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March 2002

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Diamonds: The Real Story

By Andrew Cockburn
In a little house down a muddy lane in Saurimo, a remote city in northeastern Angola, Tony Cabengele unfolded a sheet of white paper and rolled a small, squarish, cloudy white stone onto the table. "Let me teach you about diamonds," he said earnestly, unwrapping more stones and piling them into a little pyramid. "They are full of surprises."
A French-speaking native of the neighboring Democratic Republic of the Congo, Cabengele had moved here to try his luck as a trader in the rich Angolan diamond fields. There are safer places to do business. Saurimo, the capital of Angola's Lunda Sul Province, is in the midst of a hotly contested area in the civil war between the Angolan government and the unita rebels, now degenerated into savagery on all sides. The night before my visit with Cabengele drunken soldiers had celebrated Angola's independence day with heavy gunfire and grenade explosions around town. When I arrived at his house, he was swathed in bloody bandages, albeit merely because Mrs. Cabengele had taken umbrage at his late return from the festivities and smashed a glass lamp over his head.
Presented with an interested listener, the affable 32-year-old appeared to forget his injuries. Dispatching a boy for beer and sodas, he placed a small digital scale, a clear glass plate, and a sheet of white paper on the table beside his pyramid of stones. "I know this is crystal because it is octahedral," he explained, holding up a little diamond in a pair of tweezers. He set it on the plate, which he held over a bright light. "This helps you judge the clarity," he said, examining the stone for impurities. He selected another diamond to demonstrate how the white paper helped him judge color. "This is what we call glace [ice]," he said. The color of the stone almost matched the paper. He picked up a larger lump, dirty gray. "This is makbar, 30 carats but of inferior quality—not worth much."
Despite their differences, these little pebbles shared the unique characteristics of all diamonds: so hard that they can be scratched only with another diamond, so dense that they slow the speed of light by almost two-thirds, cold to the touch, because they draw heat from your fingers.
They were ancient. Created from carbon under titanic pressure and enormous heat deep underground when the Earth was young, the diamonds I held in my hand had remained just below the deepest layers of the Earth's crust until, perhaps a hundred million years ago, they rode up to the surface in a fast-moving eruption of molten rock called kimberlite. The kimberlite cooled in narrow funnels shaped like carrots, with their wide, rounded ends sticking up from the surface. Millions of years of rain and weather inexorably eroded the surface portion of the kimberlite pipes until the freed diamonds washed across the landscape and finally lodged in the gravel of a riverbed or the soft red Lunda Sul soil to await the day when lucky diggers prized them out and brought them here to this room for sale. I picked up a half dozen and rubbed them with my thumb. They had a smooth, soapy texture.
A question formed as I fingered the rough diamonds. Even in their present state they were valuable enough to incite avarice and bloodshed. Transformed from rough to gem, they would come to symbolize romance, strength, beauty, wealth. Why do diamonds, more than any other substance on Earth, capture imagination and ignite passion?
I heard many explanations—from mystical to cynical—as I followed diamonds around the world. None of them answered the question fully, although the woman who told me why she had just stood in line for two hours in a chill Parisian drizzle to see an exhibition of diamonds—"It's the closest you'll ever come to a star"—did as well as any.
This is not to say that the natural allure of diamonds is not actively nurtured by those who profit from them. When a gang of thieves with a stolen bulldozer plowed into London's Millennium Dome in November 2000 to steal a 203-carat diamond from a display sponsored by De Beers, Nicky Oppenheimer, De Beers's chairman, hailed the botched heist as wonderful publicity. "If only we could do this once every six months. We could do away with the advertising department altogether."
Beyond De Beers, the South African colossus that dominates the business, stretches an intricate and close-knit worldwide diamond network that operates in some respects on a vast industrial scale and in others like a medieval guild. The torrent of stones that circulates through the network moves along a path referred to as "the pipeline" from mines to dealers to polishing factories to jewelers to the necks and fingers of customers—a journey that takes somewhere between one and two years. There are many inlets to this pipeline: vast open pits in the Arctic Circle and the Kalahari Desert, deep underground tunnels, even floating mines out in the South Atlantic.
