Rough diamonds, apartheid and a little bit of conspiracy

The reason for writing this article was an interesting discussion between the famous Russian Africanists Yu. S. Skubko and V. G. Shubin. The controversy was initiated by Yu. S. Skubko’s article “Rough Diamonds for Apartheid. Cooperation between the USSR and De Beers: A new pragmatism or the development of an old partnership?”¹. Yu. S. Skubko developed some provisions of this work in his report “National interests above ideology: Soviet Rough diamond deals with the South African De Beers cartel during the Cold War” presented at the scientific conference in Leipzig “Areas of Cooperation between the Socialist Countries and the Global South in the Cold War Era”². These works were very sharply criticized by V. G. Shubin in his article “More About Rough Diamonds”³, some of its theses had something in common with his work “Moscow and Armed Struggle in South Africa”⁴ that was extremely valuable and rich in facts.

In our opinion, the most important topics of this interesting dispute can be summarized as follows:

- Why the USSR, being the main De Beers’ counterparty in the global rough diamond market, simultaneously financed and organizationally supported the African National Congress (ANC), the main goal of which was destroying the “white” Republic of South Africa where De Beers and Anglo-American played a critical role in its economic system?

- Were the trade of the USSR with De Beers and the financing of the ANC by the Soviet Union separate processes or were they interrelated ones?

As can be seen even from the titles of his works, Yu. S. Skubko tended to think that the interaction between the USSR and De Beers was based solely on economic pragmatism; the parties completely ignored their ideological contradictions striving to achieve maximum benefits from their work in the rough diamond market. They cleverly got around the problems of the apartheid and the international sanctions against South Africa using some “shell companies”, which allowed them to avoid the reproaches from the supporters in the socialist camp who helped in their “fight against imperialism” and also the objections from the international community against the trade with the companies of the state on which tough sanctions were imposed. Accordingly, it can be argued that the problem of financing the “black” radicals was simply not considered from the perspective of the rough diamond market - business and ideology were considered to be separate. Although, Yu. S. Skubko noted in his Leipzig report that “foreign currency earnings from the sales of the Soviet rough diamonds through De Beers in the 1980s were tens of times higher than the entire today’s trade turnover between Russia and South Africa (in comparable prices). Part of this money was used to support the forces of the national liberation movement.” Unfortunately, this bright idea was not further developed by Yu. S. Skubko. Of course, the USSR financed the ANC not in roubles, but in hard currency, which the USSR received mainly from exporting its natural resources, including rough diamonds. Therefore, at first glance, it can be said as well that the ANC was financed by the sales of the Soviet oil and gas to Europe. Thus, it still remains open whether financing the ANC was somehow connected with the agreements with De Beers.

Paradoxically, V. G. Shubin who acted as opponent to Y. S. Skubko, practically came to similar conclusions: “So, Moscow was under the necessity of cooperating with De Beers, and from 1963 to 1990, the cooperation was not carried out directly. And it was not Russia to be blamed for the contacts with the then monopolist, but the West, specifically London, where the headquarters of the Central Selling Organisation (CSO) was located in violation of the UN General Assembly’s resolutions on boycotting the racist Republic of South Africa.

Simply put, the difference between the opponents was that Yu. S. Skubko assessed the agreements with the “then monopolist” and, accordingly, “disregard for ideological dogmas” as a pragmatic and customary move made by the Soviet regime, and V. G. Shubin said that was a forced step, and the West should be blamed (sic!) for this! But both authors seemed to agree that the rough diamond business was not connected with the Soviet programmes aimed at supporting the ANC. We have a different opinion and will try to substantiate it.

So, it was 1948. The National Party came to power in the Republic of South Africa (then - Union of South Africa) in a legitimate way, through elections. It was an extreme right-wing party whose members adhered to the ideology of racism and Nazism. This was the party of the “white” people, but not for all the “white” people. The core of the National Party was the “Afrikaner Broederbond, AB” (Union of Afrikaner Brothers), in which only white Afrikaner (Boer) Calvinists were admitted. It was the “Afrikaner Broederbond” that received all the key posts in the financial and national security cabinet of the new government. The economic programme of the National Party was simple: using the administrative resources it planned to create powerful financial structures, push the British banks dominating the economy to the periphery of the financial flows, and, as a result, to gain control over the country’s mining industry. The political programme was even simpler and included taking the revenge for the defeat in the Anglo-Boer War, and declared that the land of the Boers and its wealth had to belong to the Boers. The major adversaries included the British as a nation, the banks controlled by the British, as well as the mining corporations controlled by the British, and Great Britain as a state. The minor adversary included the “black” people, generally speaking, the “non-white’ people, whose existence - very miserable - had to become unacceptable for the human society.

