The EU is currently debating a twelfth package of sanctions that will, for the first time, ban imports of Russian diamonds.
Russia is one of the world’s biggest diamond producers, but has been excluded from the previous eleven rounds of sanctions due to lobbying by Belgium. Antwerp is one of the world’s major diamond trading centres, earning billions of euros a year, but is heavily dependent on imports of Russian diamonds.
Antwerp-based diamond merchants have put heavy pressure on the government to exempt the diamond trade from the extreme sanctions against Russia, which is also reluctant to lose the substantial tax revenue it receives from the business. Although the decision to include diamonds has been taken, according to leaked reports on the content of the deal, the wrangling continues and the release date for the latest package has been pushed back again from 17 November to sometime in December.
The proposed sanctions will ban the import, purchase and sale of Russian diamonds and goods made from them from the beginning of next year. The plan also includes gradual restrictions on Russian diamonds cut in third countries such as India.
The United States has long imposed a similar ban on Russian diamonds, but the EU has been extremely reluctant to follow suit. The diamond industry in Belgium has flourished for centuries and accounts for more than half of Russia’s total diamond exports of 28.2 million carats, worth around $2.5 billion in 2021.
At the same time, the EU is proposing a new system of certificates of origin for diamonds, extending the existing ‘blood diamond’ regime to prevent Russia from selling its stones through friendly third parties. Belgium is proposing the introduction of a unified marking system that would trace all rough diamonds larger than half a carat.
Russia remains the world’s largest exporter of rough diamonds by volume (35%). Sanctions on Russian banks and state-owned diamond company Alrosa, which accounts for 90% of Russian diamond production, have already led to a significant reduction in Russian diamond exports, which fell by almost a quarter to 36.7 million carats in 2022. While Alrosa’s export volume statistics are not publicly available, industry experts had already noted a continued decline in exports in May.
The total value of Russian diamond exports, estimated at $3.87bn last year, of which $1.4bn went to Belgium, according to Kimberley Process data, is significantly lower than other key exports such as oil and fertiliser, which remain unaffected by sanctions.
However, experts say the experience of trying to ban Russian oil exports has highlighted the difficulty of enforcing sanctions globally to curb Russia’s exports of most products.
