Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Will a Russian diamond ban be effective?

Will a Russian diamond ban be effective?

The UK has announced a ban on Russian diamonds as it tightens sanctions over Russia's war in Ukraine.

Countries in the G7 bloc also want to be able to trace the gemstones to block Russian exports as they try to limit cash flowing into Russia's war chest.

But how effective will these schemes be, and could there be unintended consequences?


How important are Russian diamond exports?


Russia's diamond trade, worth about $4bn (£3.2bn) per year, makes up a small proportion of its overall exports.

Before the invasion of Ukraine, Russia's total exports reached $489.8bn in 2021, according to the central bank, with oil and gas making up $240.7bn of that.

Nevertheless, Russia is the world's biggest diamond exporter by volume, followed by African countries.

A state-owned company called Alrosa dominates Russian diamond mining - and it mined almost a third of the world's diamonds in 2021.

Profits from Alrosa do flow into the Kremlin war chest, according to Hans Merket, a researcher with the International Peace Information Service - but it is nowhere near as important as oil and gas.



Why does the G7 want to track Russian diamonds?


Western countries want to cut off this revenue stream as part of efforts to hamper Russia's war.

However, the world's diamond trade is complex, and lacks transparency.

Diamonds can change hands 20 to 30 times between mine and market, Mr Merket said.

Typically the gemstones pass through the main global hubs of Antwerp, Dubai, Mumbai and Ramat Gan, which is near Tel Aviv.

Traders grade the stones for carat (weight), colour, clarity and cut - with different traders looking for different attributes.

They then take the remaining gemstones, mix them up, and sell them on - and the process is repeated.

Traders and firms jealously guard where they source their diamonds - it's their "secret sauce", according to Tobias Kormind, managing director of online jeweller 77 Diamonds.

But the major industry players could restrict the trade of Russian diamonds if they pulled together, he said.


How could the flow of Russian diamonds be restricted?


The US has already brought in sanctions to try to ban Russian diamond exports.

However, there is a "massive loophole" here, Mr Kormind said.

The restrictions apply to rough diamonds - but once they have been cut and polished, the country of origin no longer matters.

People in G7 countries buy about 70% of the world's diamonds - so a G7 ban could have an effect, if the diamonds can be traced, Mr Merket said.

However, a G7 ban would mean diamonds are likely to flow to other markets in China and India, Mr Kormind said.

Tracing the diamonds would make restricting that flow easier.


How could diamonds be traced?


There is already a scheme to try to restrict "blood diamonds" used to fuel conflict, called the Kimberley Process, where states certify that diamonds are "conflict free".

However, this does not allow the diamonds to be traced to the country of origin.

Mr Merket said the simplest way of tracing diamonds would be to extend this process to include documentation of where the stones come from.

There are also technologies that mark stones, and one is being developed that can scan them to check their geographical origin.


What effects would a ban have?


The majority of Russian diamonds end up in India, where there is a major cutting and polishing centre in Surat.

Smaller diamond businesses in the city have already suffered, in part due to the US ban.

In Africa, local mining operations benefitted after US sanctions hit Russian exports. However, many African mining producers are not ready to feed into a traceability scheme, Mr Merket said, and could be excluded if one is brought in.

In Angola, Russia's Alrosa has a significant stake in mining, and tightening sanctions could hit local firms.

For Europe, traceability needs to be "watertight, scientific, [and] international", said Tom Neys, head of media relations at the Antwerp World Diamond Centre.

If not, Europe risks losing $40bn in trade annually to places that don't have the frameworks to deal with money laundering and terrorism, he said.

He added that UK sanctions "will have no impact on the sale of Russian diamonds" because the UK represents less than 1% of the global diamond trade.

A UK government spokesperson said it would work with key partners to help restrict the Russian diamond trade, "including through tracing technologies".