Tony Cabengele was deep into our tutorial when we were interrupted by the arrival of three men in jeans and T-shirts muttering polite greetings in Portuguese. They were garimpeiros, as diggers are called in Angola. One of them carefully unwrapped a paper packet and produced a stone the size of a chickpea. The scale recorded it as weighing 3.49 carats (a carat is one-fifth of a gram). I was impressed, Cabengele less so. "It's a double-decker," he said. With the three men watching his every move intently, he handed me his loupe, the little ten-power magnifying glass that is the standard tool of the trade. "See, it's two stones fused together, and they are of different qualities."
It was time for the bargaining to begin. Picking up a small calculator, Cabengele tapped out an offer, $750, and handed the calculator to the diggers. They passed back their price, $2,200. The calculator flew to and fro across the table. The sellers eventually retreated to $1,600; Cabengele went up to $900. Apart from the staccato rattle of the calculator keys, the entire exercise was conducted in silence. The trio eventually indicated that there was to be no sale by rising to their feet and shaking hands all around. "They won't get a better price anywhere else," said Cabengele laconically after the diggers had departed with their stone. He unerringly resorted his own diamonds and wrapped them back up into their paper containers. "With diamonds," he mused, "you can be poor today and a millionaire tomorrow—and maybe poor again the day after."
A few weeks later, in the control room of the diamond mining ship Debmar Pacific, 18 miles (29 kilometers) off the desert coast of Namibia, Randall Baker, a marine production supervisor, peered at a monitor to check on the progress of the 17-foot-wide (5-meter) drill bit that probed the floor of the South Atlantic 300 feet (90 meters) below us. Out on deck the deafening roar of the ship's machinery, sucking up 90 metric tons (100 tons) of ocean floor an hour, continued day and night, seven days a week.
Around us, on the gently heaving sea, were four more of the fleet of floating mines operated by a subsidiary of De Beers. Based on statistical calculations of the number of diamonds washed across southern Africa and out to sea by the Orange River over the past hundred million years, the head office had assigned our ship a precise target of 19,000 carats for the month, which averaged out at just over 26 carats an hour. Most would be of gem quality, around one carat. "If we don't meet the target, we'll start getting calls from the head office asking if we're throwing diamonds over the side," said the ship's captain, John Gray, formerly of the Royal Navy.
Gray and Baker were less emotive than Cabengele had been about the treasure they were hunting, perhaps because they never actually see a diamond. The elusive stones brought up in all that rock and debris are winnowed out in a series of sieves, centrifuges, and x-ray machines locked away from human intervention before they're sealed in plain metal cans and flown to the mainland.
"Last week I was working on top of the ship repairing a radio aerial," mused Baker in his thick Cape Town accent. "I looked down at the whole operation and at the other ships, and I thought, All these millions of dollars' worth of technology, all these people working, for a completely nonessential item."
"Thank god for women," remarked Gray, helping himself to a cup of coffee.
Diamonds may be a girl's best friend, but part of the enticement can be explained by simple arithmetic. The 120 million carats of rough diamonds extracted globally from the Earth every year weigh a total of just 24 tons (22 metric tons), a single truckload, but those 24 tons (22 metric tons) are sold by the producers for about seven billion dollars. Since they cost less than two billion dollars to extract, the profits are already immense. By the time the diamonds reach the customers waiting at the far end of the pipeline, the truckload, set in jewelry, is worth over 50 billion dollars.
Mahwi Benjamin and I bounced in his truck along a track lined with pale green rock. Mahwi, the mineral resources manager, was escorting me to the bottom of the pit at Jwaneng, out on the fringes of Botswana's Kalahari Desert. This mine might well be the most valuable piece of productive real estate on Earth. De Beers prospectors discovered a pipe of kimberlite here in 1973, thanks to helpful termites that, over millennia, had toted garnets and ilmenites, minerals associated with diamond deposits, up through 120 feet (40 meters) of rock and sand. Now, at a running cost of some 90 million dollars annually, the mine yields over a billion dollars' worth of diamonds a year. The fountain of money pouring out of Jwaneng and two other De Beers-controlled mines now gives Botswana, which had almost no resources when the first kimberlite pipe was discovered there in 1967, one of the highest standards of living in Africa.
