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G7 nations will ban imports of Russian diamonds from January 1 and implement staged embargoes on trading the stones throughout 2024, under an agreement aimed at restricting one of the few leading Russian exports still untouched by western sanctions.
The deal, set to be announced on Wednesday by the group of wealthy nations, follows months of wrangling between western capitals over how such a ban would work, and widespread concern from big African diamond producers that the measures could hurt their trade in the precious stones.
The diamond ban is a welcome sign of support from western allies as Ukraine has recently become increasingly anguished by the failure of the EU and the US to commit to long-term financial and military support and as its counteroffensive against Russian troops has largely failed to make significant gains on the ground.
Russia’s economy and its military-industrial complex have proven more resilient than expected since President Vladimir Putin’s full-scale invasion of Ukraine in February last year, despite western sanctions that have been gradually imposed in response. The west is increasingly alarmed at the failure of existing restrictions to curb rising Russian defence spending and the country’s production of weapons and military equipment.
The G7, whose leaders were set to meet virtually on Wednesday, will agree to ban imports of non-industrial diamonds from Russia starting on January 1 2024. A ban on the stones processed in third countries will also be introduced from March 1 and a full traceability system for rough diamonds traded in G7 nations from September 1, according to people briefed on the contents of a draft joint statement.
The G7 “will continue consultations . . . with other partners including [diamond] producing countries as well as manufacturing countries” to implement the traceability measures, according to the people.
Diamonds are one of the few remaining major Russian exports that have not been targeted by co-ordinated western sanctions, such as crude oil and precious metals.
The US unilaterally banned the import of Russian rough diamonds in April 2022, but stones that were polished elsewhere were still allowed into the country.
The EU has long toyed with banning Russian diamonds, but the introduction of such measures has been delayed by Belgian concerns that it would harm Antwerp and benefit rival diamond trading hubs such as Dubai and Mumbai.
Four proposals for the G7 diamond traceability system have been on the table from Belgium, France, India and the World Diamond Council, an industry group.
The Belgian proposal, under which Antwerp would serve as a gatekeeper for all diamonds entering the G7, has sparked outrage among the diamond industry and African diamond-producing nations.
Russia is home to Alrosa, the world’s second-largest diamond producer by revenue after industry leader De Beers and a third of which is owned by Moscow. The company made $1.9bn of revenue in the first half of 2022.
The invasion of Ukraine has already drastically overhauled the global diamond industry with Russian stones flowing largely to the Chinese market after big western jewellery companies boycotted its gems.
G7 nations have grown increasingly frustrated that the UN-authorised certification scheme to identify “conflict diamonds” could not label Russian diamonds as such since the nomenclature only applies to conflict waged by rebel groups and not by governments.
Source: Economy - ft.com
