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The De Beers make-believe

Nearly 50 years after Pakistan became an independent country, the diamond people have discovered we exist and seem to be coming to town in rather a big way. Having flouted a bevy of teasingly clad models wearing expensive diamonds and hip-hugging saris in front of a very select and wowing audience, De Beers is now seductively talking about “inexpensive” diamonds for the “average Pakistani pocket”. Since this South African diamond conglomerate is hardly a philanthropic institution and the sales promotion in Pakistan is being locally handled by an experienced advertising/PR firm that has obviously done its homework, they probably know something that we don’t. According to most analysts Pakistan is in a deep economic crisis, the average man in the street, the middle class and the moderately wealthy have all been hit hard in descending order of misery i.e. the most miserable are synonymous with the most poverty-stricken. Even the upper middle class and moderately wealthy (the upwardly mobile or “yuppies”) have food and utility bills rather than diamonds on their minds. So have the De Beers market analysis team gone bonkers in trying to penetrate such a rapidly disintegrating market or have they suddenly discovered a hitherto latent love for Pakistan that has aroused their philanthropic instincts? Given Pakistan’s strong parallel economy (may it last long!), rapid decline of the Pakistani Rupee against most international currencies, the growing enthusiasm of revenue officials with respect to ferreting out real estate acquisitions (and the official and/or unofficial tax thereof), the increasing lack of lustre among the “upwardly mobile” for gold as a hedging asset, etc diamonds may have acquired a new meaning for so many reasons, prime among them being as a status symbol in this very material world for the nouveau rich. Someone had the effrontery in this poverty stricken land to display diamond-studded jeans, it is believed that there was no dearth of buyers for this sickening monstrosity. Selling diamonds to suit the common pocket in Pakistan may not be a sick joke after all!

Those Pakistanis who have a penchant (and the wherewithal) to acquire these “inexpensive” diamonds need to have a short course of introduction in diamond’s commercial history vis-a-vis South Asia. Most of the world’s commercial diamonds (at least 75%) arrive uncut in India at a comparatively low price, India being not only the largest market for the finished products but also the biggest as far as expertise for the cutting and polishing of uncut diamonds. After a sophisticated “finishing” process, the diamonds assume a new value, much in excess of the relatively cheap labour that went into value addition to its finishing stage e.g. a rough, uncut diamond worth US$ 1000 may now fetch US$ 5000-6000. In the next stage when they are set in a necklace, bracelet or any other piece of jewellery, the value addition thereof from its primary uncut stage may be in many multiples, i.e. it may climb to many times the US$ 5000-6000 value. Diamonds may be a girl’s best friend but for a country as impoverished as ours and acutely feeling not only the rising costs of imports but a burgeoning import bill as well in the face of dwindling foreign exchange reserves, even “inexpensive” diamonds may be a luxury that we can ill-afford at the present time. Literally a stone’s throw from our five-star hotels in Karachi where the De Beers diamond extravaganzas are usually held as a “sound and light” show, people live in make-shift shelters without running water or plumbing or gas. Whatever electricity they get, if they manage it, is by the time-honoured method of illegal connection, the “Kunda”. Bereft of clean drinking water, they can hardly manage one square meal a day. Education, transport and medicines are mostly out of their reach, theirs is a 15th century existence with 20th century problems. There is a social obligation here that requires not only the government to make a sacrifice but for those also who can afford diamonds to at least try and do so. However one cannot pragmatically expect many of those being targeted by De Beers as potential customers to suddenly discover a social or a moral conscience and help the helpless in any positive way, the least they can do is to restrict to some extent the spending of the country’s hard earned foreign exchange in unnecessary purchase of these non-productive but expensive precious stones.

This is particularly galling because almost all the value addition from the diamond’s rough uncut stage goes directly into the Indian economy (already a US$ 5 billion trade). For every piece of finished diamond that our girls may be vying to buy, the finishing cost goes to Indian craftsmen (cutters and polishers), an expertise not only handed down through generations but added to by adequately funded training institutes. The difference from the original state to the finished stage notwithstanding, its commercial value may be even more expensive when sold to Pakistan depending upon what the jewellery designer or the diamond merchant is likely to get. With the knowledge that Indian origin stuff may not be entirely acceptable to the Pakistani palate if it is found coming from India, De Beers is probably the “Trojan Horse” being used as the acceptable face camouflaging the Indian connection and the direct contribution that every Pakistani citizen who can afford diamonds will make towards the Indian economy. There is no conspiracy theory here or a grand design to undermine Pakistan’s economy and thus compromise its national security, this is a hard fact of business.

To rouse the patriotic instinct may be good in theory, in practice those who can afford diamonds will certainly keep on buying them, the De Beers presentation will ensure that the make-believe becomes economic reality. Given that our girls will continue to covet diamonds as their best friend, what the government can do is to ensure that maximum of the diamonds are only imported in rough, uncut state in order to develop the local industry for cutting and polishing. Our many generations of cutters and polishers need remedial training and upgrading to modern sophisticated methods. Like it was done in India, De Beers could perhaps help fund a couple or so of institutes for processing precious minerals so that our private sector gets the expertise through the whole spectrum of value addition for the many gems and precious stones found in Pakistan. De Beers could further help by re-purchasing most of the finished products and marketing it themselves in the rest of the world in the same manner as they are doing for India, targeting us presently among the many potential suckers (oops, buyers!) in the world. Let our girls have diamonds but these should be finished in Pakistan by Pakistani craftsmen so that the value addition remains within the Pakistan economy.

The attraction for diamonds being quite strong in Pakistan, the second largest market after India in Asia, the products being blatantly peddled by De Beers could only be done so when backed by diamond-studded clout. Those who normally manipulate the puppet strings of our policy-makers are not averse to the lustre of diamonds, it translates into hard currency quite easily. Make-believe or not, when you have plenty of money, you have plenty of clout. But when you have diamonds, you have the loyalty of those with plenty of clout in Pakistan forever (with apologies to Ian Fleming’s “Diamonds Are Forever” for using the similarity very much as intended).

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