Why sanctioning Russian diamonds is so complicated

About 90% of the world's diamonds are cut and polished in the state of Gujarat, India, a major importer of Russian diamonds. AFP - PUNISH PARANJPE

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3 min

On the first day of their summit in Hiroshima, the G7 members announced new sanctions against Russia, including targeting the lucrative diamond trade through high-tech tracing methods.

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Diamonds are not eternal "said the President of the European Council Charles Michel during his speech to the heads of state and government of the G7 this Friday morning in Hiroshima. The nod to the James Bond film opened the door to G7 sanctions against Russian diamonds, whose export is worth $5 billion a year to Russia. Britain went further by announcing that it would ban Russian diamonds altogether.

At the end of September, the European Commission had already proposed to sanction them, recalls our correspondent in Brussels, Pierre Benazet. The eighth sanctions package was adopted ten days later, but without mention of diamonds, because Belgium had vetoed it. Since then, the issue had been postponed indefinitely, and it took the preparation of this G7 summit for it to resurface.

► Read also: International report – Why Belgium does not sanction diamonds from Russia

It must be said that the Antwerp diamond sector remains a key economic hub for the kingdom. Diamonds account for 15% of Belgian exports outside the EU and 5% of Belgium's total exports. Antwerp remains today one of the most important diamond poles in the world. 40% of polished diamonds, 50% of industrial diamonds and 85% of rough diamonds pass through the Flemish "metropolis".

But a third of the stones are imported from Russia, a reason for fears that the prospect of sanctions weighs on a sector already threatened by Indian competition. It took a vote in the Belgian Parliament on Wednesday in favour of sanctions against Russian diamonds for the President of the European Council, Belgian himself, to propose such sanctions.

A major industry in India

The G7 countries will now try to convince India to join these sanctions. The task will not be easy, Russia has been a strategic ally of India for decades, and New Delhi has not publicly condemned Moscow for its invasion of Ukraine. In addition, the country is a major importer of Russian diamonds. Russian mining giants, including Alrosa, traditionally supplied more than a third of India's rough cut diamonds. In the state of Gujarat, where 90% of the world's diamonds are cut and polished, the diamond industry employs nearly one million people, including traders and suppliers.

After the invasion of Ukraine, supply shrank as a result of Western sanctions that excluded Russia from the Swift international banking system. Meanwhile, India's exports of cut and polished diamonds have collapsed as US and European companies refuse to buy diamonds from Russia.

India's exports of cut and polished diamonds brought in $1.32 billion in April, according to data from the Gemstone and Jewellery Export Promotion Board (GJEPC), down 39 percent, or more than $800 million, from the same period last year.

According to JEPC Chairman Vipul Shah, the industry will be attentive to the type of sanctions imposed on Russian diamonds. "Russia is one of our main suppliers (...) Supply is going to be restrictive, we are going to face a big problem," he said, "the immediate issue is that of employment that will be seriously affected.

(

And with AFP)

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• G7
• Raw materials
• Russia
• India