The process went smoothly and rather quickly. For several years, the assets of the Volkskas Bank completely controlled by the Afrikaner Broederbond increased significantly, all the government accounts were transferred to this bank, as well as the personal and corporate accounts of all more or less wealthy Boers. The positions of the British bank “Barclays” that used to be dominant in the country were in jeopardy. The Volkskas management made no secret of their intentions to enter the capital of the mining companies in the near future - thanks to the government patronage - and to gain control over them. Prime Minister Daniel Malan (a member of the Afrikaner Broederbond) said publicly that South Africa belonged to the Boers and would remain so forever. In 1950, he issued a decree prohibiting the South African citizens from holding British citizenship. From the same year, the administrative control over the corporations with British capital was significantly strengthened.

For De Beers and Anglo-American, it was getting really tough. It was possible to re-register a company in London, but you could not take the mineral deposits with you ... And then, Ernest Oppenheimer invested generously in the United South African Trust Fund to finance the pro-English United South African Party, which was supposed to get a majority in the parliament⁵, according to the owner of De Beers. But in the crucial elections of 1958, the United Party lost comprehensively to the National Party, 34% versus 66%. His investment did not work, there were much more patriotic Boer voters than the British ones, the “black” people did not have voting rights, the National Party retained power and also significantly strengthened it; the last step had to be made until the Boer government would be able to established its control over the mining corporations having the British capital. Well, the time came to act using other methods. “My enemy’s enemy is my friend” ... This saying was useful in all times.

In June 1959, the public Anti-Apartheid Movement was registered in London, which included prominent ANC functionaries. In November 1959, this movement formed a committee to boycott the Republic of South Africa; on December 21, 1959, Albert Lutuli, the ANC leader, made a policy statement, in which he called for tough international sanctions against the Boer government. This activity was properly synchronized with the contacts between the USSR and De Beers: in October 1959, Philip Oppenheimer visited the USSR. The first official contract for the supply of the Yakut rough diamonds to the diamond monopolist was signed. A few months later, Yusuf Dadoo, the head of the South African Communist Party that was banned in South Africa, arrived in Moscow, and this visit opened a channel for financing the South African radicals by the Soviet Union.

Why did the USSR started to support the ANC in 1960, almost immediately after signing the agreement with De Beers? The ANC had existed since 1912, the contacts of this organization with the USSR had been since the 1920s, the ANC functionaries were invited to take part in various Soviet congresses and holiday celebrations, but they were not given money. Racism in the Union of South Africa (Republic of South Africa) always flourished, the laws on racial segregation were adopted literally from the day the state was founded, but for some reason, the USSR started to be concerned about the “black” people’s heavy fate after signing the agreement with De Beers. How did the fate of the “black” people in South Africa in 1960 differ from that in 1950? Or in 1940? Or in1930? Really, it was no different.

Prior to financing by the Soviet Union, the ANC was a rather unstable organization, poor, practically defenseless, with an extremely low, almost zero level of training of its functionaries. For the Boer government, the ANC was an enemy, but a weak and minor enemy. However, by 1963, the ANC and its armed wing “Spear of the Nation” (uMkhonto we Sizwe) had already become the perfectly mobilized, branched out, well-armed sabotage organizations, and the highly professional training of their militants was organized in the USSR and in some African countries.

It should be borne in mind that for the USSR, the maintenance of the ANC was an extremely costly project, which, by definition, could never pay off. While the generous Soviet support for the legitimate governments of many African countries that gained independence in the 1960s responded at least with political loyalty to the initiatives of the USSR on the international scene, the civilized world considered the ANC as a terrorist organization banned in many countries, and it could not act as a diplomatic ally. For thirty years, the USSR had financed the ANC militants, supplied them with weapons (including MANPADS, man-portable air defense systems!), and trained the militants whose ideology was nothing else than racism, but it was the “black” racism, the “focused” one. The ANC anthem was the song “Kill the Boer!”

