The European Union has issued numerous sanctions against Moscow since the start of the Russian offensive war in Ukraine. For example, there was an oil embargo, numerous assets of Russian citizens were frozen and the import of certain goods such as gold, vodka and caviar was stopped – but Russian diamonds were spared. Belgium in particular wants to prevent this luxury industry from becoming the victim.
Belgium – the country where the EU is headquartered – plays a key role in the diamond industry and has repeatedly campaigned in sanctions negotiations to ensure that Russian stones remain excluded from the measures. Antwerp has been one of the hubs of the gemstone trade since the 15th century. According to the Antwerp World Diamond Center, 37 billion euros are thrown around here every year, discreetly and confidentially. When asked where the diamonds come from, a jeweler laughs and replies: “I’d rather not ask.”
His reluctance is not entirely unfounded. The rough diamonds come from Angola, Congo, Sierra Leone, South Africa and also from Russia, explains Sigal Vantzovski, owner of Binson Diamonds in Antwerp. They are brought to Belgium to be polished in factories. The diamonds are then processed into jewelry and sold in her store, among other places.
According to the Russian Ministry of Finance, in 2021 Russia exported more than 48.6 million carats of rough diamonds abroad – the highest volume since the beginning of the observation period in 2007. Monetary turnover was not quantified. The main export destinations: the United Arab Emirates and Belgium.
Economist warns against moving to Dubai or Mumbai
Economically, Europe would hurt itself with sanctions, says Koen Vandenbempt, dean of the Faculty of Economics at the University of Antwerp. Stopping imports of Russian rough diamonds would mean losing an industry and moving it to Dubai or Mumbai — places that place far less emphasis on transparency or sustainability than Antwerp, says Vandenbempt.
Since many countries such as India, Israel or the United Arab Emirates would not participate in a boycott, the Russian stones would eventually find their way to the global market, explains Joachim Dünkelmann of the German Federal Association of Jewellers, Jewelers and Watch Shops (BJV) . . “A tightening of regulations or laws against Russia would not affect this.”
The Kremlin takes advantage of diamond frenzy
Since the Russian diamond giant Alrosa says it is “partly” owned by the state, the Kremlin also benefits from the diamond frenzy. In contrast to Vandenbempt, commodity expert Larisa Stanciu emphasizes that a ban on the import of Russian rough diamonds would mean that less money would flow into the state coffers via Alrosa. “This would have both a direct and indirect impact on the war support budget, although revenue from the diamond trade is significantly lower than revenue from the gas and oil trade.”
Alrosa CEO Sergei Ivanov is also no stranger. He was one of the first oligarchs from Vladimir Putin’s circle to be sanctioned by the United States. While the European Union hesitates, the US government imposed and then tightened sanctions against Alrosa shortly after the outbreak of war.
The US sanctions are also full of holes
However, there are also loopholes: If a diamond has been significantly modified in another country, it can claim this region as its origin, according to the US sanctions text. Consequently, for example, Russian gems polished in India could continue to be imported into America, obscuring their origins. The noble niche market with a turnover in the billions therefore remains virtually untouched.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
