – is the only way to explain many events that were more than strange and related to the development of the Soviet and - to a certain extend - of the Russian diamond industry. So, this is where the answers to the questions are: why the diamond mining in Yakutia was delayed for seven years and who thrusted his opinion on A. N. Kosygin to set up a cutting and polishing industry in the USSR that was unprofitable, from beginning to end.

Sergey Goryainov, Rough&Polished 

1Zverev A. G. Minister’s Notes. М.: Politizdat, 1973. С. 150

2Diamonds of Russia-Sakha. М.: ROSSPEN, 2005. С. 67.

3 The State Archive of the RF. Ф. 5446. О. 50а. Д. 5241. Л. 3.

4Baulin N. Ya. et al. The Diamond Fund of the USSR. Moskovskiy Rabochiy. 1979. С.15.

5The State Archive of the RF. Ф. 5446. О. 86а. Д. 1113. Л. 2-3.

6The Diamond Book of Russia. Volume 1. М.: Gornaya Kniga, 2014. С. 69.

7The works by Zverev and Baulin were published in the USSR time, so they were censored. The colonel Leshkov’s memoirs were uncensored but, as a rule, the self-censorship level inherent in this generation is high.

8Grin T. The modern world of diamonds. М.: Progress, 1993. С. 125.

9 The State Archive of the RF. Ф. 5446. О. 86. Д. 1244. Л. 2.



We continue to publish archive documents on diamonds:
 

1. The State Archive of the RF. Ф. 5446. О. 50а Д. 5241. Л. 3. The letter by A. Zverev on the Ural diamonds for the collection of the Geological Museum.

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2. The State Archive of the RF. Ф. 5446. О. 50а. Д. 5241. Л. 1. The letter by S. Kruglov on the diamonds for the collection of the Geological Museum, the Academy of Sciences of the USSR. 

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3. The State Archive of the RF. Ф. 5446. О. 44а. Д. 4608. Л. 5. The letter on the allocation of the polished diamonds and precious metals for the manufacture of the Order of Victory. 

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4. The State Archive of the RF. Ф. 5446. О. 44а. Д. 4608. Л. 7. The Regulation of the Council of People's Commissars of the USSR on the polished diamonds for the Order of Victory.

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5. The State Archive of the RF. Ф. 5446. О. 44а. Д. 4516. Л. 11. The Regulation of the Council of People's Commissars of the USSR on the polished diamonds for the marshals’ stars. 

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6. The State Archive of the RF. Ф. 5446. О. 48а. Д. 825. Л. 74. The letter by L. Mekhlis on the case of M. Shestopalov. 

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7. the Russian State Archives, Economy. Ф. 8153. О. 5. Д. 639. Л. 61. The note on the requirements for the national rough diamonds in 1949. Thirty carats were the quantity supplied by the Uralalmaz for the needs of the ‘national economy’. The remaining rough diamonds recovered went to the Special Department of the USSR Ministry for State Security (headed by N. Ya. Baulin) and then exported. 

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