The Group of Seven (G7) countries are expected to approve an embargo on imports of Russian diamonds in the next two to three weeks, according to a Belgian government official. The regulation, which is set to come into effect on January 1, will impose a direct ban on purchases, as well as a phased-in indirect embargo.
Efforts to impose sanctions on Russian diamonds have faced resistance from major gem importers like Belgium, which is home to the world’s largest diamond trading hub in Antwerp. Approximately 85% of the world’s rough diamonds pass through Antwerp before reaching consumers. Belgian authorities have argued that imposing sanctions without establishing a global system to track the gems would be ineffective, as trade would simply shift to other markets such as India and China.
In May, the G7 leaders made a commitment to restrict trade in diamonds mined, processed, or produced in Russia as a means to further reduce Moscow’s revenues. They claimed that high-tech tracing methods, including the use of the Kimberley Process certificate, would be employed to curb the $4.5 billion Russian diamond trade. However, tracking a diamond’s origin becomes significantly more challenging once it enters the supply chain and moves through different markets with mixed origin documentation.
To address this issue, the proposed indirect ban would introduce a tracking system that includes physical checks of packages containing gems and mandatory traceability data for diamond producers and traders. The aim is to restrict cross-border trade in Russian gems and prevent mixed-origin diamonds from entering the G7 market. Western authorities would have access to a tracking system through a public ledger, which would function similarly to the SWIFT international payments system used by banks.
The United States and the United Kingdom have already banned imports of Russian rough diamonds, although the US still permits the import of gems that have been substantially altered in other countries. Canada and New Zealand have also implemented similar measures against the Russian mining company Alrosa.
In response, Moscow has redirected its diamond trade to countries like China, India, the United Arab Emirates, Armenia, and Belarus, which have experienced a significant increase in the import of rough and cut stones from Russia.
The potential embargo on Russian diamonds by the G7 countries is part of a wider effort to apply economic pressure on Russia and target sectors that contribute to its revenues. By restricting trade in Russian gems, the G7 aims to reduce the country’s income and deter its activities. However, the effectiveness of such measures may depend on the ability to establish a comprehensive tracking system that can accurately trace the origin of diamonds throughout the supply chain.
Overall, the approval of the embargo in the next few weeks signifies a significant move by the G7 countries to impose economic sanctions on the Russian diamond industry. This decision comes after months of deliberation and reflects a coordinated effort to limit Russia’s access to global markets for its diamonds.