Publication: Monitor Volume: 4 Issue: 201

Kommersant daily” reported Friday (October 30) that the government of Prime Minister Yevgeny Primakov is asking for a US$200 million prepayment for diamonds delivered to De Beers, South Africa’s diamond monopoly. Russia is also hoping to receive a very large loan from De Beers, the newspaper reported. The Russian company ARLOSA is currently negotiating with De Beers in London over renewing their trade agreement for the delivery of Russian diamonds. “Kommersant daily” noted while these negotiations are, formally, simply between two private business interests, ARLOSA is 32 percent state-owned, and the Russian delegation to London is headed not by ARLOSA president Vyacheslav Shtyrov, but by German Kuznetsov, head of Goskhran, the state’s depository for precious stones and metals. Russia is hoping to receive a US$200 million pre-payment for diamonds scheduled to be delivered to De Beers during the first quarter of next year. “Kommersant” reported that Primakov will meet next week with De Beers officials to discuss the possibility of a large credit–hundreds of millions of dollars, possibly US$1 billion. Russia will provide a large portion of its diamonds as collateral, the newspaper reported.

The money from these deals will go straight into Russia’s federal budget, not to ARLOSA. Russia is apparently viewing the diamond deal as a way to help finance its budget deficit given the strong likelihood that the IMF will not agree any time soon to release further installments of its multibillion-dollar bailout package for Russia (Kommersant daily, October 30). Indeed, a number of financial analysts told “The Moscow Times” that given the statist, interventionist tilt of the Primakov government’s anticrisis plan, the IMF is unlikely to release its next scheduled tranche–which was originally set at US$4.3 billion, but was more recently described as being a bit over US$2 billion. While the program does include some measures the fund would applaud–such as lowering the profit tax from 35 to 30 percent–the English-language newspaper quoted Robert Devane, a Moscow-based independent investment adviser, as saying: “The IMF has just stopped believing in Russian promises” (The Moscow Times, October 30).