Law Leaves Amber Region With Precious Little Hope for Its Future

All that glitters is not gold, but that may come as news to the Russian federal government.

In an attempt to cut down on theft of the sparkling nuggets of amber that stud the Baltic Sea cliffs of the Kaliningrad, politicians here and in Moscow have had the resource reclassified from a mineral to a precious gem.

A law passed by Parliament this summer would deed control over all amber activities to the powerful Russian Committee for Precious Metals and Stones.

But that is widely regarded as tantamount to putting the fox in charge of the henhouse. Top committee officials are already under investigation for the illegal diversion of more than $170 million in diamonds, gold and silver to corrupt colleagues abroad for personal enrichment.

Those whose jobs depend on the brilliant globules of fossilized resin fear the new designation is a federal hijacking of their unique resource and the first step in a restructuring of the market that could put them out of business.

Federal regulations for protection and handling of precious gems oblige extractors and processors to store them in guarded vaults and to document their movements from mine to factory to retail outlet.

Already suffering a sales slump amid Russia’s struggle to create a market economy, the Yantarny Kombinat complex that is the sole source of income for most of this company town’s 8,000 people has been brought to a virtual standstill by the legislation.

“This is just another mistake in a long row of mistakes,” fumed Ivan A. Silinov, deputy director of the factory that is the only officially sanctioned amber industry in Russia. “This decision will only complicate our work as we will now have to create special storage facilities.”

That is, at least officially, the objective of the new law, which was passed by both houses of Parliament.

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Russia’s omnipotent mafia has been so active in amber poaching and smuggling that nearly half the 600 tons extracted each year goes astray.

Annual losses from unauthorized mining and sales are estimated at $1 billion, with nearly a ton of the raw resource smuggled out of Russia every day, the respected weekly Arguments and Facts has reported.

Kaliningrad’s remote beaches have become an underworld treasure trove now that the post-Soviet borders are relatively open. The mines are vast and poorly patrolled, and underpaid bureaucrats can be bribed to lose huge stocks of the stones while in transit.

Although Kaliningrad is only a tiny, unconnected dot on the map of sprawling Russia, at least 80% of the worldwide deposits of amber can be found in this formerly German territory wedged between Poland and the Baltic states.

Russian scientists estimate that 180,000 tons of amber are concentrated in the region, enough to last for three centuries at the current extraction rate.

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Closing off the poaching floodgates is expected to give Russia control of the amber market, as foreign factories and craftsmen will now have to buy their supplies through official Moscow channels.

“This would oblige us to work differently with the amber, but it would also allow for better guarding and control,” explained Kaliningrad governor Yuri S. Matochkin, a supporter of the legislation.

What has Yantarny workers worried is that the law will prevent the privatization of the amber industry, leaving them dependent on a distant and corrupt federal government for the investment and technological upgrading that is sorely needed.

Because of the factory’s antiquated equipment, it currently costs 28% more to mine amber than the raw stones are worth, complained Yantarny director Alexei S. Khan.

“We can only guess what our future holds, but we can be sure these changes are not for our benefit,” said Lyudmila, a 25-year-old sorter. “It’s nothing to those in the government if a few people at the edge of the country have no work.”

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Government officials in Moscow refuse to discuss the sensitive subject, referring inquiries from one office to another. Neither the Committee on Precious Metals and Stones nor the State Property Committee would discuss the consequences of the status change.

“The situation with amber is very strange now. The whole industry has been frozen,” said Alexander K. Ostakhov, an economic analyst in the regional capital of Kaliningrad, about 30 miles southeast of Yantarny. “Lithuania and Poland have managed to develop good businesses making amber jewelry and artworks, but ours seems to mostly get stolen.”

Most of the poached amber ends up in Germany, Poland and Lithuania, where it is fashioned into necklaces and bracelets or carved into figurines and decorative containers.

Even if the reclassification is genuinely intended to combat smuggling, the federal government’s involvement is likely to at least raise prices.

“Everyone in this town depends on the factory for survival, and we’re not so sure this is a wise move,” saleswoman Tatiana V. Khobets said of the new designation. “If they try to drive the prices up, no one will buy it. After all, we’re not dealing with gold here.”