Who's buying Burma's gems?

It's the last hour of the last day of the gems auction in Rangoon, and tired buyers are fanning themselves with worn auction catalogs, and making their final bids.

Over the past five days, jade, rubies, sapphires, and close to $150 million have passed hands here, according to the Union of Myanmar Economic Holdings Ltd., the consortium that dominates Burma's gemstone trade and is owned by the defense ministry and a clutch of military officers.

Who's buying? China, India, Singapore, and Thailand are scooping up Burma's stones. US first lady Laura Bush's efforts at a global boycott of Burma's gems seem to have done little to reduce China's appetite for Burmese jade to make trinkets and souvenirs to sell at the Summer Olympics.

At this recent auction, 281 foreigners attended, leaving behind much-needed foreign currency and generally turning the auction into a resounding success, according to the state-run New Light of Myanmar newspaper.

Mrs. Bush – and human rights campaigners – would not be pleased.

The first lady has taken on the military regime in Burma (Myanmar), urging jewelers not to buy gems from a country where the undemocratic rulers and their cronies amass fortunes selling off the country's stones, as well as many of the county's other natural resources – such as minerals, timber, gold, oil, and gas – but keep Burma's citizens in abject poverty.

She has urged UN Secretary General Ban Ki Moon to act more forcibly on Burma and stood beside President Bush on several occasions recently as he announced the growing list of US sanctions on the country. And, on International Human Right's Day this past December, Mrs. Bush added her voice to those seeking a global boycott on gems from Burma.

"Consumers throughout the world should consider the implications of their purchase of Burmese gems," she said in a statement from the White House. "Every Burmese stone bought, cut, polished, and sold sustains an illegitimate, repressive regime."

According to Human Right's Watch (HRW), Burma's junta owns a majority stake in each of the country's mines – many of them sitting on land confiscated from local communities – sanctioning both unsafe working conditions and forced and child labor. The European Union passed rules in November banning imports of Burmese rubies and jade, and Canada and the US Senate followed suit in December.

Worried about being associated with the junta's practices, some of the world's biggest names in precious stones – including Frances' Cartier, Italy's Bulgari, and the US-based Tiffany & Co., and Leber Jeweler Inc. – have announced their own bans on Burma's gems.

But, clearly, not everyone has joined the bandwagon. At this January's auction in Rangoon, according to the New Light of Myanmar, 600 lots of jade were sold – a third more than at the last auction held in November. By some estimates, jade alone now accounts for about 10 percent of Burma's yearly export earnings. Rubies, in turn, remain Burma's gem of choice; the country is reportedly the source of close to 90 percent of the world's supply. And Burma also exports diamonds, cat's- eyes, emeralds, topaz, pearls, sapphires, coral, and yellow garnet.

The government's Myanmar Gem Enterprise – Burma's third largest export company after the state-run oil and timber companies – has said gem sales have increased by 45 percent every year for the past three. The gem auctions, held once or twice a year since 1964, are becoming more frequent. All told, the official trade in Burma's gems, according HRW, was valued at $297 million in fiscal year 2006-2007, but is estimated to actually be much higher when factoring in unofficial sales.

Why haven't Western sanctions on Burma's gems – and the country's other products – been more effective, even after so many years?

"The only sanctions that would work would be Chinese," asserts Robert Rotberg, a professor of public policy at Harvard University's Kennedy School. "The Chinese ... supply all the weapons and much of the investment [to Burma]."

And, while gems are clearly a part of the problem, stresses Mr. Rotberg, they are only the very tip of the iceberg. "The role of gems is not huge ... compared with oil and gas, and opium smuggling," he says. Overall, China, Thailand, and India reportedly spend about $2 billion a year here on electricity, natural gas, oil and timber.

"China is the culprit here," explains Thai social critic and frequent Burma commentator Acharn Sulak Sivaraksa. "Burma is supported by China. End of story. We need to liberate that country not only from its own military junta but also from the imperialist Chinese."

Pressure on China – and to a smaller extent on India and Thailand – to assume a more constructive role in Burma is mounting.

"It is in all our interests to address the poor governance that can give birth to conflict and instability," British Foreign Secretary David Miliband told students at the elite Peking University on a trip to China last month. "When the incentives of global engagement do not work, there will be cases for applying pressure," he said. "Burma is on your border. You know it well," and outlined Britain's view that Burma's military government is "brutal."

His carefully chosen words echoed those of Mrs. Bush: "President Bush and I call on all nations – especially Burma's neighbors – to use their influence to help bring about a democratic transition," she said, addressing China in a December teleconference.

Recently, several Burmese human rights and opposition groups have begun linking China's Burma policy to the upcoming Olympics – a particularly unwanted development for Beijing. The Burmese "88 Students Generation" group issued a call two weeks ago appealing to people around the world not to watch the sports events on TV, and the Washington-based US Campaign for Burma has called on athletes to boycott the games.

Linkage between Burma policy and the Olympics would be "inappropriate and unpopular," responded Liu Jingmin, vice president of the Beijing Olympics organizing committee, at an October press conference.

But whether or not it's the specter of the Burma issue mushrooming into a rallying call of similar proportions to that the campaign linking China's role in Sudan's Darfur region to the Olympics – such pressure on China seems to be having some effect.

While there is no indication China will sanction Burma or even dramatically change its basic working relationship with the country – China is famously averse to interfering in other country's internal affairs – there are nonetheless small signs that Beijing's patience with the military junta next door is waning and an eventual policy shift is possible.

"We sense China is changing its attitude," says U Han Than, a spokesman for the Burmese opposition National League for Democracy (NLD). "We have heard that high-ranking Chinese officials were here and told the military generals they are not happy."

China's official news service did report, in November, that a special envoy, Vice Minister of Foreign Affairs Wang Yi, had been in Burma and asked the military "to resolve the pending issues through consultations so as to speed up the democratization process."

"China is trying harder to be constructive," says a Western diplomat in Rangoon, speaking on condition of anonymity. "They don't care about democracy or a political opening up, but they care about their investments and the Olympics and don't want the sort of instability that resulted from the September blunders of the government. They want an economic opening up, which is not a bad start."