Standing on the floor of the pit, its terraced sides soaring a thousand feet (300 meters) above me, I leaned over to tie my shoelace. "Don't touch the ground," Mahwi said sharply. "It's forbidden." He admitted that the odds against my actually spotting a diamond amid the sea of rock were five million to one. Nevertheless, here, as at all other De Beers operations, there is a perpetual struggle against temptation, with progressively more restricted color-coded security zones, remote cameras, and stringent searches, not to mention a fenced zone surrounding the whole complex. "The simple fact of human nature," explained Steve Gould, the Jwaneng mine manager, "is that if people can get hold of diamonds, they will keep them."
Critics insist that the high price of diamonds is purely artificial, not subject to economic constraints of supply and demand but entirely dependent on the machinations of De Beers—a cartel, as it is often called, not least by the antitrust division of the United States Department of Justice. (De Beers was indicted in a 1994 price-fixing case, and its executives do not set foot on U.S. soil for fear of subpoena.)
Under the guiding hand of the Oppenheimer family, De Beers has indeed striven with ruthless efficiency to control supplies and thereby manipulate prices. By tradition De Beers's 125 carefully screened customers assemble ten times a year in London, Lucerne, and Johannesburg to attend "sights," where they buy rough stones. "Sightholders," as customers are called, are presented with an allotment of stones in a plastic zip bag inside a yellow plastic briefcase; they must buy the entire offering at the price named by De Beers. Take it or leave it—negotiations over stones or price are rarely allowed, except in the case of diamonds that weigh more than 10.8 carats.
In the past producers attempting to market rough stones independently have been mercilessly punished, sometimes by a selective flooding of the market with stones from the legendary stockpile in the vaults under De Beers's London headquarters. Yet today rival producers in Africa, Australia, and Canada are flourishing. Tony Cabengele's stones, as with every other legal buyer in Angola, are bought by a company controlled by Lev Leviev, an Israeli entrepreneur who, in the 30 years since he emerged from the Tashkent ghetto, has come far enough to drive De Beers into headlong retreat from Angola and threaten its traditional control of Russian production.
Changing its strategy in the face of the new competition, De Beers sold off half its five-billion-dollar stockpile in 1999-2000. (Last year the Oppenheimers turned De Beers into a private company and ceased releasing such information.) Prices have fallen although they have not collapsed, suggesting that supply and demand do indeed apply to the diamond market after all. In fact in late 2000 the De Beers sales team faced a shortage of rough stones and had to search for emergency supplies.
"Diamonds are not really a commodity like gold or silver," a leading New York dealer explained to me one day. "You won't buy a stone from a jeweler and then sell it back to him for the same price—he's not going to give up his profit. But they are definitely the easiest way to move value around. I know a guy who had to leave Iran at a moment's notice during the revolution there. No time to sell his house or get to the bank, but he had time to pick up 30 million dollars' worth of diamonds and walk away."
"They are a form of currency," remarked Mark van Bockstael of the Diamond High Council in Antwerp. "They back international loans, pay debts, pay bribes, buy arms. In many cases they are better than money." Monrovia, capital of Liberia, for example, is known as a mecca for money launderers seeking to turn questionable cash assets into diamonds that can then be easily moved and sold elsewhere. There have been unconfirmed reports that Osama bin Laden's terrorist organization, al Qaeda, made use of this operation.
As van Bockstael expounded on his favorite subject, we were strolling to lunch from his office in the city's diamond district, the heart of the world's diamond bazaar. Eighty percent of the world's rough gem-quality diamonds are traded every year along three short streets next to the Antwerp railroad station. The Antwerp district has extensions in many cities: West 47th Street in New York, London's Hatton Garden, the high-rise offices of Ramat Gan in Tel Aviv, not to mention the Opera House district in Mumbai (Bombay) and the other "diamond cities" of India, where, in a union of modern technology and cheap labor, 800,000 workers craft stones weighing a fraction of a carat into polished gems. Each of these business centers revolves around personal contact and connections, thrives on rumor and gossip, and cherishes secrecy. Multimillion-dollar deals are clinched with a handshake and the word mazal, Hebrew for "good luck." "So many secrets," sighed van Bockstael as we skipped to avoid a cyclist in a long black coat and a broad, flat, fur-trimmed hat. "Nothing is what it seems in the diamond business, and half the time you don't even know if that's true."
