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Belgium’s diamonds lose shine amid Russia sanctions talk

Belgium’s diamonds lose shine amid Russia sanctions talk

Belgium is concerned about harming the world-leading Antwerp diamond district. But some countries are losing patience.

Russian diamonds are on Europe’s radar once again — as is Belgium’s fraught role in the industry.

Despite six rounds of sweeping European Union sanctions against Moscow, Russian diamonds have remained a shining absence from the embargo list.

Their omission is due in part to Belgium’s prominent role in the diamond industry. Antwerp has, for generations, served as the main hub for diamonds arriving in Europe — including from Russia.

But that may change. Russia’s pledge to ramp up its military campaign in Ukraine has prompted the EU to accelerate work on a new sanctions package. And several diplomats said Belgium’s hesitance about a Russian diamond ban is increasingly untenable.

Publicly, Belgium has pledged not to block diamond sanctions. It has also expressed concerns that such a move may harm EU economies more than Russia’s purse. Privately, Belgian diplomats have successfully lobbied EU officials to keep the precious stones off the sanctions list, according to numerous diplomats familiar with the sanctions discussions.

“This position is becoming more difficult,” said an EU diplomat.

The result is that Belgium — and its unyielding support of an industry long linked to autocrats, dictators and conflict zones — is once again in an uncomfortable spotlight. The EU has already sanctioned Russian gold and other luxury goods. And now those long pushing for diamond sanctions, including the Baltic states, Poland and the Netherlands, are trying to pounce.

“We’ve been pushing for sanctions on Russian diamonds for months,” said another EU diplomat.


Diamond divergence


Rough Russian diamonds currently account for 30 percent of the global trade in the precious stone. And the U.S. Treasury Department estimates that diamonds are one of Russia’s top-10, non-energy exports, totaling over $4.5 billion in 2021.

Yet even amid the war, Belgian leaders have not distanced themselves from the country’s diamond industry. Just last week, Belgian Prime Minister Alexander De Croo was in Antwerp expressing his support at an industry conference. He has repeatedly argued that any diamond ban would hurt Europe more than Moscow.

“For six centuries, Antwerp has proven that it always manages to remain resilient and innovative in turbulent times,” he said in a speech that didn’t mention Russia.

Diamond industry leaders in Antwerp remain confident, even after the renewed debate on sanctions started this week.

Other countries have taken a different approach.

“For six centuries, Antwerp has proven that it always manages to remain resilient and innovative in turbulent times,” said Belgian Prime Minister Alexander De Croo


The U.S. barred the import of “non-industrial” diamonds from Russia shortly after the invasion. It also sanctioned Sergei Sergeevich Ivanov, the chief executive of Russia’s largest diamond mining firm, Alrosa, and his father, Sergei Borisovich Ivanov, a former chief of staff to Russian President Vladimir Putin.

The EU has not followed suit.

Roland Papp, who follows illicit financial flows for Transparency International, said the EU was demonstrating “moral hypocrisy” on the subject.

“Over the summer the EU added Russian gold to the sanctions list, it is not too late to add diamonds,” he said.

In July, the anti-corruption NGO wrote to EU officials urging them to include diamonds in its Russian sanctions regime. Papp said the EU did not respond to the letter.

Tom Neys, a spokesperson for the Antwerp World Diamond Center, argued that the diamond business, already under huge pressure from regulators and consumers, organically responds to consumer demands, which currently include ethical and sustainable practices.

“We have invested for 20 years in making the diamond trade more transparent,” said Neys in an interview with POLITICO at the Antwerp conference. “Are we really going to throw that all away to reward Dubai, which is already opening its doors for Russian oligarchs?” he added.

These arguments have left Ukrainian officials fuming. In April, Ukrainian President Volodymyr Zelenskyy lashed out at Belgian lawmakers in a video appearance before the country’s parliament.

"There are those for whom Russian diamonds, sometimes sold in Antwerp, are more important,” he said.


A historic bond


Anti-money laundering, tax regulation and greater transparency haven’t come naturally to Antwerp’s diamond traders.

Since the late 1990s, Belgium’s diamond industry has been linked to civil war, armed struggle and corruption across Africa. The world’s first-ever trial against a smuggler of “blood diamonds” from Sierra Leone was held in Antwerp in 2004.

Belgium’s government has long faced criticism for looking the other way.

In 2008, Human Rights Watch wrote to Belgium’s then-Deputy Prime Minister Didier Reynders, now the EU’s justice commissioner, urging Brussels to crack down on Zimbabwe’s diamond smuggling and the human-rights abuses that accompanied it.

But NGOs later accused Belgium of doing the opposite and lobbying the EU to lift sanctions on Zimbabwe’s major diamond producer, which it did in 2013, providing a boost for the country’s despotic ruler, Robert Mugabe.

Similarly, a group of Antwerp-based politicians in the early 2010s known as the “diamond club” were accused of dictating government policy and laws to benefit the industry.

When it comes to Russia, then-Belgian Prime Minister Charles Michel, now the European Council president, was another advocate for Antwerp’s diamond scene. In January 2018, Michel met Dmitry Medvedev, then Russian premier, in Moscow to discuss business opportunities.

“Our investment cooperation has not come to a standstill,” Michel said at the time, referencing recent EU sanctions on Russia over its annexation of Crimea. “Russian companies have long been working in Antwerp.”

Michel and Reynders declined to comment.


Russia divides diamond industry


Sanctions aside, the diamond industry has also split over how to address Russia’s war in Ukraine.

Since 2002, the so-called Kimberley Process has been a United Nations-endorsed certification scheme designed to assure consumers and traders that the diamonds they buy are not fuelling wars in Angola, Sierra Leone, and the Democratic Republic of the Congo.

But critics say the Kimberley Process fails to address current conflicts, like Russia’s war in Ukraine. Still, Bruce Cleaver, the chief executive of De Beers, told POLITICO his company supports reforming the Kimberley Process instead of eliminating it.

“We think it's an important building block in maintaining consumer confidence that the diamonds they're buying are not conflict diamonds or [had] child labor involved in them,” he said.

Reform may be impossible, though. Papp, of Transparency International, said pro-Russian members are resisting pressure to expand the Kimberley Process’s narrow conflict definition, which only covers diamonds financing rebellions seeking to overthrow legitimate governments.

Indeed, at a Kimberley Process meeting in June, members like China, Belarus and the Central African Republic, stopped any debate on the topic.

Hans Merket, who covers natural resources for the Antwerp-based IPIS think tank, said the Kimberley Process is struggling to protect consumers from fears they are funding Russia’s conflict in Ukraine.

“It runs the risk of becoming increasingly irrelevant,” he said.

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