Publication: Monitor Volume: 2 Issue: 14

Russian officials failed January 18 to reach a new long-term agreement with De Beers, signing instead a stop-gap agreement extending until March 1st the 1990 agreement under which Russia sells 95 percent of its uncut diamonds through De Beers’ central selling organization. (16) The five-year agreement, reached at a time when the Soviet state held a monopoly over Soviet diamond production, expired at the end of last year and had already been extended by a month to allow negotiations to continue. Russia, which produces 25 percent of the world’s rough diamonds, wants a higher price for its uncut stones. It also wants the right to market a larger proportion of its gemstones and to move into the business of cutting and polishing the stones for export. A Russian threat to establish its own exchange for uncut and polished diamonds created alarm on world markets last year due to fears that a price war would provoke a fall in world prices. A price fall would be in the interest of neither Russia nor De Beers, but Russian officials are being driven by the ongoing struggle between the federal center and diamond-producing regions over who should reap the profits of Russian production. (17) Talks are due to resume in February.

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