Updated July 2008
Burma produces a variety of gems but is most famous for its rubies and jade. The vast majority of high-quality rubies on the world market originate from Burma. Burmese rubies are renowned for their dark "pigeon's blood" color, which makes them more valuable than rubies produced elsewhere. According to industry estimates, Burma accounts for more than 90 percent of the global trade by value.
Burma also dominates as the top producer of jadeite, the most expensive form of jade. Burma is especially well known for "imperial jade," a gem-quality jade that is valued highly for its deep green hue. In addition, Burma produces and exports a variety of other precious and semi-precious stones, including sapphires and spinel.
The color and quality of gems from Burma make them attractive for use in jewelry sold around the world, but the beauty of Burmese gems is marred by their association with serious human rights abuses. A growing number of governments, ethically-minded businesses, and civil society groups are working to curtail the international trade in Burmese gems through targeted sanctions and boycott campaigns. There are signs that these efforts are having an effect.
The Burmese Government's Record of Abuses
The ruling military junta, the State Peace and Development Council (SPDC), has an abysmal human rights record. It has achieved notoriety for its recruitment of child soldiers, persecution of ethnic minorities, use of forced labor, and imprisonment of political dissidents, among other abuses. The number of political prisoners in Burmese jails-estimated at nearly 1,200 in mid-2007-increased to 1,800 following the government crackdown against peaceful protests in August-September 2007 in which at least 31 people were killed. The country's most prominent democratic figure, Nobel peace laureate Daw Aung San Suu Kyi, has spent 12 of the past 18 years under house arrest. Burma's military rulers also showed callous disregard for their citizens when a cyclone struck Burma in May 2008, offering only a slow and ineffectual national response and hindering international relief efforts.
Mining, Money, and Misery
Burma's gem industry is dominated by the SPDC. The SPDC has a direct stake in many mines, in some cases through joint ventures with private entrepreneurs. Burma's gem mines are ruled with an iron hand by military authorities and mining companies. Deplorable conditions at the mines reportedly include rampant land confiscation, extortion, forced labor, child labor, environmental pollution, and unsafe working conditions for miners. HIV/AIDS, drug-resistant malaria, and tuberculosis are increasingly common in mining areas.
The SPDC also has a direct ownership interest in many of the country's top gem businesses, including state-run firms such as the Myanmar Gems Enterprise and Myanmar Pearl Enterprise, which both operate under the Ministry of Mines. In addition, a military-owned conglomerate, the Union of Myanmar Economic Holdings Company (UMEH), owns many businesses in Burma, including in the lucrative gem-mining sector. Shares in the holding company are held by the Ministry of Defense and members of the armed forces, and UMEH's board of directors is comprised of senior military officers.
Burmese officials have openly stated in the past that they increasingly rely on gem sales to bring in hard currency. Many of these sales take place in official auctions at which domestic and foreign buyers bid on gemstones sold in lots. Regular auctions used to be held annually, but since 1992 they have taken place twice yearly. Beginning in 2004, additional "special" auctions were called to help fill the government's coffers. Moreover, senior military officers reputedly arrange "private" sales of the finest gems and keep the proceeds. Together, official auctions and military sales of the most valuable gems account for the major portion of Burma's gem trade. In addition, there is also some cross-border smuggling of gems, particularly into Thailand.
Boycotts and Sanctions
International pressure to clamp down on Burma's gem dealings increased following the SPDC's brutal crackdown on protesting monks, democracy activists, and ordinary citizens in August-September 2007. Human Rights Watch was among civil society groups that called on governments to adopt strict sanctions on Burma's gem trade and urged traders to stop buying gems from Burma.
The majority of gems mined in Burma are first exported to countries such as Thailand or India to be cut and polished. Some are then incorporated into finished jewelry, such as rings, before being sold on to international gem dealers and retailers. China stands as the largest buyer of Burmese jade. Traditionally, the prime markets for jewelry made with Burmese rubies have been the United States, Europe, and Japan. A considerable number of the highest-quality and most expensive stones are exported to Switzerland for onward sale to other markets, according to industry sources.
A few jewelry retailers, notably Tiffany & Co. and Leber Jeweler Inc, have long refused to purchase gems of Burmese origin. In reaction to the bloody crackdown in Burma, several European and US jewelry companies - including Bulgari and Cartier - also voluntarily pledged to boycott Burmese gems.
In October 2007, the Jewelers of America, an industry association, issued an unprecedented call to US Congress to eliminate a legal loophole that permitted imports of Burmese gems via third countries. The group also encouraged its 11,000 members to halt purchases of these gems until democratic reforms are under way. Other industry associations - one in Canada, a second association in the United States, and an international jewelers' confederation - supported similar moves.
These voluntary boycotts helped to pave the way for government action to curtail the international trade in Burmese gems. European Union leaders in October 2007 voted to outlaw any trade with select industries in Burma, including the mining sector. The EU ban specifically prohibits the import of precious and semi-precious stones. In December 2007, the Canadian government adopted new sanctions on Burma that, among other measures, block all imports of Burmese origin.
