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Why is it that Jim and Rob may do what Ivan and Vladimir may not?

03 february 2020
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Any legislative innovation in the Russian Federation is adopted, of course, with the aim of ‘improving the legislation’ governing such-and-such for the good of people. However, judging by the new rules governing the circulation of precious and semiprecious stones in the EAEU, the most perfect legislation is the one that introduces total bans on everything and anything. It prohibits not only the sale and purchase transactions, but even the storage of precious stones - under threat of administrative and criminal penalties.

Even arms in civil circulation and distribution of narcotic drugs, in spite of all the obvious danger of these goods, are allowed in Russia and the EAEU in certain cases. But the sale of precious metal nuggets and rough precious stones (in their natural form) to citizens for the replenishment of their mineral collections is not allowed at all, according to paragraph 4 of Article 9 of the ‘Agreement on the Peculiarities of Operations with Precious Metals and Precious Stones within the Eurasian Economic Union’ adopted in October 2019.

Come on, gemstones ... Now in Russia, it has become unsafe even storing just semiprecious stones in the mineral collections - it might have happened that someone once mined them ‘without authorization’, and you, buying them, might have guessed that, but anyway you bought them. That is, you might have acquired a ‘semiprecious stone mined deliberately without authorization’. And it doesn’t matter that at the time of your purchases, no one could have even imagined that someday, the concept of the ‘unauthorized extraction’ could be introduced into the Russian legislation, and a person could be put in jail for acquiring semiprecious stones ‘mined deliberately without authorization’.

It is easy to believe that the government officials who developed the ‘Agreement on the Peculiarities of Operations with Precious Metals and Precious Stones within the Eurasian Economic Union’ and the draft amendments to Article 191 of the Criminal Code of the Russian Federation did not really understand why a Russian citizen may ever need a precious metal nugget or rough stone, except for selling it and gaining a profit? The meaning and content of the notions of ‘collecting’ and a ‘mineral collection’ are not clear for most officials... But it’s clear why law enforcement officers need such a norm - to make it easier to prosecute both those who mined something and those who bought something. The law enforcement officers, in principle, also do not see the possibility of any other use of rough precious stones, if not for reselling them or processing (cutting and polishing) the gems for jewelry purposes. Similarly, in their opinion, precious metals nuggets can only have one application - to melt and sell them by weight as a precious metal.

After all, the preservation of crystals and rock chip samples in the mineral collections is an environmental activity, part of the mankind’s culture supported throughout the world. To make jewelry, synthetic stones can be used, or at least not all natural stones should be cut.

A well-formed crystal of a precious or semiprecious stone, especially the one placed in the host parent rock (that is, not cleared of it) can cost several times to several hundred times more expensive than the same stone used like a raw material. But our legal and regulatory framework obliges us to completely clear the precious stones of the rocks when mining them. And for the correct assessment of the raw materials in them, it is mandatory to crush them, if it is not possible to evaluate the stones without crushing. We use so barbaric methods in recovering the precious stones, that all the stones are destroyed before sorting and evaluating them.

I recall the analogy with the famous theft of the bronze sculpture by Henry Moore ‘The Reclining Figure’ worth $5.1 mn later paid to the modernist by the insurance company. The 2-tonne sculpture was stolen by scrap metal collectors, cut and melted down and sold like bronze metal for just $2,500.

It is impossible to calculate how much the Russian Federation loses from the fact that all the precious metal nuggets, with the exception of very unique ones, are melted down, and all precious stones are sold exclusively as raw materials to be cut and polished. There is an expert opinion, for example, of Viktor Bogolyubov, the Russian expert on the beneficiation of emeralds, that the emerald mines in the Urals alone could bring many millions of dollars of stable income to the mine instead of its permanent losses. But this requires completely free circulation of emeralds and the possibility to sell them, first of all, as a mineral collection material.

Unfortunately, we have to discuss not the achieving of complete freedom, but the issue of the complete ban on the sale of rough precious stones and precious metal nuggets to individuals. It’s interesting, how do law enforcement agencies deal with thefts at mines and pits, for example, in the USA, where any citizen can freely buy or sell any rough precious stone or a precious metal nugget?

For better understanding, the author offers the collage of the photos (accompanying this article) of several American mineral collectors with some outstanding samples of the precious stones and precious metal nuggets from their collections (diamonds, emeralds, rubies, sapphires, gold, and silver). I think these nice people would be a little surprised if they knew that under Article 191 of the Criminal Code of the Russian Federation, just for storing such samples in their private collections, they would be sentenced to a 5-year prison term with a fine of up to $8,000. After all, they would have stored them here illegally, since the legal storage of rough precious stones and precious metal nuggets in Russia is just impossible for individuals. It is not provided for by law.

