ABOUT LAB OR RUSSIAN DIAMONDS

Russia is the world's second-largest diamond producer, but Soviet-era restrictions and the De Beers cartel have crimped Russian profits from the gems. Now South Africa-based De Beers is relaxing its grip on the world's diamonds, and Russia is angling to make a name for itself in the lucrative, secretive industry. "It's time for Russia to step out in this business," said Natalya Marakina, a member of the exclusive Russian Diamond Chamber, a club for diamond producers. "We are ready."

Russia has an advantage these days, as fears mushroom about gem sales financing the wars in Sierra Leone, Angola and Congo "The Russians are an important source of non-bloodied stones," said John Meyer, an industry analyst with Societe Generale in London. "The diamond industry in Russia has had a pretty low profile ... and this could be a pretty good marketing tool for them."

More exports would bring increased government revenues - the state owns a majority stake of Alrosa - and good news for an economy still hung over from a decade of decline. Most Russian diamonds come from Sakha, formerly known as Yakutia, a province five times the size of Texas that straddles the Arctic Circle. Soviet authorities coaxed workers to the ever-frozen wilderness with bloated salaries and generous benefits. Alrosa has trimmed the work force, but production costs remain high - about five times as much as De Beers spends extracting stones from its South African deposits. Once they leave Yakutia, diamonds are guarded by a series of private militias. Addresses of the Moscow vaults are a prized secret.

Russia produces about 20 percent of the world's rough diamonds and has vast untapped reserves. Russia's diamond monopoly Alrosa would develop new mines and reach more markets.

"After 40 years in the diamond business, Russia has grown out of children's shorts and understands how to sell diamonds so as not to harm the market or our own interests," said Valery Rudakov, chief of Russia's precious gem reserves.