G7 and EU Discussing Ways to Track Russian Diamonds Across Borders, Potentially Leading to Future Trade Restrictions
According to sources, the Group of Seven (G7) nations and the European Union (EU) are exploring options for monitoring Russian diamonds as they cross borders. If successful, this move could set the stage for potential trade restrictions in the future. However, previous attempts by the EU to impose sanctions on Russian gems have faced opposition from importer countries, like Belgium, which argue that the lack of a reliable tracking mechanism for precious stones would render such efforts ineffective.
Although the Kimberley Process certifies the origin of diamonds at the beginning of the supply chain, it becomes challenging to trace their movements thereafter, as they are often mixed with other polished stones, and their original certificates are replaced with mixed-origin documentation.
Russian diamond trade faces potential restrictions as G7 nations and the European Union discuss ways to track them across borders.
The US has already sanctioned Alrosa PJSC, the Russian mining giant that accounts for one-third of the $80 billion global trade in rough diamonds, but limited impact was observed as much of the trade goes through other markets such as India. However, tracing polished diamonds in the global market is challenging, and a solution is not expected to be imminent.
The G7 may release a statement as early as next week to maintain pressure on Russia ahead of the one-year mark of its war in Ukraine.
The G7 nations and the European Union are discussing ways to track Russian diamonds across borders to prevent the sale of conflict diamonds that may finance wars. A diamond’s origin is clear at the start of the supply chain when it is issued a certificate under the Kimberley Process, which was designed to end the sale of so-called blood diamonds that financed wars.
However, after that, it can become difficult to track. Cut and polished stones are often intermingled at trading houses, and the original certificate will be replaced with “mixed origin documentation,” making it near-impossible to keep track of where Russian diamonds are eventually sold.
The US has already sanctioned the Russian mining giant, Alrosa PJSC, which accounts for about a third of the $80 billion global trade in rough diamonds, but much of the trade flows through other markets, such as India, and the impact of sanctions has been limited. The G7 and EU discussions aim to find a way to trace polished diamonds in the global market, which is extremely complicated, and pave the way for future restrictions on their trade.
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