Lab-grown diamonds will eventually dominate the fashion markets across the world, predicts Rohan Siroya, CEO of Evermore

Rohan Siroya, the scion of the Siroya jewellery empire, has a clear ambition to catapult the company into the next phase of development and continued success. Having honed his skills as a real estate developer in Mumbai, Rohan has demonstrated his versatility...

06 february 2023

De Beers to start production at SA's Venetia underground project this year, establishes JV with Endiama in Angola

De Beers is expected to begin production at its Venetia underground project in South Africa this year, almost two years behind the initial commence date. Construction of the underground project started in 2013 and first production was targeted or 2021...

30 january 2023

“Although we’re the 7th world gold producers, we have to buy the metal in USA”

With more than 45 years in the industry, Clemente Guevara runs New Fashion Peru, one of the three largest jewelry companies in the country. All together control the 90% of a 120-million-dollar jewelry export market. Mr. Guevara is also a member of...

23 january 2023

Consumers are testing a vastly less-expensive alternative to natural diamonds - Vin Lee, CEO of Grand Metropolitan

Vin Lee, the self-made billionaire CEO of Grand Metropolitan of USA, is popular as the 'King of Luxury'. The Beverly Hills family office 'Grand Metropolitan' is a $7 billion AUM privately held luxury goods holding company with a 60-brand...

16 january 2023

"Surat Diamond Bourse will become the voice of industry in the coming days," says Vallabhbhai Patel, Chairman of the Surat Diamond Bourse

Vallabhbhai Patel, Chairman of the Surat Diamond Bourse, looks towards the Surat Diamond Bourse (SDB) to play an important role in turning Surat into the world’s largest manufacturing and trading diamond hub in a short period. Vallabhbhai dreamed...

09 january 2023

Exposing disguise stories used as a cover for the Soviet diamond industry

26 december 2022

My small contributions to the research of the diamond market history published in Rough&Polished and as separate publications aroused keen interest not only in narrow professional circles but also in the academic community, which was quite unexpected, to be honest. So, Academician V. M. Rozin (Institute of Philosophy, the Russian Academy of Sciences) wrote a very voluminous series of articles where he thoroughly analysed and criticized the concepts I formulated and he even built my psychological profile (which was very flattering and funny)1. The staff of the Africa Institute of the Russian Academy of Sciences, the Institute for Economic Strategies of the Russian Academy of Sciences, the Institute for Systemic and Strategic Analysis, and several universities also paid attention to my efforts. Most of the opinions, reviews and analytics expressed by the academic political scientists, historians and economists boiled down to the thesis “Such an analysis of the diamond market is essentially blatant conspiracy theories”, which, of course, must be debunked scientifically using the most sophisticated methods. In this regard, it’s worth quoting Academician Rozin as saying, “In this case, the methodology was implemented like comparative analysis, methodological problematization, situational analysis, reconstruction and interpretation of the concepts declared by Goryainov. This made it possible to criticize Goryainov’s conspiracy theory and highlight the reasons for the unsatisfactory character of such concepts. As a rule, their authors interpret the facts based on their concept, do not take into account the criticism and other studies’ results, and do not satisfy the basic requirements of scientific justification.”

It’s hardly worth engaging in controversy with academic researchers on the pages of an industry publication, besides, my opponents and I use different conceptual definitions (I don’t even know what “methodological problematization” is). In addition, there has never been any “Goryainov’s conspiracy theory”. This “theory” is just an extrapolation of the results obtained in solving the problem of “exposing cover stories”. Tasks of this type were part of my professional responsibilities during the Soviet days, and although my field of activity had nothing to do with the diamond market, the methodological framework remains unchanged. Therefore, I consider it useful to simply tell the story of the exposing cover stories, and a reader has the right to decide what is conspiracy theories and what is not. I will try to avoid special terms whenever possible to simplify the understanding of the context.

This is an axiom that the USSR’s diamond industry was covered with special cover stories (legends). On the basis of the “Regulations on Making Up a Cover Story about Enterprises and Works of Defense Importance”, which established a uniform procedure for making cover stories on the territory of the USSR, all works with an appropriate secrecy level were subject to this procedure. And the stamp “Top secret” and even “Highly sensitive” was a constant attribute of diamond-related documents in all segments, from the exploration and mining to diamond storage and trade. Therefore, the fact that we were dealing with a cover story, was clear from the very beginning of our research. The question was what exactly was covered, how deeply it was covered and for how long.

