The day most feared by the European diamond industry, concentrated almost exclusively in the Belgian city of Antwerp, has arrived. Yesterday, the European Union agreed on its twelfth round of sanctions against Moscow in response to the war in Ukraine and, this time, after many attempts, it includes a ban on the trade in diamonds from Russia. Blood diamonds, Belgian Prime Minister Alexander de Croo called them a few months ago, in a clear signal that the country would participate in international efforts to dry up this source of funding for the Ukrainian war for the Kremlin.
The measure has been adopted in a coordinated manner with the G-7 and will enter into force on January 1, 2024, with a view to the implementation of a new traceability system that prevents the laundering of Russian precious stones in other world markets, such as India, a practice that has so far rendered useless the sanctions approved by the United States in April 2022. From September 1, all diamonds bought and sold in the EU will to have a specific certificate of origin that the Antwerp industry will take care of verifying.
Russia is the world’s largest producer of diamonds and the company that markets them, Alrosa, is publicly owned. According to the European Commission, in recent years Russia has received about 4.5 billion dollars annually thanks to this trade, which is why the strong pressure exerted by Kyiv on the EU to act against this very lucrative business and Antwerp’s fear of losing competitiveness against places such as Dubai or Mumbai, if the measures adopted only penalize European operators. Despite US sanctions, Russia has maintained a level of exports similar to pre-war levels thanks to the fact that, once polished, diamonds lose their country of origin passport and their stones have been selling as if they were Indian in the world market.
Based on several technological innovations, the G-7 and the EU will launch a traceability system that allows the origin of stones to be traced along the entire supply chain, from the time they leave the mine to the the jewelry stores The decision will be rolled out gradually. As of January 1, direct imports of diamonds of one carat or more mined, processed or produced in Russia will be prohibited. From March 1, action will be taken against indirect importation; that is, the buying and selling of processed Russian diamonds in third countries.
During the following six months, a certificate of origin will begin to be required for the stones, also those based on simple declarations of honor. However, from September 1 the stones will have to pass the certification and verification exam that will be carried out for the entire G-7 by the Belgian industry, which will be based on block chain technology to record the data for each diamond, including those manufactured in a laboratory. Uncertainty about the future of the sector had begun to take its toll in Antwerp, which is why the employer supports the plan and tries to occupy a central place in this new phase of a commercial activity in which it has been a world leader since the 16th century.
