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Tuesday, May 28, 2024

Russia – European Union. Russian diamonds sanctioned, Belgium opposed

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Russia is the world’s largest supplier of rough diamonds. The trade continues despite calls from Ukraine and some European Union countries to put an end to it. The main reason for the lack of sanctions is opposition from Belgium, which is the center of the world’s diamond trade.

At the recent G7 summit in Hiroshima, the leaders of the world’s seven largest economies pledged to “increase efforts” to curb the diamond trade. He also talked about it even before the summit Charles MichelPresident of the European Council, who was prime minister at an earlier stage of his political career Belgium. – We will limit trade in Russian diamonds. Russian diamonds do not last forever. We will openly and honestly explain why these sanctions are necessary and justified.

Russian diamonds without sanctions

However, businessmen from Antwerp, the center of the world’s diamond trade, are well aware of all the ethical arguments in favor of the restriction. They are opposed by economic arguments. According to the World Diamond Center in Antwerp (AWDC): 80 percent. rough diamonds and 50 percent. of cut diamonds reach final customers via Antwerp.

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Meanwhile, as the German economic daily “Hadelsblatt” wrote in recent days – Russia is the world’s largest supplier of rough diamonds, with a global market share of 30%. “There is no way Antwerp can replace the sudden disappearance of nearly a third of supply from other sources,” explained Tom Neys, a spokesman for the AWDC, quoted by the daily.

The Brussels-based business intelligence agency Eurointelligence reported that diamonds account for 15% of value of Belgian exports outside the European Union. In 2021, Belgium exported diamonds worth €13.9 billion. So far, these arguments have convinced the Belgian government, which has blocked attempts to impose sanctions on this lucrative business. Also lucrative for Russia.

According to available data, in 2021 Russia earned about $4.7 billion from diamond exports. Of these, it exported EUR 1.8 billion worth of precious stones to the EU. In 2022, this amount decreased slightly to €1.4 billion. The diamond mining tycoon in Russia – the Alrosa group – is responsible for about 95 percent of of Russian exports and is also the largest single partner of Antwerp. It provides about 25 percent. stones. About 60 percent of Alrosa’s shares are directly or indirectly owned by the Russian state.

Belgium opposes the sanctions

Industry representatives in Belgium stress that sanctions could only make sense with a global approach. Meanwhile, without consent India, which is one of Belgium’s competitors on the world market, is not possible. Thus, if Belgium agreed to the sanctions, Russia would easily redirect exports to other places. And the relatively few, but extremely influential tycoons of the diamond business from Antwerp, which has been a symbol of the trade in precious stones for several centuries, are not going to agree to this. Especially since they’ve lost big chunks of the diamond pie to Dubai and Mumbai in the last 15 years.

Anyway, as the German economic daily “Hadelsblatt” reminds, Antwerp is not facing criticism and indignation for the first time. In the 1990s, blood diamonds from Africa were sent there. The money from their sale fueled the brutal civil wars on this continent. Finally, in 2003 UN introduced the Kimberley Diamond Origin Certification (KPCS) process to ensure that rough stones do not come from conflict zones.

However, as the “Handelsblatt” daily pointed out, hiding the origin of diamonds is still child’s play. The problem is that mine operators around the world sell raw stones to about twenty wholesalers. They mix and liquefy them. The certificates say “mixed origin”. As a result, according to the German daily, Russian diamonds are being sold in the US, even though Washington announced a ban on imports a year ago. Additionally, if Russian stones are cut in India, they change their “citizenship” to Indian and can legally be sold to America.

Taking all this into account, in the opinion of Eurointelligence, the risk that the declarations of the G7 and Charles Michel will remain only declarations is very high.

Main photo source: Shutterstock



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