Diamonds are conducive to secrets. With only some exceptions, they give no clue as to where on or in the Earth they originated. Although the industry is moving toward a system for certifying the source of every diamond, the hundreds of millions of stones moving through the pipeline today are anonymous, shedding their history as they pass from rough to polished. But not always, as I discovered one afternoon in New York at the back of a well-guarded workroom in the heart of the diamond district in midtown Manhattan. There a master polisher named Motti Bernstein was working, bent over a scaife, a spinning disk that looks much like an old-fashioned record turntable. The surface of the scaife was coated with oil and diamond powder, and resting on the scaife as it spun was an oval diamond clamped at the end of a mechanical arm called a dop.
Two months before, when this diamond first arrived in the workroom, it had been an opaque, semirectangular slab, fatter at one end than the other. In addition the stone had been "frosted," meaning that its interior—and any imperfections it might contain—was hidden until the first cut had been made.
Bernstein lifted the dop and looked at the stone through his loupe. He did this every few minutes, as he has done with tens of thousands of stones in 30 years of working as a master cutter. Calculating the shape and size of polished gems that can be carved from a rough stone without losing too much material is the true art in cutting and polishing. For more than a month Bernstein had been patiently shaping this diamond into its present form, crafting its 58 facets so that light would reflect both from its surface and its heart.
This was no ordinary diamond. "Never in my life did I work on something like this," he said as he held it up for me to see.
The diamond was enormous—just over 102 carats, the size of an egg and the largest flawless oval-cut diamond in history.
"It's sweet material, soft on the wheel," purred William Goldberg, Bernstein's boss and a renowned dealer in the New York diamond business. "Sometimes a stone will cry as you put it on the scaife," said Goldberg, uttering a plaintive, screeching noise in illustration. "But not this one. God," he declared to the room at large, "is on our side."
Goldberg had bought the diamond over the phone from Tel Aviv. When it arrived, he had taken it out on his terrace so he could be photographed holding it. Diamonds can shatter if struck in the wrong place, so one man had lain full length on the flagstones beneath Goldberg's outstretched hands, a human cushion in case Goldberg dropped the rough stone.
Eloquent on the subject of its sublime qualities, Goldberg was now mulling possible names for the oval diamond Bernstein was polishing, one of four gems ultimately cut from the rough stone that had arrived from Tel Aviv. "Maybe the Beluga," he mused, "because it's the best of the best." He had no idea where the stone had originated before it surfaced on the Israeli diamond market. I asked him what the uncut diamond had weighed when he bought it, and he replied, "265.82 carats." The penny dropped. I had found an old friend.
Eight months before, in the late spring of 2000, a group of diamond miners had been hard at work in a wide, sandy pit south of the city of Mbuji-Mayi, the heart of diamond country in the Democratic Republic of the Congo. The pit was honeycombed with square shafts hardly wider than a grave and as deep as 20 feet (10 meters). The dirt was hauled in buckets on ropes to the surface, washed, sieved, and picked over. It was backbreaking and dangerous labor, and sometimes weeks or months went by without any reward.
Most of the stones the diggers found were small—less than a carat. The few dollars they brought had to be divided up among the numerous interests involved in the dig, including the owner of the land, the financier who supplied the food, the guards, and the creuseurs, as diggers are called in Congo. Then at the end of May one of the creuseurs reached into the dirt and pulled out a stone weighing an unbelievable 265.82 carats. Their troubles were over—at least for a while.
The creuseurs who had found what soon became known as the "big stone" were determined to drive a hard bargain. After intense negotiations, they made a deal with a stocky, 37-year-old dealer named Alphonse Ngoyi Kasanji, a powerful force in the local diamond business. Rumor put the price at three million dollars, although Kasanji would never confirm to me how much he'd paid, perhaps because some among the original team of diggers might not have gotten their fair share. But he did have to bring in partners and cash from his extensive properties around the city to meet the asking price. Confident that he would be able to recoup his investment, he began to look for buyers. Bewitched by the stone's enormous size, he put it about that it might be worth as much as 20 million dollars. His troubles were just beginning.
In October 2000 Kasanji announced that the big stone had been sold to a German buyer for 17.9 million dollars—a price inflated enough to raise a few eyebrows in the industry. Surrounded by an eager entourage of partners, family, and assorted hangers-on, he was a constant presence in the lobby of the Hotel Memling in Kinshasa, the capital of Congo, waiting for news that the money had arrived in the bank. "Is it here, Monsieur Kasanji?" I would call out to him in the morning. "Today," he would answer confidently. But the money never did arrive, and eventually Kasanji decided to set off for Antwerp and sell the stone there. Unfortunately for him there was another player in the game.
