Earlier this year, it was reported that all G7 countries - Canada, France, Germany, Italy, Japan, the UK, the US, and the EU – planned to ban the import of diamonds mined in Russia, even those cut and polished overseas.
Belgium officials have reportedly informed the media that this import ban will be announced within the next two to three weeks.
European Union member Belgium has proposed the sanctions. Antwerp is the world’s largest diamond trading hub. The sanctions would come into effect on 1 January.
“We’re talking about restructuring a global market,” a Belgium official told Reuters.
“Russia is the biggest supplier globally. With this system, we are cutting them out, leaving them in an inferior market with lower prices. We are slashing the financial flows from this sector.”
The G7 accounts for approximately 70 per cent of the global market for diamond jewellery, and Russia is the world’s largest producer of diamond rough.
Important exemptions
The import ban will reportedly be enforced with a certificate system. There will be ‘three layers of control’ and blockchain systems that create two certificates for rough and polished diamonds.
Customs checks will be performed at G7 wholesale entry points for rough and polished stones.
"I think the G7 officials involved with this are taking it quite seriously, and I believe they will strictly enforce it. But the enforcement method will be the challenging part,” diamond analyst Paul Zimnisky said.
"Industry representatives have been quite actively included in this discussion and thus, the government officials are being cognisant of and trying to limit the negative impact this will have on centres that are neutral to the issue like India and Africa.”
As a result of these sanctions, it’s expected that Russian diamonds would be sold to Asian markets, while all non-Russian diamonds would be sold to Western markets.
The system would also include an exemption for African diamond producers.
Who pays?
According to the Reuters report, Belgium officials do not want the extra cost of these sanctions to fall on consumers and jewellers.
“Jewellery shoppers may see prices rise if there is a shortage of non-Russian diamonds after more sanctions are imposed, but increases would likely come gradually rather than suddenly. The industry has been expecting the action,” writes Elizabeth Paton of The New York Times.
“The question is whether an industry, mainly composed of small businesses, that is organised around the quality, size and colour of stones — not their provenance — could segregate stones and accurately produce paperwork that categorises them by origin.
“That challenge likely would be further exacerbated by the multiple supply chain loopholes that are possible when diamonds make their multinational journey from a mine, through a hard-to-police global web of middlemen, and ultimately to consumers or into industrial uses.”
The issue is further complicated as the import ban is expected to be limited to diamonds that are one-carat or larger.
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