It is interesting that in Russia, it is possible to freely purchase or sell, for example, a multi-million-dollar piece of art, but it is impossible to legally acquire or sell a tiny rough diamond or another gem worth only a few dollars. Amazing!  

But this is not all - the legitimacy of this prohibition that is in the ‘Agreement ...’ raises doubts.

The fact is that the restriction on the circulability, or tradability, of precious stones in the Russian Federation was introduced through the first decree of the President of Russia No. 179 dated February 22, 1992, and then the decree of the Government of Russia No. 959 dated December 10, 1992. However, two years later, the Civil Code of the Russian Federation was put into force No. 51-ФЗ dated November 30, 1994, and its clause 2 of article 129 introduced a norm according to which the restriction of the circulability of civil rights’ objects can be established either by law or in the due process of law.

However, Federal Law on Precious Metals and Precious Stones No. 41-ФЗ put into force in 1998 did not establish any restrictions on the circulability of precious stones and precious metals. Moreover, the law clearly prescribed that “Precious metals and precious stones purchased in the due process of the Russian Federation law may be ... owned by legal entities and individuals. The owners of precious metals and precious stones exercise their property right to precious metals and precious stones in accordance with this Federal Law, the Civil Code of the Russian Federation ...”.

Clause 4 of Article 32 of the effective Law No. 41-ФЗ reads “To propose to the President of the Russian Federation and entrust the Government of the Russian Federation, state authorities of the constituent entities of the Russian Federation - within three months from the date of the official publication of this Federal Law - to bring their legal acts into line with the present Federal Law".

The dictate of Law No. 41-ФЗ has never been implemented as for the termination of the norms for restricting the precious stones circulability introduced by decree of the President of Russia No. 179 dated December 10, 199, and Decree of the Government of Russia No. 959 dated December 10, 1992. Thus, restricting the circulation of precious metals and precious stones in Russia cannot be considered legitimate as it has not been established by any law, or in the due process of law - despite any existing by-laws.

But if there are no restrictions on the circulability of precious metals and precious stones in the legislation of the Russian Federation, then how could they be incorporated into the regulatory legal act of the Eurasian Economic Union, where Russia belongs to? Moreover, none of the states of the Eurasian Economic Union has such restrictions in their national legislation either.

Of course, it is easier for officials to forbid everything than to develop and maintain sound industry legislation that has not prohibitive, but regulatory functions leading to the development of the industry on the whole and mining in particular. But unfortunately, so far, we are where we are. In the field of precious metals and precious stones, what Jim and Rob may do Ivan and Vladimir may not.

However, not only Jim and Rob may do this, but also all the people in almost all other countries of the world may, except for the countries of the Eurasian economic space. Why are we so deprived of our rights to harmless gems?

Unfortunately, unlike the business structures, certain interested groups - individuals, do not have lobbyists in the government. Individuals are the most insecure category of market players. As a result, our people are accustomed to accept any violation of their civil rights obediently. If it’s not allowed - it’s not allowed, nobody has thought of knowing our opinions ...

But if the circulation of precious stones in Russia and the USSR was always forbidden, how did officials manage to introduce a bill to ‘improve’ the criminal law regarding the circulation of semiprecious stones, the circulation of which has never been controlled? Has the principle ‘you can't make an omelet without breaking eggs’ worked out, according to which, for the sake of the great goal of ‘preventing the plundering of the country’s wealth’, the fate of some mineral collectors is of no significance at all?

And if the precious stones circulability in our country still existed, although de facto illegitimate (as shown above), then there has never been any restriction on the semiprecious stones circulability. That is, no document previously limited the circulability of the ‘semiprecious stones mined without authorization’ simply because there was no such legal notion - ‘unauthorized mining’. This means that the semiprecious stones ‘mined without authorization’ could not be limited in circulation, and even more so, administrative and criminal penalties could not arise on them ‘retrospectively’. After all, the penalty introduced punishes not only for purchasing and selling such stones, but also for storing the previously purchased ones, even before the introduction of the normative concept of ‘unauthorized mining’, if it can be proved that these stones were mined by someone ‘without authorization’, - which means that a penalty is ‘retrospective’ ...

In addition, the norm is unpleasantly surprising, according to which the list of semiprecious stones for the purpose of criminal punishment is established not by law (as in case of precious stones), but by a government decree. That is, this list can be increased very quickly, even every day. And voting for its expansion is not required.

Unfortunately, this is how we ‘care about’ improving the preservation of our cultural heritage, one of the areas of culture - collecting of rocks and minerals.

Vladimir Zboikov for Rough&Polished


The collage above was made using the photographs from the Mineral Collections in Texas Album, September-October 2014, published by The Mineralogical Record, USA.