At the time the big stone was discovered, Congo had been locked for two years in a civil war in which both sides were financing themselves with diamonds. The government in Kinshasa relied heavily on its revenue from Mbuji-Mayi's diamonds, roughly 25 million dollars a month. At the same time, the government's Zimbabwean military allies were seeking to turn a profit on their intervention by taking shares in a new Mbuji-Mayi mine. And in the eastern half of the country rebels and their sponsors from the Rwandan and Ugandan armies were either siphoning off diamonds themselves or taxing those that did.
Back in August 2000, desperate for arms to ward off a rebel offensive, Laurent Kabila, then Congo's president, had sold the exclusive right to buy diamonds in Congo to an Israeli firm for 20 million dollars. Local dealers immediately began smuggling stones over the border to evade the intrusive Israelis and the low prices they were paying. But poor Kasanji and his treasure were already too high profile to slip away unobserved, so at the direction of Kabila and the Israeli firm, he took the stone not to Antwerp but to Tel Aviv, where it ultimately caught the attention of Gerry Rubens and David Delevi, William Goldberg's Israeli partners. For the stone Kasanji had claimed would bring 20 million dollars, Goldberg agreed to pay a more modest eight million.
Diamond wars are not a new phenomenon. Long ago in southern India powerful kingdoms fought for control of the mines that made them rich. Both sides in the vicious Lebanese civil war of the 1970s and 1980s were subsidized by Lebanese traders and smugglers in the diamond fields of Sierra Leone. In those days no one outside the diamond business paid much attention to this trend, nor did the emergence in the early '90s of the Angolan rebel leader Jonas Savimbi as a major supplier of rough stones excite immediate outrage, despite the slaughter that quickly ensued.
In 1992, following the breakdown of a peace accord with the Angolan government, Savimbi sent his unita army to seize the diamond-rich Cuango valley in northern Angola. Over the next seven years, thanks to the efforts of 100,000 semi-enslaved diggers, he extracted perhaps as much as four billion dollars' worth of stones. The consequences of Savimbi's access to diamond money are abundantly apparent today. "Diamonds have been a curse on Angola. Without diamonds the war couldn't last so long," said Jeremias Belino as he stood in the wreckage of Kuito, his home city in the central highlands, pulverized into ruin by Savimbi's assaults and artillery barrages. De Beers's annual reports from the early '90s provide stark confirmation of this belief, laced as they are with self-congratulatory references to the company's success in buying up the stones marketed by Savimbi and thereby avoiding a glut on the market.
For years there were few complaints from the UN or any other authority about the trade's support of Savimbi. In December 1998, however, Global Witness, a small group of British environmental and human rights activists, entered the fray. Operating on an annual budget of less than $500,000, from a walk-up office in north London, the group published "A Rough Trade," a powerful and damning summary of the diamond industry's responsibility for Angola's misery, quoting, among other public sources, De Beers's indiscreet reports.
Nevertheless it was not the war in Angola but the gruesome atrocities of a rebel group in another African country that finally put "conflict" or "blood" diamonds on the map, threatening the industry with disaster.
In the mid-1990s the richest digging fields in Sierra Leone fell under the control of a rebel group called the Revolutionary United Front (RUF), led by a former army corporal named Foday Sankoh. By 1999 Sankoh and his men were smuggling tens of millions of dollars' worth of stones a year out of Sierra Leone through neighboring countries.
The RUF forces, many of them forcibly conscripted boys, maintained control of their operation by spreading terror among the local population. In a horrifically systematic manner Sankoh's soldiers ordered men, women, and children to line up with both arms outstretched, then hacked off the victims' hands or legs and hauled them away in sacks. As a way of deliberately panicking civilians it was more effective than mere slaughter.
As reports of the RUF's gruesome attacks spread, the outside world began to discern a connection between diamonds and children with missing limbs. Global Witness announced the launch of Fatal Transactions, a campaign by several organizations to alert consumers to the bloody side effects of the diamond business, just in time for the 1999 Christmas season. "That dazzling diamond necklace you buy for that special someone at a swank Fifth Avenue jewelry store may be funding the activities of a cannibal gang in Sierra Leone," declared the New York Post in November 1999.
