The Group of Seven (G-7) nations have agreed to impose a ban on the import of Russian diamonds starting from the beginning of the upcoming year, representing the latest move to hinder Russia\’s financial backing of its invasion of Ukraine.
While the G-7, together with its European allies, has been exploring various measures to impact Russia\’s economy and curb its funding for the conflict in Ukraine, the matter of diamonds has presented a challenge. Earlier attempts to enforce sanctions on Russian gems in Europe encountered resistance, particularly from major importing nations such as Belgium, which argued that a direct ban might merely shift the lucrative gem trade to other locations.
On Wednesday, the G-7 declared its decision to enforce a ban on all imports of rough diamonds directly from Russia beginning January 1. This ban will extend to cover Russian diamonds that have undergone processing in third countries from March 1, with a comprehensive traceability system expected to be in operation by the start of September.
Over the past three months, the diamond industry has actively engaged with decision-makers within the G-7, concentrating on the methodology for tracing diamonds. Belgium proposed a plan in which all diamonds would be processed through the port city of Antwerp, a formerly dominant global trading hub facing competition from hubs in India and Dubai. Under this arrangement, rough diamonds would be required to be registered on a digital ledger in Antwerp before being transported to major trading and manufacturing centers elsewhere.
This proposal faced staunch opposition from numerous diamond-producing countries and industry leaders, who deemed it impractical and potentially detrimental to the diamond trade. In response, they proposed an alternative system wherein the industry would enhance and expand existing models of origin certification.
The G-7 affirmed its commitment to ongoing consultations with diamond-producing and manufacturing countries to formulate and implement an effective tracing system. Belgium\’s Prime Minister, Alexander De Crew, welcomed the announced tracing system, viewing it as a crucial step in significantly diminishing financial flows from the diamond trade to Russia.
At the beginning of the supply chain, a diamond\’s origin is clearly documented when it receives a certificate under the Kimberley Process, designed to eliminate the sale of \”blood diamonds\” funding conflicts. However, tracking becomes challenging as the stones progress along the supply chain.