Exposing the cover stories always begins with selecting the open sources of information. In this case, the selective feature was the audience for which this or that source was intended. On this basis, all open sources on the diamond industry, both foreign and domestic ones (before 1991), were divided into five groups: a) non-specialized media; b) popular publications written by non-professionals; c) popular publications (including memoirs) written by professionals in the diamond or diamond-related industries; d) scientific and narrowly specialized publications; e) normative documentation with a stamp not higher than for “Official Use Only”. It should be noted that at this stage, declassified published documents (in our case, there were practically none) should not be included in the analysis - so far, the creation of a cover story, and not exposing a cover story is of interest.

After selecting the sources, the most creative and difficult part of solving the problem comes as it is necessary to select the information constants, i.e., the blocks of information identical in content (the forms of presentation may be very different) that are present in all the groups. These information constants are the “reference points” of the “cover story” under study. In addition to being present in all groups of sources, they should have one more important property - it should be extremely difficult (or impossible) to verify without the use of special tools and classified sources. The problem is the number of such information constants, the more constants, the more difficult, longer and more expensive further research will be, the dependence is exponential. But if there are too few of them, the probability of successful exposing the cover stories decreases: firstly, a single constant may not be an attribute of a cover story, and all further work can be in vain, and secondly, the minimization of research objects in this case significantly limits the available verification tools.

We have identified three information constants typical of all the groups of open sources (until 1991) on diamonds: A) The main motive for the creation of the USSR diamond industry was the desire to get rid of the need to import industrial diamonds since their import threatened the development of industry, primarily, the defense industry; B) In 1950, the West imposed an embargo on the supply of industrial diamonds to the USSR, which intensified the exploration of own deposits in the country; C) At least before starting the development of the Yakut deposits, the USSR overcame the embargo by means of smuggling the African diamonds, using diplomatic mail channels, among other things.

These three constants are the “reference points” (not the only ones, but most significant) of the USSR industry diamond cover story and in one form or another, they are in all the groups of sources, they are obvious and at the same time, practically cannot be verified.

Indeed, point A is quite convincing; undoubtedly, there existed such a motive, but how can you check whether it was the main driver for the creation of the USSR diamond industry? At first glance, point B is also OK as in 1949, the Western countries established the CoCom (Coordinating Committee for Multilateral Export Controls) and industrial diamonds were included in the lists of goods banned from supplying to the Soviet Bloc. In this case, you don’t even need to prove anything, do you? Well, point C is generally simpler than ever, everyone knows when there is an embargo, there is smuggling, it can’t be otherwise. The curious people are asked not to worry as everything is transparent, there is nothing to check, and it is impossible to check in open sources. Everything is in full accordance with the above “Regulations on Making Up a Cover Story ...” that read that “Cover stories must be believable, convincing and continuous, and their fictional part should be difficult to verify. The information presented in the cover stories should not allow for an ambiguous interpretation and arouse an additional interest in the sensitive enterprises (works)”. And not a single historian, economist or political scientist, domestic or foreign one, showed an “additional interest”.

The last stage of “exposing cover stories” is the refutation of the established information constants. Since we act in a lawful manner only, archival funds are the only tools that can be used in this case. The task was set as follows “To document that the USSR regularly imported industrial diamonds through official channels from 1950 to 1957 in quantities sufficient for the industry functioning”. Thus, the information constant B became the main target, it was obvious that in the event of its refutation, the constants A and C were destroyed automatically. But, despite the clearly defined time interval, it seemed just impossible to fulfil the huge amount of work. The required documents could be in four federal archives and they could be in a special repository. Unfortunately, the Russian archives are very poorly digitized and searching in electronic catalogues is not effective. And it takes years and huge patience to look through thousands of archival files.

I had to resort to subterfuges. In December 2013, Rough&Polished published my article “Legend about the ‘Diamond Embargo’, which categorically stated that the 1950 embargo on the supply of industrial diamonds to the USSR was bogus stories, an element of an industry cover story. A number of indirect evidences were cited in the article that could serve as a subject for discussion. But there were no direct evidences, moreover, at that moment I didn’t even know if they existed at all and where to look for them. The article was a classic active measure, “probing” into the information space in the hope of getting an adequate response. The probing worked. An elderly former employee of the USSR Ministry of Foreign Trade (unfortunately, the deceased now) got in touch and kindly suggested the direction of the further search.

The first case I found in the State Archive of the Russian Federation thanks to the recommendation of the USSR Ministry of Foreign Trade’ employee, was entitled “On the Purchase of Special Tools and Analytical Balances from England Required for the Acceptance of Industrial Diamonds”. I would like to cite the central document of this dossier reading “Ministry of Foreign Trade. July 22, 1952. Secret. Attn: Deputy Chairman of the Council of Ministers of the USSR Comrade Mikoyan A. I. In connection with the forthcoming significant purchases of industrial diamonds from England, the USSR Trade Mission in London needs special tools and analytical balances to accept them, check their quality, sort and weigh them on the spot. Please authorize the purchase. The estimated cost is 1.6 thousand roubles. The draft order of the Council of Ministers is attached. Deputy Minister of Foreign Trade S. Borisov”2.

