Is the Russian diamond industry heading towards a revolution?  According to a Monday report by RAPAPORT, Russia plans to reduce import levies on rough diamonds from 20% to 15%. The new tax rates will take effect January 1, 2010.
 
The report noted that the Customs Union of Russia, Belarus and Kazakhstan intends to lower duty rates on synthetic diamond imports from 20% to 5%. Pearl import taxes are also expected to be cut from 20% to 10%.

 
Taxes placed on other rough, precious and semi-precious stones, as well as on sapphires and rubies, stand to be reduced from 20% to 15%. The ad-valorem tax on gold, silver and platinum-plated costume jewelry will be reduced by a similar rate as well.

The question is, why would the Russian government take such steps?  One of the reasons may be to boost diamonds and jewelry trade in order to stimulate the local industry, as well as local consumption. Today, Russia is considered  one of the world's biggest diamond producers and polishers, but it still has  some regulation issues – like  high taxes.

Russia's high taxation makes it particularly difficult and somewhat risky, to trade in Fancy Color Diamonds: with an import tax of 20%, diamond brokers and polishers import diamond to Russia with fear that they might be unable to sell their merchandise. Taxes are applied to any import, regardless of whether the dealer or the polisher manage to sell or export the stone later on.

The Russian government might take additional steps to ease the constraints of the diamond industry and increase trade. Data released earlier in December indicated Russia exported over 5.3 million carats in rough diamonds, worth $540.9 million, between July-September 2009.

A statement issued by the Russian Finance Ministry said that compared to  the second quarter of 2009,  rough diamond exports doubled in terms of volume and increased by18 times in terms of value.

The statement also noted that Russia exported over 4 million carats in rough diamonds worth $430.8 million to Belgium, and about 861,600 carats worth $82.2 million to Israel. At the same time, Russia's diamond imports grew in value and decreased in volume: Russia imported over 36,200 carats of diamonds worth $36.4 million, mostly from Israel and Belgium.

Alrosa, Russia's largest diamond miner, sold $1.73 billion worth of diamonds between January and October 2009. Alrosa accounts for 97% of Russian and 25% of global diamond output.

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Earlier this month, Israel Minister of Industry, Trade and Labor Binyamin Ben Eliezer announced that his ministry will act to support the Israeli Diamond Industry. With the global financial crisis still at large, unemployment is high, and the diamond industry is low on “Excellent” diamond polishers. The solution is simple: the ministry would help finance professional training programs for diamond polishers.

The Israeli Diamond Industry, which has been deeply affected by the crisis, is expected to see an increase of hundreds of millions of dollars in local production of polished diamonds, and the 100 people who undergo the training will be hired by local manufacturers.

The Israeli Diamond Industry is doing everything in its power to pull through the crisis, as evident from our Together Works program. Other governments around the world are also trying their best to help their diamond industries.

The government of Russia, for example, has pledged to invest some $1 billion in diamonds produced by Russian diamond giant Alrosa. I can't imagine what Russia Prime Minister Vladimir Putin is planning on doing with $1 billion worth of diamonds, but it is nonetheless quite a noble gesture.

In India, the government has launched a new scheme to support the diamond and jewelry industry, which includes subsidized loans, support of safety measures and protection from occupational hazards, and the establishment of an institute for the development of gemstones and jewelry.

Meanwhile, Ontario launched diamond drilling training programs in two colleges in Northern Ontario. This is just one expression of Canada's Economic Action Plan, which includes a C$12 billion investment in infrastructures, some of which directed at the diamond mining industry.

Sierra Leone, which relies heavily on the export of diamonds, recently decided to lower the commissions for the export of diamonds and gold, in an attempt to encourage more mining companies to operate in its territory.

And finally, last month the Thailand government canceled the 7% value-added tax on the import of raw materials for the Thailand jewelry industry. This tax exemption will be valid until December 2011, by which time, hopefully, the global financial crisis will be over.

It's difficult to say that things are looking bright, but they are definitely looking brighter. The governments of the world continue to provide well needed and deserved support to the diamond industry, and hopefully, we will all soon pull through it together.

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A special post written by: Yehuda Kassif 

Part 3 

As we further explore the history and fait of the Russian crown jewels, it is important to note that the mystery of the missing jewels is not just a story about exquisite jewelry, but also about a great personal tragedy of the Romanov family.

Alexandra Romanov's Crown

When Czar Nikolai II, along with his wife Alexandra and their five children, left the palace where they were imprisoned on their way to Tobolsk in Siberia, they took with them a train car filled with their belongings. At some point, just before some of the Czar's family was moved from Tobolsk to Yekaterinburg in the Ural Mountains, Alexandra managed to give monks from a local monastery two or three crates filled with jewels.

At a later stage, when the monastery was attacked by Bolshevik revolutionaries, the monks handed the jewels to a local farmer. The man was then captured and tortured and revealed the whereabouts of one of the crates. The single crate was found and catalogued by the Soviets. The fait of the two additional crates is still unknown and researchers estimate that they have never been found.

Nikolai and Alexandra Romanov

Later, when the revolutionaries tried to assassinate Alexandra by firing squad, the bullets that were directed at her did not kill her at first. The bullets were stopped by jewelry pieces and gemstones that were sown to the inside of the girdle Alexandra was wearing in the hope of escaping with them. 
After Alexandra was assassinated, the jewels she was wearing were found. Most of them were of little significance, but some were extremely precious pieces such as a cross set with emeralds, and several loose diamonds.

When the White Russian forces, which fought the Bolsheviks during the civil war, approached Yekaterinburg in an effort to investigate what had happened to the Czar and his family, they were taken to a mine pit where the Romanoff's family belongings had been dumped. The jewels that were hidden in the clothing were discovered and then catalogued. They were then attached to Sokolov's report after his investigation into the assassination of the Czar and the Romanoff family.          

Czar Nikolai Romanov

All of the belongings that were found in the mine pit, together with other belongings from the house where the family was assassinated, were gathered and sent to Vladivostok, which was, at the time, the only escape route out of Russia. The White Russian forces intended to ship the entire lot to the late Czar's relatives living in Britain. However, when the crates were opened in Vladivostok, all of the belongings were found – except for the jewels.

Until today, it is unknown who stole the jewels or where they were hidden. The tragedy of the House of Romanoff has left gaping holes in the mystery of the Russian crown jewels and it is entirely possible that in some point in the future, more pieces of the puzzle would be found, which could help solve this century-old mystery. 

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