India’s Blood Diamonds and Dirty Gold

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How many of you wear gold?

I personally am dripping with gold. Right now, I’m wearing a pair of small gold hoop earrings, two gold bangles, a gold nose ring, and a gold necklace.

Apparently, gold is an “Indian passion.” Back in 2005, the Christian Science Monitor reported that “India’s costly love affair with gold” was “weighing down” the economy. And really, look around you: aunties, mothers, grandmothers, and sisters wear some object of gold. Prior to a shaadi, what is the bride-to-be presented with? Gold jewelry. What is the bride wearing lots of? Gold jewelry. When someone gives you a gift, it’s gold jewelry. In every Desi enclave in the diaspora, there is at least one jewelry stores that sells a lot of- you guessed it- gold:

India is the world’s #1 consumer of gold, accounting for almost a fifth of gold sales. Wedding season in India, which runs from November to February, is when gold jewelry sales are at their highest, accounting for 60 to 70 percent of the country’s annual gold consumption [Link].

Where does this come from? Why do we wear lots of gold?

Wearing gold not only enhances strong emotional feelings for its wearer but also completes a woman’s appearance - it makes women feel indulgent, beautiful, successful, confident and sexy. Women who wear gold jewellery consider it to be an integral part of their appearance, and consider it as a necessary item rather than just an accessory. There are also traditional reasons for wearing gold, such as for marriage, religion, and family gifting [Link].

Ok, this sounds more like constructing gender (”women are sexy and feminine”) and infusing it with consumption (”and wearing gold will make a woman feel even sexier”) in order to market gold. It’s analogous to how people say, “Diamonds are a woman’s best friend.” So you are man who is about to propose to your girlfriend; you go out and spend thousands or millions of dollars to get her a diamond ring because that is what “women like,” and presumably expect. And speaking of diamonds, demand for gold has declined while the sales of diamonds have seen a spike.

Whatever the sources are for this consumption of gold and diamonds, few people know where the diamonds come from and what are the effects of wearing gold.

From 1991 to 2002, there was a civil war in Sierra Leone that took place alongside Liberia’s 14 year long civil war as well. Both civil wars were partially funded by “blood diamonds;” that is, diamonds from these two countries which were used finance the civil war. This spawned a whole industry of middlemen, smugglers, and so on, especially after the UN imposed sanctions.One of the stops that smugglers made was in India. In 2000, the BBC reported:

India is one of the world’s largest centres for processing and polishing diamonds. The industry employs nearly one million people and generates more than $6.5bn in foreign exchange.

A team of UN experts is in the Indian capital Delhi and says there are indications that some Indian diamond dealers may be involved in smuggling “blood diamonds”.

…[R]eports say there are fears that blood diamonds are entering the Indian market indirectly, from trading centres in Antwerp, London and Israel [Link].

Back then, the UN team didn’t have the “resources to to check on the involvement of suspected Indian criminals in trading diamonds coming from Sierra Leone.” But now, there is evidence that blood diamonds are showing up in Surat, Gujarat, the epicenter where 92% of the world’s diamonds are polished:

India’s diamond industry is the fastest growing in the world, employing more than a million people and turning over some $8bn a year. But an investigation by The Observer has uncovered a damning consequence - evidence of the sale of blood diamonds on the black market from the Ivory Coast and Liberia, both banned from trading by the UN.

Such is its standing in the international diamond industry, India is expected to be chosen by the United Nations to take over the Kimberley Process - an initiative to stop the trade in African blood diamonds - from the EU.

In a thriving corner of Surat’s bazaar, Samir Shah’s fat Rolex and impressive girth provide testament to his flourishing business. ‘These stones are from Africa,’ he said, holding up two knuckle-sized murky brown diamonds. ‘We can’t always tell where they are from, but they aren’t legitimate. But here business is done with cash and no questions.‘

Amnesty International agrees that the industry is funding bloody conflicts in Africa. ‘The sparkle of diamonds still comes at a heavy price,’ a spokeswoman said. ‘The Kimberley Process is being systematically bypassed and the reality is that conflict diamonds from Liberia are being smuggled into neighbouring countries for export and stones from strife-torn Ivory Coast are also finding their way to the Middle East and to India for processing and ultimately into European markets.’

Blood diamonds are not the only issue threatening the Indian government’s credibility. Campaigners say it continues to ignore Dickensian working conditions and the use of child labour. India’s Save the Childhood Foundation estimates that diamond workshops employ up to 30,000 children.

Surat is an abysmal scene of row upon row of decrepit factories and redbrick chimneys spewing yellow toxins into a discoloured sky. Every morning more than 500,000 diamond cutters, most earning less than $2 a day, trudge into its factories to slice, polish and facet the rough stones into sparkling gems.

This, economists say, is the true genius of India. It takes in the ‘garbage’ from mines in Australia, Canada and Africa, slaps 58 facets on it, sets it in gold and sells it on at a vast profit [Link].

Two months ago, the UN lifted a six year ban on Liberia exporting diamonds; but the government has still not legalized diamond mining. My guess is that keeping the diamond mining industry illegal will only help the underground/black market flourish even more, in which smugglers and middlemen play a large role. That means Surat will be the hub of much of this activity, as it may very well be right now.

Then there’s the ”dirty” gold, which refers to irresponsible mining practices:

The gold industry consumes a tenth of the world’s energy, spews about 30-50% of the globe’s toxic emissions and imperils 40% of the frontier forests. A single gold ring generates a staggering 20 tons of waste.

Estimates vary, but it is believed that at least 13,000 tonnes of gold rest in India – or approximately 9% of the world’s cumulative mine production.

India is the biggest consumer of this metal, some 950 tonnes of it annually, by some counts (accurate estimates are impossible to come by, considering that much of it is smuggled in, though not on the scale previously). Old-timers still recall “the bad old days” when Morarji Desai, as finance minister, imposed a Gold Control Order. Everyone had to declare his holdings, much to the chagrin of some householders, especially industrialists and sundry businessmen who hoard gold as unaccounted-for wealth.

“The hoarding tendency is well ingrained in Indian society, not least because inheritance laws in the middle of the 20 th century lent a great desirability to anonymity. Indian people are renowned for saving for the future and the financial savings ratio is strong, with a ratio of financial assets-to-GDP of 93%. Gold is valued in India as a savings and investment vehicle and is the second preferred investment behind bank deposits. India is the world’s largest consumer of gold in jewellery (much of which is purchased as investment). Gold circulates within the system and roughly 30% of gold jewellery fabrication is from recycled pieces. India is typically also the largest purchaser of coins and bars for investment (over 80 tonnes per year).” [Link]

What are the consequences of this, you might ask. Apart from the environmental consequences, there’s the human costs: massive human rights violations such as in the Democratic Republic of Congo, as well as villagers in Buyat Bay, Indonesia, who have suffered health problems from the gold mining waste that has been dumped in the bay.

Something to think about when you put on your best gold jewelry set and those sparkling diamonds.

* Photo found here.

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