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Europe Pursues Digital Autonomy in Light of Transatlantic Strains
OpenAI Secures Unprecedented $40 Billion Funding
Apple's Innovation Divide: Falling Behind in AI and Foldable Technology Amidst Progress from China
Passenger Taken into Custody for Masturbating on SWISS Air Flight
PUTIN’S LIMOUSINE DETONATES—SECURITY CHAOS ENSUES
OpenAI Unveils New Image Generation Tool for ChatGPT
Ex-FIFA President and French Football Icon Acquitted of Corruption Accusations
American Brands Face Consumer Boycott in Europe Amid Escalating Trade and Political Tensions
German President Frank-Walter Steinmeier has just signed off on a national debt hike to fast-track Germany’s militarization
Pope Francis Makes His First Public Appearance in Five Weeks After Being Hospitalized
Pope Francis Released from Hospital Following Pneumonia Treatment
European Countries Boost Defense Budgets Due to Changes in U.S. Support
Pope Francis Set to Leave Hospital Following Recovery from Pneumonia
Thousands Rally in Amsterdam to Oppose Racism and Fascism
Revealing the Electromagnetic Characteristics of the Great Pyramid of Giza
The Development of China's Automobile Sector
Netanyahu Dismisses Shin Bet Chief Amid 'Loss of Trust' and 'Qatargate' Corruption Investigations Involving Netanyahu's Advisors
Leaders of the US and Ukraine Hold Constructive Discussion Amid Ongoing Conflict
EU Charges US Tech Giants with Violating Digital Regulations
Serbia's authoritarian government uses illegal sonic weapons against peaceful demonstrators.
European Union Moves Toward Joint Debt for Military Spending
Mass Protests in Belgrade Against Serbian President and Government
Trump Administration's Deportation of Alleged Gang Members Sparks Legal Dispute
Massive Protests Erupt in Serbia Against President Vučić Amid Corruption Allegations
Large Demonstrations Break Out in Serbia After Fatal Railway Station Collapse
Serbian Government Denies Use of 'Sonic Weapon' Amidst Massive Protests
Serbia Witnesses Unprecedented Protests Following Novi Sad Railway Station Collapse
China Introduces 'Zhulong' C-14 Nuclear Battery Promising a Lifespan of 5,730 Years
Inquiry: Social Media Platforms Permitted Advertisements Featuring Anti-Semitic and Anti-Muslim Material in Germany
Thus, following countless Ukrainian fatalities, the devastation of the country, the collapse of the economy, and vast numbers of the population fleeing, NATO has "declared" that Ukraine's membership is no longer being contemplated.
Bosnia and Herzegovina Encounters Political Unrest Following Arrest Warrant for Serbian Leader
In Budapest, Hungary, there are no fake Islamic asylum seekers and it is a true paradise.
Putin Shows Interest in a 30-Day Ceasefire in Ukraine During Ongoing Conflict
Trump Discusses Possible Ceasefire in Ukraine as Tensions Continue
EU and Canada Unveil Retaliatory Tariffs in Response to U.S. Steel and Aluminum Duties
Romania Excludes Prominent Presidential Contender Călin Georgescu from Election Repetition
Russian Teacher Under Investigation After Explicit Content Incident in Classroom
Poland Plans Comprehensive Military Training for All Adult Males Amid Enhanced Defense Initiatives
Lithuania Withdraws from Cluster Munitions Convention Amid Security Concerns
Trump Discovers It Simpler to Negotiate with Russia Compared to Ukraine During Ongoing Conflict
Macron Cautions Against Growing Russian Aggression as U.S. Support for Ukraine Changes
EU Member States Endorse Gradual Rollout of Entry/Exit System
President Trump Indicates Willingness to Reestablish Relations with Ukraine in Light of Recent Tensions
Europe Investigates the Use of Frozen Russian Assets to Aid Ukraine
Macron Calls on Europe to Bolster Defense in Light of Russian Threats and Possible U.S. Withdrawal
Germany Supports Looser EU Fiscal Policies to Boost Defense Expenditures
Pope Francis's Health Update: Vatican Reports Stable Condition
MPs from Various Parties Express Worry About Proposed Reductions to the UK Aid Budget
U.S. Creates Strategic Cryptocurrency Reserve, Leading to Market Upsurge
Zelenskyy Convenes with UK Prime Minister Starmer in Light of Strains with the US
×