Diamonds funding Armenian forces
By John Helmer

Mineweb.com
’03-JUN-05 07:39′

MOSCOW (Mineweb.com) — According to a report just issued in Moscow by
the Civil Research Council (CRC), illegal diamond trafficking between
Russia, Armenia, and the Nagorno-Karabakh Republic is growing fast,
and is the principal source of funding for the armed forces of the
Armenian-based republic in its long-running conflict with neighbouring
Azerbaijan.

Russian researchers, as well as international monitors of the
Kimberley certification process, believe there are links between
Armenians trading in arms and diamonds in the conflict zones of west
and central Africa, diamond manufacturers in Israel, and Armenians
fighting to defend the Nagorno-Karabakh territory.

With full control over Shogakn, the largest diamond-polishing
enterprise in Armenia, Lev Leviev, the Israeli diamantaire, says he
is not involved in any diamond cutting operations in the conflict
zone between Armenia and Azerbaijan. The rough for his Armenian plant
comes mainly from Africa through Israel, according to his spokesman.

Leviev acquired Shogakn when the state-owned diamond holding of Amenia
was broken up and privatized. According to his spokesman, he invested
about $3 million in new equipment, and currently employs 1,500 cutters
to produce about 30,000 carats per month. Annual turnover, according
to Leviev’s spokesman, is about $150 million, making Shogakn one of
the largest diamond-cutting plants in the world.

The Shogakn management is constantly on the alert to deter and stop
attempts at running smuggled goods through the cutting works, the
source added.

Potential diamond-cutting capacity for Armenia as a whole, where
about 50 enterprises are reported to employ about 5,000 cutters, is
estimated at 2 million carats per annum. In all, diamonds and diamond
jewellery comprise the single largest export earner of Armenia,
worth about $300 million in 2004.

Without citing its sources by name, the CRC report claims that other
Armenian-based firms are supplying rough to cutting enterprises across
the border in Nagorno-Karabakh. Among these operations, the report
names Lory, which employs about 1,000 cutters and is linked to the
Arslanian group of Antwerp; and DCA, controlled by Gagik and Araik
Abramian, who are linked to De Beers in Moscow. According to the CRC
director, Sergei Goriaenov, the Arslanian and Abramian groups are the
biggest of the diamantaires involved in Nagorno-Karabakkh. Diamondtech,
employing 800 cutters, and funded by Rosy Blue of Antwerp, is also
reported to be operating in Armenia proper.

For stones moving to Nagorno-Karabakh, Kimberley certificates are
provided on the Armenian side of the frontier. But according to the CRC
report, the extent of the processing of diamonds in Nagorno-Karabakh,
and the destination of the goods, are still unclear.

The CRC emerged a few weeks ago in Moscow, identifying itself as
independently funded, with special interest in researching the links
between the diamond industry of Russia and terrorist or criminal
groups in the Caucasus.