Boycott on Russian Diamonds: Western Powers Seek Formal Ban
Introduction
Following Russia’s invasion of Ukraine in February 2022, jewellers in Paris quickly distanced themselves from Russian stones. Now, Western powers are pushing for a formal ban on Russian diamonds, which supply one third of global demand. However, the announcement has been delayed due to disagreements over the specifics.
The Impact on Diamond Dealers
Antwerp-based diamond dealers, including Thierry Tugendhaft, received calls from big jewellers asking them to stop supplying Russian stones. Tugendhaft, the head of T. Diamonds BVBA, used to source 50% of his diamonds from Russia. With just six weeks to find alternative supplies, he turned to Canada and African countries. Other Antwerp dealers faced challenges as European banks refused to finance Russian supplies, leading to a suspension of their rough stone trade.
Russian Diamond Revenues and Western Sanctions
Russian diamonds bring in over $4 billion annually for the Kremlin through state-owned Alrosa. With sanctions on Russian oil and gas already in place, Western powers now aim to curb Moscow’s diamond revenues as well.
Proposals for a Ban
The U.S., Canada, Japan, and the EU are considering different proposals to ban Russian diamonds. Belgium, the diamond trade hub, has been asked to draft a proposal to retain Antwerp as the main center for rough trade. The main challenge lies in tracing the origin of the stones, as the industry relies on advanced technology and blockchain to ensure traceability.
Challenges in Tracing Diamond Origins
Tracing the origin of diamonds becomes nearly impossible once they are cut. New technology may allow for identification based on unique geological characteristics, but it is still under development. The focus of the ban proposals is initially on rough diamonds of 1 carat and above.
The ban on Russian diamonds poses logistical challenges due to the volume handled by Antwerp. Customs and shipment costs would add up, making it costly for the industry. Additionally, the process of implementing a full ban could take up to a year.
Conclusion
While Western powers aim to implement a formal ban on Russian diamonds, the industry faces challenges in tracing the origins of the stones. Antwerp, as the main diamond trade hub, plays a crucial role in shaping the ban proposals. The impact of a ban on the industry’s logistics and costs remains a key consideration.
