http://www.kommersant.com/page.asp?id=555218
The Central Bank Wants to Cancel Diamond Exports // Interoffice Debate Kommersant has learned that the Ministry of Justice has turned down a project prepared by presidential order by the Ministry of Finance to cancel quotas on the export of platinum and diamonds from Russia. The reason is that the document was not approved by the Central Bank, which holds that quotas should not be eliminated, rather the state monopoly on platinum export should be. However, market players say that, behind the scenes, a long-time conflict between the Central Bank and the Russian platinum exporter Almazyuvilereksport is being played out. The bureaucratic intrigue has been going on for years now. The Finance Ministry has brought it to the attention of the administration four times, but a lid has been kept on it until now. Until the recent liberalization of the market, the secrecy of the size of deposits, production and demand for platinum and diamonds held the market down. However, after the presidential decree "On Changes to Information Considered a State Secret" was issued at the beginning of this month, only the reserves of platinum and diamonds in the State Fund and Central Bank are secret. It would seem that the last barriers to market liberalization have been overcome but the Justice Ministry has just refused the proposal to cancel export quotas. At the ministry, they claim that it is because "the document has not been approved by the Central Bank." Kommersant has information that the Central Bank gave the document a negative appraisal in February because of the non-market system for platinum export from Russia. The Central Bank considered it necessary not to eliminate the quota mechanism, but to eliminate the state monopoly on its export. That is a strong hint at the need to reform Almazyuvilereksport, which has long had an account with the Central Bank. The Central Bank has stated repeatedly that Almazyuvilereksport and Norilsk Nickel have international trading policies that are unprofitable for it. At the end of the 1990s, when huge reserves of platinum were built up in the Central Bank reserves, it wanted to take control of Almazyuvilereksport, which is normally managed by the Finance Ministry. Since then, according to Kommersant's information, the Central Bank has gotten rid of its reserves and no longer imposes a quota on its export. It is, therefore, surprising that the Central Bank has reacted so strongly to the liberalization of the market. "The Bank of Russia has not been a participant in practice on that market. It was ever only involved by chance, when the State Depository for Precious Metals transferred a large amount of platinum to it. The administration then decided to underwrite a large monetary emission," a source at a large company that deals in precious metals and stones told Kommersant on Wednesday. Officially, the Justice Ministry's refusal to endorse the document is being chocked up to technical complications. "We assume that the delay in the preparation of the decree is of a technical nature," said president of ALROSA Alexander Nichiporuk. "When principle decisions are made on the liberalization of the market (I mean the recent decree on declassifying the reserves, production and demand for diamonds), it is understandable that the implementation of the decision is a matter of time. We assume that the elimination of the quota on diamond exports will go into force by the end of 2005. That would fully meet Russia's obligations for entry into the WTO." Norilsk Nickel, the Central Bank and Finance Ministry all refused to comment on the topic. Almazyuvilereksport, as might be expected, supports the elimination of the quote on platinum and palladium export. "The elimination of the quota is absolutely the right thing to do," Almazyuvilereksport deputy director Sergey Gorny said. "The main producer of metals in this group, Norilsk Nickel, has a long-term quota [to the end of 2009] on the total volume of production. So the elimination of the quota doesn't change anything for it. The other platinum owner, Gokhran [the State Depository for Precious Metals] is also unopposed to it. Its quota is set annually in the state budget. The sales system and state monopoly on platinum export is a political question." Gorny refused to comment on the possible conflict between the Central Bank and Almazyuvilereksport. Russian Article as of Mar. 17, 2005 ------------------------ Yahoo! Groups Sponsor --------------------~--> Give underprivileged students the materials they need to learn. Bring education to life by funding a specific classroom project. http://us.click.yahoo.com/FHLuJD/_WnJAA/cUmLAA/TySplB/TM --------------------------------------------------------------------~-> -------------------------- Want to discuss this topic? 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