So, investing huge sums of money for thirty years just so that the “black” racists on the other side of the earth had the ability to effectively kill the “white” racists was a strange project, even for the communist regime. But all makes sense when we compare the dynamics of the relations between the USSR and De Beers and the progress in the ANC’s activities because the more rough diamonds the USSR sold to De Beers and the better the conditions for these sales were, the more generously the ANC was financed and the higher its operational efficiency was. The threat from the ANC grew steadily and rapidly, forcing the Boer government to spend more and more budgetary funds to remove the threat. This, in turn, completely destroyed the scheme of accumulating funds at the nationally oriented banks with the aim of subsequent control of the mining corporations. At the same time, tough international sanctions were imposed on the Republic of South Africa, the sanctions applied to the banks and companies with the state participation, but they did not affect the De Beers’ and Anglo-American’s activities; in fact, the corporations with the British capital did not suffer from the sanctions. At the same time, the owners of De Beers and Anglo American received a very beneficial reputation as fervent opponents of the apartheid, while at the same time, they had nothing to do with the ANC terrorists.

The history of the relations between the USSR and the ANC is described vividly in the works of V. G. Shubin, and we will not dwell on it in detail. Still, we would like to quote one episode that V. G. Shubin didn’t pay attention to: “When money came to the London resident agency, Gordievsky put on gloves, removed the bank packaging from the money and counted the banknotes. Alexander Fyodorovich Yakimenko, the party representative who also collaborated with the KGB, received Dadoo at 18, Kensington Park Gardens. After receiving money from Gordievsky, Dadoo signed separate accounts on behalf of the ANC and the South African Communist Party. He did not put money into his briefcase but stuffed it into the pockets of his suit and coat. Gordievsky watched as Dadoo - thin as a stick - “became inflated” from the bundles of dollars and walked home. Obviously, he was not at all afraid that on the way, he could be robbed”⁶. So, this happened in London in 1982. Oleg Gordievsky, the KGB colonel, was the employee of the Soviet diplomatic station and an agent of the British intelligence. Yusuf Dadoo was Vice Chairman of the ANC Revolutionary Council and Chairman of the South African Communist Party. The ANC was recognized as a terrorist organization in South Africa and the United States, Dadoo was put on the international wanted list, but Dadoo had no problems in London. The British intelligence services (thanks to Gordievsky) knew very well who Dadoo was, how much money he received from the USSR, and where this money was sent. Every wad of dollars in the Dadoo’s pocket meant a blown-up police station in Cape Town, a gunned down officer in Johannesburg, a burned down Boer farm. However, no one could touch Dadoo in London, he calmly went home. There was no more comfortable place on Earth for the ANC terrorists than London. Well, not to mention Moscow, of course.

So, there was no paradox in the relationship between De Beers and the USSR in the era of the South African apartheid. The government of the “white” nationalists tried to control the assets of De Beers and Anglo American, to take revenge for the defeat in the Anglo-Boer War of 1899-1902; and they caught a cruel, ultimately fatal blow made by the hands of the new De Beers’ counterpart. Of course, the whole process was “packed in an ideological wrapper”, both an ANC militant and his Soviet instructor from the GRU (Russian Military Intelligence) and even a curator from the International Department of the CPSU Central Committee could well believe that all this was done in order to have a portrait of Karl Marx hung in South Africa. I think this is called conspiracy?

Sergey Goryainov, Rough&Polished

¹ Skubko Yu. S. Rough Diamonds for apartheid. Cooperation between the USSR and De Beers: A New Pragmatism or the Development of an Old Partnership? // Journal "Scientific Notes of the Institute for African Studies of the Russian Academy of Sciences". 2017. No. 3 (40). p. 53-65. (in Russian)
² Skubko Yu. S. Conference in Leipzig: Areas of Cooperation between Socialist Countries and the Global South in the Cold War Era // Asia and Africa Today. 2018. No. 4 (729). p. 73-75. (in Russian)
³ Shubin V. G. More about Rough Diamonds // Journal of Scientific Notes of the Institute for African Studies of the Russian Academy of Sciences. 2019. No. 1 (46). p. 115-199. (in Russian)
⁴ Shubin V. G. Moscow and Armed Struggle in South Africa // Asia and Africa Today. 2020. No. 3. p. 72-79. (in Russian)
⁵ South African History Online (SAHO)//National Party (NP) https://www.sahistory.org.za/article/national-party-np
⁶ KGB: The Inside Story of Its Foreign Operations from Lenin to Gorbachev by Christopher Andrew, Oleg Gordievsky. M.: Tsentrpoligraph,1999. p. 353. (in Russian)