The Reason Russian Diamonds are excluded from European Sanctions Packages

kuni Isaac May 9, 2022 in Business, Contemporary, Global, Home Tagged 2022, nationalglint, Russiona Diamonds - 3 Minutes

Kuni .G. Isaac

European Commission President Ursula von der Leyen presented the proposal for a new sanctions package against Russia on Wednesday. Oil and banks are part of this, but Russian diamonds are not mentioned at all.

Antwerp can safely be called the diamond capital of the world. Just behind the central station, all jewelers and diamond traders have gathered in a well-secured area. The main street is barricaded at both entrances and the police are never far away.

Just over 80 percent of all diamonds in the world pass through the port city. Many of the diamonds that can be found in the Antwerp shops originally come from Russian mines. Last year, 1.8 billion worth of Russian diamonds was traded in Antwerp.

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Russian State Company

There is also a branch of the Russian state company Alrosa in the diamond district. Almost all diamonds from Russia are mined by this company. The CEO, Sergey Ivanov, maintains close ties with Putin. On the first day of the war, the United States put him and the company on a sanction list. The EU has not yet done so.

When the EU puts diamonds on the sanctions list, the diamond industry in Antwerp will be hit hard. According to Belgian Prime Minister Alexander de Croo, tens of thousands of jobs will be lost if no more Russian diamonds come to Antwerp. This would involve jobs that are directly and indirectly involved in the sector.

Antwerp would certainly feel the hole that Russian diamonds would leave behind, says Hans Merket, who studies diamonds from conflict zones. However, he says, tens of thousands of jobs will not be lost. “That number comes from a 2008 study that was already controversial at the time,” Merket said. He calls it “a bit lame” that politics is now taking over that number. His expectation is that it will be 3000 to 4000 jobs.

The Ethics Card

Antwerp has profiled itself for years as an ethical diamond market. For example, there is a quality mark that should ensure that rebels in conflict areas do not earn from it. Due to strict regulations, the sector has managed to keep blood diamonds out of Africa.

The economic damage to Russia is negligible. Compared to what gas and oil yield Russia, the income from diamonds is small.Tom Neys of trade association AWDC

A consequence of this is that these types of diamonds are now mainly traded in places with less strict rules such as Dubai and India. So there is already talk of a shift in trade. Tom Neys of the trade association AWDC fears that in the event of sanctions, Russian diamonds will also make the crossing to Dubai and India. “Once they are gone from Antwerp, they will also stay away.”

Neys calls it illogical to impose sanctions on Russian diamonds. “The economic damage to Russia is negligible. Compared to what gas and oil yield Russia, the income from diamonds is small.”

Merket endorses this, but also says that it is primarily an ethical issue. If Antwerp wants to continue to play the ethical card, it is not sustainable for long to trade Russian diamonds, according to him.

Plane to Dubai

The trade association does not consider the ethical issue an argument. “If we introduce sanctions tomorrow, those diamonds will be on a plane to Dubai within ten hours.” Neys calls it cynical to impose sanctions if you know that the market will move to the Middle East and that Russia can continue to earn from it.

Prime Minister De Croo has indicated that Belgium will not block European sanctions on diamonds if they are on the table. Merket, however, argues that the Belgians should put it on the table themselves. There is no other European country with a comparable diamond industry.