Sanctions: G7 targets Putin’s diamonds

By | April 30, 2023

Proposals and disagreements – The role of Antwerp

Of particular note is next month’s G7 summit, which is expected to include an agreement to ban the sale of Russian diamonds, aided by new technology that will allow authorities to track gemstones around the world.

The European Union has so far backtracked on plans to impose sanctions on Russian diamonds amid concerns that an embargo would hit the Belgian city of Antwerp, a major international diamond trading hub. Instead, the G7 governments are preparing an international ban on the sale of these gemstones.

Preparations are underway to announce more details at the summit in Japan starting May 19, a European government official involved in the negotiations told politico. One of the main goals of this coordinated G7 push is to prevent sanctions circumvention, for example, by importing Russian diamonds that were first processed and labeled in other parts of the world.

tracking the diamonds

Swiss company Spacecode now claims to have a solution to this problem: a new device that can determine which region of the world individual diamonds come from.

Spacecode is already known for its monitoring work in the global diamond industry. At the same time, the company is working on the next step to determine the “DNA of the diamond,” as knowing the exact origin of diamonds is key for the industry, said Pavlo Protopapa, Spacecode’s president and chief executive officer.

According to him, Spacecode now has the technology to trace the origin of diamonds by understanding a diamond’s morphology, chemical composition and optical properties, because stones from certain regions have similar characteristics.

By understanding these unique characteristics, Spacecode’s device would instantly determine the origin of a stone, even if it was not previously recorded in the supply chain. “Diamonds are constantly getting mixed up,” he said, adding: “The only way to control that is by using Spacecode technology.”

Cracks in the front of the G7

EU and Japanese diplomats are speaking out against a US proposal to freeze G7 exports to Russia as part of negotiations ahead of the group’s summit in Hiroshima next month.

The joint declaration of the G7 leaders prepared for the meeting includes a commitment to replace the current regime of sectoral sanctions against Russia with a total export ban with some exceptions, according to documents cited by the Financial Times. The exemptions, according to the same documents, include agricultural products and medical supplies, among others.

According to officials familiar with the matter, the proposal was made by the US as the White House appears unhappy with the way sanctions have been applied so far, leaving loopholes for Russia to continue importing Western technology.

“It is not possible”

However, representatives of Japan and EU countries were cautious at a preparatory meeting last week, arguing that a blanket export ban was not feasible. “From our point of view, it’s just not feasible,” the official said, speaking on condition of anonymity.

The summit of May 19

G7 leaders will meet in Hiroshima on May 19 for a three-day summit that will focus on the impact of the war on Ukraine, economic security, green investment and the Indo-Pacific region.

The EU, which is a member of the G7 along with the US, UK, France, Germany, Italy, Japan and Canada, requires its 27 members to agree on sanctions policy.

It has agreed to 10 sanctions packages against Russia starting in February 2022, but only after weeks of consultation and confrontation between member states, some of which have secured cuts and exemptions for critical domestic industries by threatening to veto the restrictions.

The victory of the Belgians

For generations, Antwerp has been the main arrival center for diamonds in Europe. Following Russia’s invasion of Ukraine a year ago, the city’s diamond industry warned that an EU ban on Russian diamond imports would be an economic blow to Belgium and would only divert trade to India and the United Arab Emirates.

Russian rough diamonds account for about 30% of the world diamond trade.

With an international traceability scheme, linked to the import ban, the Belgians are able to keep their own diamond industry alive while positioning themselves as world leaders in transparent and ethical trade.

“I am very happy that the G7 is putting its weight on this issue,” Belgian Prime Minister Alexandre De Croix told POLITICO.

“The traceability approach is the right one: it will gain consumer confidence in the sector by ensuring that ‘war’ diamonds are no longer available in our stores. Belgium and its diamond industry will provide the necessary know-how”.

But critics, including his own government, argue that the current approach is too slow. Within De Croo’s seven-party coalition, he was pressured by the Greens and the Socialists to move faster.

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