This sort of talk, with intimations of worse to come, threw the industry and those who depended on it into panic. "If there is a boycott of diamonds," said Nelson Mandela, "the economies of Botswana and Namibia will collapse." Diamonds from the Ekati mine in Canada, a new and major source, were marketed as coming "from a land as pure as the driven snow" in advertisements showing maidens standing on icebergs—an implied contrast to the sweaty, war-torn jungles of Africa. The U.S. Congress began the process of creating legislation that would mandate stringent certification of all imported diamonds as "clean."
As it turned out, customers appeared undeterred by the controversy. The feared boycott did not materialize, and sales for 2000 were the highest on record. Nevertheless De Beers, seeking to shed at least its image as a monopoly and to introduce its own line of branded gems, announced that it would no longer be buying any African stones from mines it did not own. "Diamonds have to be ethically correct," Tracey Peterson, a De Beers spokesperson, informed me as we stood on the Debmar Pacific's remorselessly rocking deck in the South Atlantic. "They are about love and emotion, soft issues."
Associating diamonds with love and emotion has long been the key marketing strategy for De Beers. Fundamental to the campaign is the famous slogan "A Diamond Is Forever"—embracing the twin notions of eternal devotion and eternal value. Sometimes De Beers advertisements are more explicit about the role of its product in the mating game: "Of course there's a return on your investment," ran one full-page offering just before Christmas 2000. "We just can't print it here."
De Beers may be single-handedly responsible for prompting, in less than a century, American, European, Japanese, and, increasingly, Chinese women to expect the "traditional" gift of a diamond engagement ring as a matter of right. But myths that associate diamonds with love and devotion go back long before De Beers's marketing campaign.
In Indian mythology gems are considered to have a cosmic power in and of themselves. Astrologers advise clients on which gems to wear in order to alter their destinies, and diamonds, according to one practitioner I consulted in Hyderabad, exhibit powerful effects on love, procreation, and, by extension, immortality.
Given their supernatural powers, it is not surprising that jewels have deep religious significance in India. Thus it was that in a gold-plated Hindu shrine high in the hills above Tirupati northwest of Chennai (Madras), I found a god adorned in diamonds. The ancient idol, nine feet tall and carved of black stone, stood at the end of a narrow passageway. This was Balaji, fast becoming the most popular deity in all India. In the line behind me, stretching back miles, tens of thousands of excited worshipers chanted his name, the sound competing with the roar of nearby machines sorting the donations—destined to be used for the temple's charitable enterprises—that poured into collection sacks at the entrance.
Balaji wears a colossal shimmering crown of diamonds. It weighs almost 60 pounds (30 kilograms) and contains no less than 28,000 stones. His hands are covered with more diamonds; his ears sport massive diamond earrings. Close by are a diamond-encrusted conch shell and discus, his traditional accessories.
As Nanditha Krishna, an elegant Chennai matron and ardent Balaji devotee, explained somewhat superfluously, "He likes diamonds." Among other examples, she cited the experience of a friend who had promised Balaji a valuable diamond ring and then thought better of it, only to have the ring violently sucked off his finger and into the collection sack by an unseen force as he entered the shrine.
Deposited in the brimming treasure vaults of the temple, the ring would have joined priceless relics of an era when India was the world's sole source of diamonds. Southern Indian kingdoms and empires grew powerful on the wealth pouring out of the alluvial mines of the eastern Deccan Plateau, much of which was deposited at Tirupati and other temples as offerings from devout rulers. Their religious obligations fulfilled, kings and princes indulged themselves with exotic jewelry in forms and settings similar to those bequeathed to the gods. Travelers from far-off Europe marveled at the profligate display of wealth at the royal courts. According to one awestruck 16th-century visitor, even the king of Vijayanagar's horse wore a "city's worth" of jewels.
High on a rock on the edge of Hyderabad stands the towering fortress-palace of the rulers of Golconda, sacked and ruined by the Mogul emperor more than 300 years ago and abandoned to the kites and kingfishers that soar over the silent battlements. Of all the old diamond kingdoms, this was the most famous, its very name still a synonym for riches centuries later. The Koh-i-Noor, the Hope Diamond, the Regent, and other stones famous for their dramatic and frequently bloody histories—the original conflict diamonds—passed through here before drifting to the outside world by way of purchase, bribery, theft, or conquest. The extraordinary "old-mine" diamond cuts and settings treasured by India's now powerless royal families—and the newly fashionable adaptations by modern jewelers—give a hint of former times.
