Myanmar's rubies -- bloody color, bloody business

By Carmel Crimmins

BANGKOK (Reuters) - The gem merchants of Bangkok display their glistening wares proudly; diamonds from Africa, sapphires from Sri Lanka and rubies, of course, from Myanmar.

The red stones from the country formerly known as Burma are prized for their purity and hue. But they have a sinister flaw.

The country's military rulers rely on sales of precious stones such as sapphires, pearls and jade to fund their regime. Rubies are probably the biggest earner; more than 90 percent of the world's rubies come from Myanmar.

International outrage over the generals' brutal crackdown on pro-democracy rallies encouraged the European Union this week to consider a trade ban on Myanmar's gemstones, a leading export earner in the impoverished country.

There is also pressure in Washington to close a loophole on existing U.S. sanctions which allows in most of its precious stones.

But in neighboring Thailand, where the majority of Myanmar's gems are bought and sold, the stone merchants have yet to be put off business with the junta.

"People are unhappy about what's going on but they are not angry enough to stop buying rubies," said Pornchai Chuenchomlada, president of the Thai Gem and Jewelry Traders Association.

"If they killed a lot of people like they did in 1988 we might consider banning their products," said Pornchai, adding that he personally bought little from Myanmar on moral grounds.

Official media say 10 people were killed when soldiers fired on protesters, including Buddhist monks, in downtown Yangon last week, but the real toll is thought to be much higher.

The junta killed an estimated 3,000 people during the last major uprising in 1988.

VALLEY OF RUBIES

Myanmar's generals are estimated to have earned around $750 million since they began holding official gem and jade sales in 1964. A far bigger number of precious stones are smuggled over the border into Thailand and China.

The official expositions, held twice a year in the tropical heat of Yangon, are increasingly popular. More Chinese bidders are attending, attracted by slabs of jade.

The state holds a majority stake in all mining operations in Myanmar, including the "Valley of Rubies", the mountainous Mogok area, 200 km (125 miles) north of Mandalay, famed for its rare pigeon's blood rubies and blue sapphires worth tens of thousands of dollars apiece.

Conditions in the mines, off-limits to outsiders, are reported to be horrendous.