From this case, the ‘ball rolled’ quickly. A few weeks later, copies of dozens of declassified documents were on my desk about record-breaking, fantastic volumes of deliveries of industrial diamonds from England to the USSR in 1951 through 1953. In 1952 alone, the USSR purchased over 20 mn gold roubles worth of diamonds. This was 10 times (!) higher than the exports of 1939 and significantly exceeded the supply of diamonds under Lend-Lease during all the years of WW2! The deliveries of 1951 and 1953 were a little less, and from 1954 to 1957, annual deliveries were more than 2 times more than the pre-war ones! The situation was particularly ‘spiced up’ with the fact that these deliveries were at a staggering discount to the market price - up to 17%3. As a result, the Gokhran accumulated a huge stock of industrial diamonds, which could be enough for 15 years to come4. Do you call that a “diamond embargo”!?

So, the information constant B burst like a bubble followed by the constants A and C that burst like a bubble, too. Indeed, could the desire to get rid of dependence on a foreign supplier of industrial diamonds be the main motive for the development of the diamond industry in the USSR? What was so bad about the supplier who delivered huge amounts of rough diamonds to you at all-time low prices? Was there a threat of a rough diamond shortage for the industry? When did you have an inventory that could be sufficient for the next fifteen years? And why was smuggling required when the deliveries were so high? Well, the industry’s cover story that had lasted in the information field for more than 70 years just ‘died’.

In the open sources, no mention was made of the diamond transactions of 1951 to 1953 that were under consideration, neither in the English sources, nor in the Russian ones, nor in any other sources. The reasons are absolutely clear today: those were the years of the Korean War, the UN troops, which included the British contingent (with the dominions among them like Australia, New Zealand, Canada, South Africa) had a deadly battle with the 64th Fighter Corps of the Soviet Army. Aircraft were burning, people were killed, including the citizens of the USSR, Great Britain and allies. However, the mutually beneficial trade in diamonds was booming. Record deals were concluded in the diamond market! They were marked “top secret” by both parties to the contracts. This was done behind the cover story about the diamond embargo and smuggling. It sounds like a conspiracy, doesn’t it? And when there is conspiracy, there is a conspiracy theory. Well, it’s time to talk about conspiracy theories.

From the 1950s to the present day, a lot of articles, books and academic dissertations have been written about the challenges the USSR faced in the diamond market. And in all these works, a “diamond embargo”, “Soviet diamond smuggling” are mentioned as well as “the main motive was to provide the industry with domestic diamonds”. The only proof of the “truth” of these concepts are mutual cross-references not confirmed by documents, which, for obvious reasons, simply do not exist. Can the works using the constants of the industry’s cover story be considered as the works “fulfilling the basic requirements of the scientific justification”, as Academician Rozin said? Obviously, not. A cover story, even repeated and replicated a hundred times, does not become either truth or science. This is just “a specially prepared complex of the information - real and fictitious - that is similar to the information obtained as a result of an analysis of the external signs of an object (work), and designed to deceive the enemy and conceal the true nature and purpose of the sensitive object (work) from unauthorized persons)”. Exposing the cover stories of the USSR diamond industry had serious consequences. It makes rather a desire to obtain a reliable source of convertible currency be the main motive for the creation of the Soviet diamond industry than an attempt to get rid of the dependence on a foreign supplier. And the fictitious “diamond embargo” and “diamond smuggling” were replaced with very curious aspects of the interaction between the USSR and De Beers that dated back to the time when the “big diamond dealer Oppenheimer” had fun in the Moscow “National” Hotel with high-priced ladies of the evening kindly provided to him by the department headed by Genrikh Yagoda5.

The term a “conspiracy science” usually has a negative connotation. It is not good, “not scientific” to explain the history of the development of the diamond market by secret agreements… But the problem is that dozens of documents are introduced into the scientific circulation that confirm these very secret agreements. And what to do with monographs and academic dissertations based on just a cover story?

Sergey Goryainov, Rough&Polished

 

1 See, for example, Rozin V. M. Management of Global Markets and World Events by the Anglo-American Supra-Government Elite (conspiracy discourse; based on the book “Battles of the Diamond Barons” by Sergey Goryainov). // Politics and Society. - 2015. - No. 7. - Pages 952-963.
2 The State Archive of the Russian Federation. F.5446. Inv.86a. D.1244. L.2.
3 The State Archive of the Russian Federation. F.5446. Inv.86a. D.1442. L.6.
4 The State Archive of the Russian Federation. F.5446. Inv.86a. D.1113. L.2.
5 Central Archive of the Federal Security Service. F. N-13614, V.2, L. 40-56.