Why Russian diamonds remain a conundrum for European sanctions

In a parallel to the fashion industry, the diamond trade faces challenges in tracing the origins of its precious stones, maintaining an opaque nature. Just as a garment produced in Romania may bear a "Made in France" label upon receiving final touches there, such as the addition of a care label or a button, diamonds follow a similar pattern. When a Russian diamond undergoes polishing in Mumbai, it is often classified as Indian, concealing its true origin. This practice extends further, with all sub-one-carat stones in the United States believed to be of Russian origin after being polished in India, yet none carry this designation. At the recent G7 summit in Hiroshima, the proposal to impose sanctions against Russia by banning its diamonds resurfaced. According to El Pais, these diamonds contribute around 4 billion euros in revenue to Moscow annually. Belgium, renowned as one of the world's premier diamond centers, has long maintained that its trade would suffer while less transparent nations would reap the benefits if it were to sanction Russian diamonds. Despite a significant decrease in the trade of Russian diamonds in Antwerp since the Ukraine conflict, specific sanctions have yet to be implemented. However, last week, the Belgian government raised the possibility of sanctions if they were imposed across all G7 countries, which account for 80 percent of global diamond sales. Moreover, there is a growing consensus to establish a scientific system to trace the stones from their origin, closing any potential legal loopholes. El Pais emphasizes that if diamond bans are limited to the European level, less scrupulous countries could easily circumvent the sanctions, rendering them ineffective against Russia. Trade would simply relocate to other markets. Technology would play a crucial role in establishing the origin of diamonds and implementing mine-specific labeling, moving away from the current system reliant on mere declaration. Yet such a system would require many months, if not a year, to be successfully implemented. Image: Tiffany & Co., Argyle Pink diamonds
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