In an ironic turn of the wheel, long after the Indian mines were played out and the last trader abandoned Golconda, most of the world's gem diamonds once again pass through India. Of the 800 million stones wrenched out of the world's diamond mines every year, most are tiny, a fraction of a carat. Until 30 years ago they were considered useful only for industrial purposes such as cutting edges and drill bits. Labor costs in the traditional cutting centers of New York, Antwerp, or Tel Aviv made it uneconomical to turn them into gems.
Then in the 1970s a group of Jains, members of a small but venerable Indian religion, set up shop in Mumbai and began to cut and polish very small diamonds for export. As time went by, they shifted their manufacturing operation to Surat and a few other provincial cities. A soft currency, some useful tax breaks, dirt-cheap labor—"we prefer to say economical labor," one of them corrected me—and tightly knit family networks all worked to the Jains' advantage.
These new arrivals on the diamond scene found supplies easy to come by. Not only did De Beers begin unloading its stock of small stones, which came to be known as Indian goods, but the U.S. government also started to sell off its stockpile of industrial diamonds. The vast output of the Argyle mine, discovered in 1979 in northwestern Australia, consists almost entirely of very small stones. A further source opened up in 1996 when Boris Yeltsin sold a chunk of the Russian stockpile to raise cash for his reelection campaign. Jewelers, particularly in the U.S., quickly adapted to take advantage of this new source of cheap gems, marketing them for use in inexpensive settings.
So it is that many of the world's rough diamonds find their way to India, and so it was that I found myself in Old Surat buying diamonds in a street so crowded with traders that four-wheeled traffic has long since been banished. All around me serious-looking men were negotiating deals in rapid-fire Gujarati, while at my feet a child beggar carefully swept the dust in hopes of finding stray stones.
Amidst the roar of the Surat street market I was offered diamonds of every shape and color. Someone flashed a paper square of shiny table-cut black stones at me. Another showed me some canary yellows. Behind me there was an excited shout from the crowd: "Hey, bring your stuff, this guy's buying everything!"
I announced that I was looking specifically for "small whites," and soon I was squatting inside an open storefront, peering at a little pile of what looked like brilliantly shiny grains of sand. Magnified ten times by the dealer's loupe, the sand turned into a heap of perfectly cut "round brilliants," each one with 58 meticulously polished facets. It was hardly a less impressive sight than the great multimillion-dollar orb I had handled at Motti Bernstein's workbench back in New York.
"Six and a half thousand rupees a carat," said the dealer. That would be just under $140. After some rapid negotiations the price came down to 6,000 rupees, $125, and I was the proud owner of a folded square of paper containing 168 perfect little works of art. Each one had taken three hours to make, with the labor subdivided among three different workers. I felt that the craftsmen, recruited from a desolate farm district in the interior and earning about $80 a week, deserved more credit for these miracles of miniaturization.
I had seen the vast De Beers mines in South Africa and Botswana, the trading centers of Antwerp, New York, and Tel Aviv, not to mention entire countries wracked by diamond wars, but nothing quite so impressed on me the scale of the global diamond business as evening rush hour on Varachha Road. This is the main artery of the Surat diamond factory district, and at 8 p.m. it is a bedlam of honking cars, jam-packed rickshas, motorcycles, and hundreds of thousands of bicycles carrying half a million diamond workers. The closely guarded factories in which these people have been at work all day ("If people can get hold of diamonds . . .") vary from stifling sweatshops to more upscale establishments. One, Blue Star Diamonds, even dresses its workers in identical gray-blue uniforms and insists they park their bicycles neatly, front wheels all pointing in the same direction.
In the Blue Star conference room proprietors Anuj and Akshay Mehta were telling me of their ambitious move upmarket into larger and more valuable stones when I produced my little packet and asked their opinion. The brothers whipped out their loupes and began scrutinizing the diminutive gems as seriously as if they had been ten times larger. Finally, after assessing color and quality, they gave their best estimate: "Ten thousand rupees?" Smugly, I told them how much I had paid. They beamed at me approvingly. "Excellent price. You are a diamond trader now! Why don't you go back to the market and make a good profit?"
I was tempted, but in the end I kept my little cache, just to pore over from time to time. They are full of surprises.


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