In the United States, action was taken to tighten an existing 2003 ban on importing Burmese gems. The US Congress attempted in late 2007 to fully block the trade in Burmese-origin gems by closing the loophole for gems processed in third countries. This effort, however, was delayed by differences in the legislation approved by the House and Senate. In July 2008 a compromise bill-the Tom Lantos Block Burmese JADE (Junta's Anti-Democratic Efforts) Act of 2008-was approved unanimously by Congress and signed by President George W. Bush. It outlaws imports of Burmese-origin rubies and jade, by far Burma's top-selling gem exports. It does not cover other types of precious stones produced by Burma, nor does it forbid the sale of Burmese-origin gems legally imported to the US under prior rules.
In addition, the Bush administration has declared several gem-related businesses to be US sanctions targets. These include the UMEH military conglomerate, Myanmar Gems Enterprise, Myanmar Pearl Enterprise, Myanmar Ruby Enterprise, and Myanmar Imperial Jade Company. First Lady Laura Bush has been a strong critic of the trade in Burmese gems.
Impact on Gem Trade
There can be little doubt that Burma's gem trade is a major money earner for the SPDC. Official figures show that in both 2006 and 2007 years gems constituted Burma's third most important export product, following petroleum (oil and natural gas) and agricultural products. Yet the total value of Burma's gem trade is difficult to assess because of the unreliability of government statistics.
The trade in Burma's gems and jewelry was valued at US$647 million in fiscal year 2007-2008 (April 2007 through March 2008), according to reports citing Ministry of Commerce figures. Customs figures cited elsewhere, however, gave the value of gem exports during calendar year 2007 as US$561 million. Either figure, if accurate, would represent a marked increase in exports of Burmese gems, since declared gem earnings in fiscal year 2006-2007 stood at US$297 million.
Although these official statistics portray very robust growth in gem exports, there are signs that international pressure may be dampening the trade in Burma's gems. Notably, the increased frequency of gem auctions, alongside an apparent reduction in sales revenue, suggest that international sanctions on the gem industry and pressure for consumer boycotts are having an impact. They also raise questions about whether the SPDC may have inflated its trade figures to mask this effect.
Burma has organized three major gem auctions since the bloody August-September 2007 crackdown and ensuing pressure for international sanctions and boycotts.
The first of these was the Myanmar Gems Emporium that was originally scheduled for September 2007 but was ultimately held in November 2007. By most measures, the emporium was a disappointment. An unnamed official from the state-run Myanmar Gems Enterprise, which organized the November auction, told reporters that total sales were more than 100 million euros (approximately US$150 million). That is less than half of the US$300 million the company had said it had hoped to earn. It is also far below the company's most conservative earnings estimate for that gem auction, of US$230 million.
About two-thirds of the gems on offer (65 percent) were sold at the November auction, according to Human Rights Watch's calculations from figures published in the official government newspaper, the New Light of Myanmar. This represents an 8 percent decrease on sales from a previous gem auction in July 2007.
Approximately 3,600 gem merchants participated in the November auction, as compared to some 4,000 traders who attended the previous July. The number of foreign traders participating was essentially unchanged: nearly 2,300 in November, as compared to 2,200 in July. Merchants from China, including Hong Kong, reportedly accounted for nearly 90 percent of the foreign buyers at the November auction.
On the heels of the November gem emporium, the military-owned Union of Myanmar Economic Holdings Company held a gem auction in January 2008. Once again, there is reason to believe the SPDC was unhappy with the results. No earnings figures were released, contrary to prior practice, but one press account that cited government organizers said the auction netted US$41 million. Although this figure could not be verified, it did seem to suggest a slump in sales. Calculations by Human Rights Watch from statistics published in the New Light of Myanmar, moreover, indicate that only about 40 percent of the precious stones offered for sale found a buyer. Fewer than 300 foreigner traders participated.
When a March 2008 auction was held, more than 7,700 lots of gems, jade, and pearls were made available for sale. At the time, an unidentified official from the Myanmar Gems Enterprise told a reporter that organizers hoped the auction would draw 3000 foreign merchants and yield sales of US$153 million dollars.
These expectations do not appear to have been met. No information on total sales figures or the final volume of trading was released for the March 2008 auction. Instead the New Light of Myanmar only disclosed the unimpressive result that on one day fewer than 50 lots of gems sold. The state-run paper also revealed that some 1,600 foreign traders attended the first days of the event alongside nearly 1,200 local merchants. The auction was subsequently visited by a further 500 traders, raising the total attendance to just over 3,300. In contrast to its usual practice, however, the paper did not specify how many of these later arrivals came from abroad
The apparent decline in sales in late 2007 and the SPDC's unwillingness to release auction results in 2008 may reflect the impact of voluntary boycotts and moves to adopt new sanctions in Europe and North America. By closing off markets and reducing overall demand, such moves are believed to have lowered the short-term market value of Burmese gems, especially rubies. In late 2007 some traders in Thailand told reporters that they were holding off on purchases of such gems because they lacked confidence that they would be able to resell them at a good price. By early 2008, gem traders in Thailand were quoted confirming that US and EU sanctions had cut into sales of Burmese-origin gems.
Although China, Thailand, and some other countries that import Burmese gems have not imposed any measures to block this trade, many of the gems they buy - especially those sold to Thai traders - are ultimately intended for use in jewelry sold to consumers in other parts of the world so remain vulnerable to the impact of sanctions and boycotts elsewhere. A sustained boycott of Burma's gem industry in key consumer countries would have the effect of lowering overall demand for products made with Burmese gems and putting downward pressure on prices. The resulting reductions in profits earned by the country's military would complement existing sanctions by putting added pressure on the Burmese government to respect human rights.