B) Production

Is a Diamond Really Forever: DeBeers, India and the Global Intimacies of Diamond Production

 

The extraction of diamonds (i.e. mining) and the processing of diamonds (i.e. the cutting and polishing of the “rough,” recently mined gem) combine to configure two salient elements of global diamond production.

De Beers, operating as the chief puppeteer of the international diamond cartel—the entity presiding over world rough diamond production—is heavily involved with the extraction side of the diamond industry (Spar, 195). The company, itself, only mines about 40% of the total world supply of rough diamonds, but, it controls about 70-75% of the rough market, a percentage increase De Beers has been able to achieve via two processes. The first is the (often forced) incorporation of new suppliers into the cartel by way of contractual agreements. The second is the direct purchasing of rough diamonds on the open market (Bergenstock et al., 177). Wielding such a dominant hand in regard to the global supply of rough diamonds, De Beers and the rest of cartel exhibit a huge influence on the eight countries or so that produce the bulk of this supply—namely, Botswana, Russia, Canada, South Africa, Angola, Democratic Republic of Congo, Namibia and Australia (Spar, 195-196).

Rough Diamond Producer Countries

 

The mechanisms of this influence greatly resemble how the IMF and the World Bank have come to exercise their wills, essentially, in regard to the economies of the Global South. Much like how the IMF and World Bank use conditionality in their Structural Adjustment Programmes to take authority over a country’s economy, De Beers forces diamond-producing countries into conforming to a precise set of rules that gives the cartel managerial power over the production, storage and distribution of these countries’ diamond supplies (Spar, 196). In both cases, countries are coerced into making a deal with the devil out of necessity. The IMF and World Bank will not administer loans to countries in great need of capital who do not adhere to conditionality, whereas De Beers can flood the market of a runaway diamond-producing country (i.e. Zaire in the 80s) with low-quality industrial diamonds and thereby force it to renegotiate a contract with the cartel on far less favorable terms (Spar, 199).

Cartoon depicting the “tight grip” of the IMF in regard to global capital–especially that of the Global South’s

 

De Beers’ tight grip on producing countries in some ways can also be attributed to the particulars of IMF Structural Adjustment that emerged in the 1970s in the wake of the global debt crisis. At this time, countries that were crippled by debt accumulated from the agents of the crisis—OPEC, President Nixon’s and President Carter’s financial decisions, the IMF and World Bank’s emerging influence, etc.—were directed by the IMF to seek neoliberal solutions to their financial woes. One of these solutions involved the restructuring of a country’s economy in which the country would commit to the development of their particular “comparative advantage” on the global economic stage (i.e., the unique resources they possess that are economically attractive in the neoliberal world economy). For the diamond-producing countries of the Global South in the 1970s, mineral extraction was (and continues to be, into the present) their comparative advantage to pursue. As such, these countries likely have been driven, since the 70s, to establish contracts with De Beers concerning diamond extraction within their territories as a way of pursuing their comparative advantage. But, in incorporating themselves into the De Beers monopolistic fold, they further strengthen De Beers’ already tight grip on the diamond commodity chain.

I now turn to the processing side of diamond production. This is where a lot of the “value-added” occurs for the diamond, for it is where the rough gem becomes transformed into the high-priced striking beauty that has become so important for Western culture; and, the better quality the cut, the higher this high price becomes. The majority of rough diamonds go to India to get cut and polished: an estimated 92% of the world’s diamonds go through this process in Surat, a western Indian town, which is quite the surprising fact, given that India is not a rough diamond-producing country (Hussain). However, India does possess an ideal, profit-producing workforce for the diamond industry (i.e. cheap and highly skilled), and it is this quality that has given it the competitive advantage on the global stage to become the diamond-processing center of the world (Hussain). It is cheaper to (efficiently) cut and polish diamonds in India than in anywhere else (Hussain).

Cutters in a Diamond Polishing House

 

With this labor force, India has differentiated itself in much the same way as South Korea, and later China, Thailand and Indonesia, did in the 1980s and 90s, when they presented themselves to Nike and Reebok as the cheapest locales, globally, for labor (Enloe). In both cases, the labor is cheap because the workforce has been subjugated into docility and, therefore, into complacency in regard to low wages. In India, specifically, conditions are quite poor for workers. Many cutters and polishers are young migrants from the countryside, and most live within polishing factories, where ventilation is minimal, making about 50 euros a month (Hussain). However, the majority of these workers, especially the migrants, take this job happily as a step-up from work opportunities in the countryside, as a real opportunity to provide, economically, for their families (Hussain). Such an individual reality has unfortunate far-reaching significations: it only reinforces India’s competitive advantage as a place for cheap, skilled production of diamonds, thereby perpetuating the unfortunate interconnectedness between cheap labor and the dynamics of the contemporary global economy.

In recent years, diamonds have arisen in the contemporary consciousness less as a comparative advantage and more as a signifier of conflict, due to media spotlighting of an emergent challenge in Africa: the reality that diamonds were funding civil wars and other such conflicts in locales like Sierra Leone, Liberia, Congo and Angola (Spar, 204).

“Blood” Diamond Conflict Areas

 

In these countries, rebel organizations have taken over diamond-rich areas, allowing them access to an extremely valuable commodity, which could be traded for weapons and other such supplies crucial to their war efforts. In such a case, the diamond becomes a powerful manifestation of the workings implied in Mountz & Hyndman’s “global intimate,” an analytical lens through which to look upon the intricacies involved in micro- and macro-level spatial interaction (i.e. how globalization impacts everyday lives and is tied to class, race, gender and power within the context of specific regions). The diamond is a valuable commodity on the global market precisely because De Beers has been able to use effective supply management to maintain the rough diamond’s high price, despite the commodity’s non-scarcity and marginal cost of mining (Bergenstock et al., 174). With such (created) global value, the diamond emerges as a commanding tool for war; the control of its production allows for the creation and perpetuation of power through the mechanizations of global trade, as we see in Africa. Herein, the global becomes registered on the intimate-level.