The largest diamond trade in the world takes place in Antwerp, Belgium. However, according to some, the gems have unwillingly become a symbol of the war in Ukraine, since, according to many, they represent the gasoline thanks to which the Russian President Wladimir Putin So far it has succeeded in fanning the flames of the conflict. Of course, trivialization is not the only means of financing, but until a few days ago diamonds were one of the few products excluded from the sanctions package against Moscow.
Russia is the world's leading exporter of diamonds from Siberian mines, with Putin earning over $4.5 billion from the sale in 2022. Antwerp trades $47 billion in diamonds annually, many of which are produced through the trade in Russian gemstones. But a few weeks ago (end of September) Belgium opened up the possibility of also sanctioning diamonds. This happened almost a week ago, when the 27 member states in Brussels passed the twelfth sanctions package against the Kremlin.
The ban on Russian diamonds “applies to diamonds originating in Russia, to diamonds exported from Russia, to diamonds in transit in Russia and to Russian diamonds processed in third countries,” the EU Council communication said. From January 1, 2024, the 27 member states will no longer be able to purchase natural and synthetic diamonds or diamond jewelry directly from Russia unless they are intended for industrial purposes. Until March 1st, the import ban will be extended to include Russian diamonds processed in third countries.
“Our message is clear, as I said when I chaired the informal Foreign Affairs Council in Kyiv: we remain committed to Ukraine and will continue to support its fight for freedom and sovereignty,” the High Representative said the European Union for Foreign Affairs and Security Policy, Josep Borrell.
Until now they had been excluded from the packages so as not to damage Antwerp, but a few weeks ago Akexander de Croo, the Belgian Prime Minister, changed the cards on the table with the words: “Russian diamonds have become a symbol of war and violations of it War has become “human rights”.
This decision also comes from something else: specifically, from a submarine.
The Russian diamond company Alrosa is controlled by the Russian state. Russia and the Republic of Yakutia, the vast region of northern Siberia where most of the company's mines are located, together own 66% of Alrosa. Alrosa boss Sergei Sergeyevich Ivanov was one of the first oligarchs to be sanctioned by the United States on the first day of Russia's invasion of Ukraine. His father, Sergei Borisovich Ivanov, a former Russian defense minister who is also under US sanctions, is considered one of Vladimir Putin's closest allies in Washington. In addition, the diamond company financed a B-871 attack submarine named Alrosa, according to the company and the European Commission.
The diamond market is essentially a duopoly operated by two companies. De Beers (as he says, “A diamond is forever”), founded in South Africa in 1888, and Alrosa, a Russian company controlled by the Kremlin. A De Beers report said that before the war in Ukraine, the two companies led global sales of rough diamonds, with De Beers accounting for 33% by value and Alrosa 24%.
In 2021, global sales of rough diamonds were $16.4 billion, while demand for polished diamonds was $28 billion, the De Beers study said. In short, a huge market, although the war also changes geopolitics. 70% of the demand comes from the G7 countries, but here too there is already another huge market that you can enter as a buyer but also as a bidder. In fact, Dubai competes with Antwerp and also India, where around 90% of the world's diamonds are cut.
The trade association Antwerp World Diamond Center (AWDC) argued that large companies have alternatives to Russian diamonds, while for small traders this blockage is very difficult to overcome. According to AWDC, if Russian diamonds end up falling under the blow of European sanctions, 10,000 jobs would be at risk, of which 4,000 were direct and 6,000 were indirect.
In any case, Belgium demanded and achieved that the sanctions be accompanied by a mechanism allowing every diamond to be traced, thus preventing Russian diamonds from continuing to enter the markets of the G7 countries (USA, Canada, Germany, France) despite the ban , United Kingdom, Italy, Japan and the European Union). This system transparency mechanism appears to be ready, but to implement it and put it into operation on January 1, 2024, “a lot of work still needs to be done together,” de Croo said at the meeting in New York. This would be a three-tier control mechanism, including Kimberley certification – an international certification system that came into force in 2003 to counter the flow of “blood diamonds” on the global market – and the use of blockchain technology.
Meanwhile, there are already those who are protesting because the import ban on Russian diamonds announced this week by the G7 as part of sanctions over the war in Ukraine could have negative consequences for African producing countries. This was reported by Tom Alweendo, Minister of Mines and Energy of Namibia, one of the world's largest gemstone producers. Diamonds are also Whindoek's main exports, alone accounting for about a fifth of the country's total goods sold abroad.