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Despite Criticism, Belgium’s Trading In Russian Diamonds Continues

Poland and the Baltic republics are urging the EU to include russian diamonds in the next wave of sanctions.

It takes only five minutes to casually stroll around Antwerp's diamond sector. Despite this, 86% of the world's rough diamonds transit through only one square kilometre in a drab section of Belgium's second city. Billion-year-old gemstones from mines in Botswana, Canada, South Africa, Angola, and Russia arrive in Antwerp's unassuming concrete offices. Despite the atrocious war in Ukraine, which has halted billions of dollars in trade, Belgium still imports diamonds from Russia, albeit in much smaller quantities.

The EU has stopped importing Russian coal, is phasing out most Russian oil, and has stopped buying gold, caviar, and vodka from Russia. Nonetheless, diamonds have repeatedly eluded the sanctions list. The omission is all the more notable given that the trade affects only one EU member state, Belgium, which has consistently stated that it would not oppose a ban.

Despite moral pressure from Ukraine's president, Volodymyr Zelenskiy, trade has resumed. In March, he told Belgium's parliament that peace was worth "more than any diamond." Exchanges have taken place, despite the fact that Russia's diamond firm, Alrosa, is owned by the Russian state. Russia and the republic of Yakutia, the large north Siberian area that is home to the majority of Alrosa's mines, control 66% of the corporation. Sergei Sergeevich Ivanov, the CEO of Alrosa, was one of the first billionaires sanctioned by the US on the first day of Russia's invasion of Ukraine. His father, Sergei Borisovich Ivanov, is a former Russian defence minister who is also sanctioned by the US and is reported to be one of Vladimir Putin's closest associates.

According to internal business documentation and the European Commission, the corporation has also sponsored a B-871 battle submarine known as the Alrosa. According to Russian official news outlet Tass, the Alrosa submarine returned to the waters in June following an eight-year refurbishment that included the installation of Kalibr cruise missiles. According to a draught seen by the Guardian, EU officials cited Alrosa's funding of the submarine as a reason to sanction the diamond miner in September. When the final draught was approved, Alrosa was no longer on the list. It had vanished at the last moment at least twice before. "It was a strange pattern," one EU diplomat said.

"We had it [diamonds] in the European Commission plan, and then we found out in the last hours that it wasn't in there." Poland and the Baltic nations are pushing once more for diamonds to be included in the EU's next round of sanctions, the ninth, which senior officials have assured will be issued before the end of the year. Meanwhile, the United States has prohibited the import of non-industrial diamonds from Russia, while the United Kingdom sanctioned Alrosa in March. However, neither nation has a big diamond trading centre the size of Belgium.

Diamonds have been traded in Antwerp since the 15th century. According to the Antwerp World Diamond Centre business association, around 1,700 enterprises and 4,500 dealers purchase and sell from the tiny diamond sector. Faced with severe competition from India and the Middle East, the Scheldt River city is proud of its pioneering artists and traders. In 1919, Belgian mathematician and gemologist Marcel Tolkowsky concluded that 57 facets were the ideal cut for capturing a diamond's fire and brightness. Tolkowsky's brilliant cut would add glitter to engagement rings, pendants, and trinkets all throughout the world.

Men with black briefcases walked purposefully down Hoveniersstraat, one of the district's main streets, a nondescript thoroughfare lined with exchanges, dealers' offices, jewellers, and police cars on a recent November morning. While the industry has become more digital, insiders say there is no substitute for looking at a rough diamond under a microscope to determine its value.

Prior to the invasion of Ukraine, Russia supplied 25% of the raw diamonds transiting through Antwerp. According to information provided with the Guardian by Belgium's national bank, Belgium imported €1.8 billion (£1.6 billion) of Russian diamonds in 2021 and €1.2 billion in the first eight months of 2022. Trade has been on a rollercoaster ride in 2022, rising sharply in June to €393.8m before falling sharply. Belgium imported €35.9 million in Russian diamonds in August 2022, compared to €215.4 million in the same month in 2021, representing an 83% decrease year on year.

According to Tom Neys, an AWDC spokesperson, the June surge reflected diamond deals that were "already closed before the war started." The industry was thrown into uncertainty as soon as the conflict began, leaving millions of dollars in trade up in the air. "For three months, a small army of lawyers needed to investigate whether the deals were all OK, whether they were all compliant with changing rules in the US and Europe." "They had to constantly find logistical solutions," he explained.

Despite the sharp decline in commerce since June, Neys opposes an import restriction. He stated that Antwerp must remain "an open door for enterprises with no other choices." "The most essential thing for us is that these enterprises have the opportunity to adjust to the new market." He claims that large corporations have alternatives to Russian diamonds. "However, for small dealers, this is really tough... you will be squeezed to death if they do not have alternatives." He went on to state that Russian industrial diamonds were the industry standard for surgical eye scalpels in several specialised markets. According to the AWDC, stopping Russian diamond imports threatens 10,000 jobs: 4,000 direct and 6,000 indirect.

Filip Reyniers, director of the International Peace Information Service, an Antwerp-based research institute, believes these figures are "outdated and exaggerated," citing a 12-year-old study. (The AWDC stated that their data was based on research conducted in 2021, but did not respond to requests for the data.)

Belgian officials have privately warned the EU of job losses, despite the government says it has never attempted to thwart penalties. "Our country has never rejected diamond-related measures," Belgium's Prime Minister Alexander De Croo remarked in March. Belgian officials maintain that this is still the case today. Nonetheless, when Alrosa was included in the most recent round of sanctions, Belgium, according to one source, abstained. It would have been a flaw in the EU's seamless unity on the Ukraine war, which it likes to proclaim to the rest of the world. The sanctions were later approved unanimously, with no mention of Alrosa.

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