Belgium and the European Commission are working on a system that will allow Russian diamonds to be traced and identified as “blood diamonds”, De Morgen reports. The system will serve as an alternative to a proposed European import ban on diamonds, which was excluded at the last minute from the most recent round of European sanctions against Russia.
Since the start of Russia’s war in Ukraine, European officials have declined to enact any meaningful sanctions on the precious stones, which fuel the European diamond trade – centred in Antwerp.
Most Russian exports are managed by ALROSA, which accounts for 95% of Russian diamond production and 27% of global diamond extraction. Each year, Russia rakes in around $4 billion in revenues from the export of rough diamonds. As Russia’s military needs expand, much of this money ends up in the coffers of the Russian army.
Diamonds are forever?
Belgium has been, at best, ambiguous about its stance on imposing sanctions on Russian diamonds. In April, Prime Minister Alexander De Croo claimed that the impact of such a ban on Russia “would be zero, but the impact on Europe would be very great.”
Some accused De Croo of siding with the Antwerp diamond trade rather than see the market shift to Dubai, which does not participate in international sanctions.
In 2021, Russian diamonds accounted for a quarter of the direct imports in the Antwerp diamond district. Ukrainian activists accuse Belgium of financing Russia’s war through the purchase of these diamonds.
Now, according to unnamed sources in De Morgen, EU Member States are looking to put an end to this sanctions loophole. In Belgium, politicians from the Flemish socialist party Vooruit are petitioning the government to advocate a total import ban.
The European Commission is already considering a range of measures against the flow of Russian diamonds, ranging from a cap on imports to 30% of pre-war levels to an outright ban. Vooruit believes that the caps are insufficient and favours a sweeping ban.
Sales of Russian diamonds have already fallen significantly over the last year, by as much as 80%. If a 30% cap were introduced, these sanctions would have very little real impact. One government official told De Morgen that sanctions are likely not the way to go, given the already significant drop in sales.
As hinted by De Croo, the source believes that sanctions would simply redirect diamonds to India, where they are polished. These diamonds would thereby circumvent European sanctions and enter the market. Moreover, this would decimate the European market and have little to no impact on the Russian economy.
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However, an alternative measure could take shape in the form of a complete ban or cap. Belgium, together with the European Commission, has held talks with the G7 member states to work out a system which would allow Russian diamonds to be tracked and identified as “blood diamonds” – gems linked to the financing of war and terror.
“If that is coordinated with the US – the largest consumer market – I think that would be a good approach,” Hans Merket, researcher from the International Peace Information Service, told De Morgen.
Traceability and accountability
While the proposal may seem a suitable way to protect the European diamond trade and punish Russia, questions remain. This is not the first time that the traceability of diamonds has been proposed. In 2003, the Kimberley Process Certification Scheme (KPCS) sought to prevent conflict diamonds from entering diamond sorting tables in Europe.
Two decades later, the mechanism has been criticised as ineffective since it can be circumvented. Human Rights Watch argues that the KPCS is too narrow in scope and failed to properly address human rights concerns. Numerous countries and industry players declined to participate in the scheme and failed to ensure real traceability.
It remains to be seen what model the European Union and its international partners will impose, if any, to put an end to Russia’s once-lucrative rough diamond exports. The European Commission has not yet put forward any proposal in favour of an import ban or tracing system.