Belgian Prime Minister Alexander De Croo has declared that Russian diamonds “symbolize war” and should be banned from the G7 market starting from January 1, 2024. Speaking in New York this week, De Croo confirmed that Belgium, the global center of diamonds, is prepared to extend sanctions against Moscow in this profitable industry.
Surprise in Brussels after years of hesitation
Last Friday, a Belgian official informed journalists that, according to a Belgian proposal, a ban on Russian diamonds would be introduced in January next year, according to Reuters. On Wednesday, Alexander De Croo wrote on Twitter that “the G7 wants to reduce revenues from Russian diamonds” and that Belgium, as the main diamond trading hub, has a “responsibility to contribute to the success” of the proposed ban on Russian diamonds.
“I met with industry leaders to discuss how we can take advantage of this opportunity and raise transparency standards for the entire industry,” he continued. Speaking on Tuesday evening in front of a group of actors from the jewelry industry at the residence of the Belgian Consul General in New York, Alexander De Croo stated that Russian diamonds should be banned from the market. He urged the industry to “continue until the last mile” to ensure the success of the proposed Brussels initiative to ban Russian diamonds.
Antwerp, the diamond capital
Russian diamonds have not been subject to any sanctions from the European Union. However, the revenue generated from their sale helps the Kremlin finance its aggression against Ukraine. Until recently, Belgium has been hesitant to impose such a ban as it is home to the global center of rough and polished diamond trade, specifically in Antwerp, a city in the Flemish region of the country, according to Euractiv.
Every day, diamonds worth $220 million are traded in Antwerp, amounting to approximately $47 billion per year. The city controls 86% of the global trade in rough diamonds and 50% of the trade in polished diamonds. And although imports of Russian diamonds into Belgium have drastically decreased since the start of the war in Ukraine in February 2022, they have not stopped completely.
Considering these factors, Belgium plays a central role in discussions regarding the ban within the G7 (which represents 70% of the consumer market) and the EU. One of the main concerns expressed by industry actors, particularly in Belgium, regarding the imposition of sanctions is that a ban may be ineffective if Russian imports are redirected to countries like India or the city of Dubai.
An almost operational mechanism
In addition, Belgium desired an effective tracking mechanism for each diamond to prevent those from Russia from entering the markets of G7 countries (USA, Canada, Germany, France, UK, Italy, Japan, and the EU) despite the ban. This mechanism is now almost operational, a Belgian official stated last Friday.
“Making the system fully transparent requires a lot of work that we need to do together. Let’s take this final step to implement the system on January 1, 2024,” De Croo told industry players on Tuesday.
According to Lianne Keme, the founder of Everledger, a company specializing in transparency in supply systems that develops technology used to track luxury goods and sensitive minerals, the anticipated system can be compared to SWIFT, the international banking transaction system also headquartered in Belgium, as reported by the Belgian news agency Belga.
Negative reaction from producers
The new traceability system would involve a three-level control mechanism, including the Kimberley Process – an international certification system established in 2003 to halt the flow of “blood diamonds” into the global market. It would also utilize blockchain technology, according to the Belgian news agency.
“Russia is the largest supplier in the world. With this system, we eliminate them, leaving them in a lower market with lower prices. We reduce financial flows from this sector,” explained the Belgian official. The decision should also benefit the African diamond industry. Currently, the Russian state-owned company Alrosa, which holds 90% of Russia’s diamond extraction capacity, represents between 35% and 40% of the global supply.
On Wednesday, the Financial Times reported that 16 major diamond producers, including the largest one, De Beers, reacted negatively to De Croo’s proposal to ban Russian diamonds presented to the G7 countries. The US newspaper also revealed that the Antwerp World Diamond Centre (AWDC) collaborated with the Belgian government to develop the ban proposal – information confirmed to Belga by a reliable source in the sector. Other governments, including those of the G7, are also said to have collaborated on this proposal.
