MWith gloves on, the jewelry is displayed in a shop window in the Diamond District Antwerp Draped on velvet. The Belgian port city has been one of the centers of the gem trade since the 15th century. According to the Antwerp World Diamond Center, €37 billion is delivered here every year, discreetly and confidentially. When asked where the diamonds come from, the jeweler laughing replied, “I’d rather not ask.” His hesitation is not entirely unfounded.
Rough diamonds come from Angola, Congo, and Sierra Leone, as well as from South Africa RussiaAs Sigal Fantzowski, owner of Binson Diamonds in Antwerp, explains. It is brought to Belgium to be polished in factories. The diamonds are then processed into jewelry pieces and sold in her shop, among other places.
Belgium plays a major role
It is an upscale niche market with billions in sales, which Russia – despite the war in Ukraine – continues to benefit from. The European Union Russia has issued numerous sanctions against Moscow since the beginning of Russia’s war of aggression in Ukraine. For example, some commodities such as gold, vodka, and caviar were stopped being imported—Russian diamonds were spared, and for some reason.
According to the Russian Ministry of Finance, Russia exported more than 48.6 million carats of rough diamonds abroad in 2021 – the highest volume since the start of the monitoring period in 2007. The monetary turnover has not been quantified. Main export destinations: United Arab Emirates and Belgium.
Therefore, Belgium – the country where the European Union is headquartered – plays a major role in the diamond industry and has lobbied in sanctions negotiations to keep Russian stones out of the proceedings.
From an economic point of view, Europe will be hurt by sanctions, says Koen Vandenpept, dean of the Faculty of Economics at the University of Antwerp. By halting imports of Russian rough diamonds, the industry would be lost and relocated to Dubai or Mumbai — places that place less emphasis on transparency or sustainability than Antwerp, says Vandenpette.
The Kremlin should take advantage
Since many countries such as India, Israel and the United Arab Emirates did not join the boycott, the Russian stones eventually found their way to the global market, explains Joachim Dunkelmann of the German Jeweler, Jeweler and Watch Association (BJV). “Tighter regulations or laws against Russia will not affect that.”
However, the Kremlin is likely to benefit from the diamond craze. One of the largest producers is Russian diamond giant Alrosa, which claims to be “partly” owned by the state. Experts estimate the state’s share at about 33 percent.
Alrosa accounts for 95 percent of Russia’s diamond production – about 27 percent worldwide. This means that at least every fourth stone on the markets around the world comes from Russia. The giant operates several mines in the Sakha region in northeastern Russia and in Arkhangelsk in the northwest, and it also has interests in mines abroad, such as in Angola.
In contrast to Vandenbempt, commodities expert Larissa Stancio emphasized that a ban on the import of Russian rough diamonds would mean that money would flow into state coffers via Alrosa. “This will have direct and indirect effects on the war support budget, although the revenues from the diamond trade are much lower than the revenues from the gas and oil trade.”
A loophole in the US sanctions base
Alrosa’s CEO, Sergey Ivanov, is also no stranger. He was one of the first oligarchs from Putin’s circle to be sanctioned by the United States. While the European Union was reluctant, the US government imposed and then tightened sanctions against Alrosa shortly after the war broke out.
“I always get cynical about it,” says Vandenpette, critically noting that Europeans are naive in thinking that Americans are doing something that hurts their economy. According to him, jewelry sales in the United States make up 50 percent of the global market. There is also a loophole in the US sanctions regulation thanks to the wording which is completely flawless. It says: If a diamond is significantly altered in another country, it may claim that region as its origin.
Thus, Russian gems polished in India, for example, could still be imported to America and their provenance concealed. In any case, it is technically almost impossible to determine the country of origin of the stone, says expert VandenBet. However, there are certification procedures for rough diamonds such as the so-called Kimberley Process, which according to customs aims to prevent the import of so-called conflict and blood diamonds into the EU.
In Germany, according to the General Director of BVJ Dünkelmann, the industry is very concerned not to buy any goods from Russia. “This especially includes diamonds.” Since spring, many suppliers have confirmed that their stones do not come from Russia. Neither retailers nor consumers want goods from Russia and we are doing everything we can to ensure that.”