G7 to discuss four options for banning Russian diamonds

The G7 countries are to discuss four versions of a plan to ban Russian diamonds on G7 markets from 1 January 2024, ranging from light-touch self-regulation to strict import measures, exposing differences that explain why it has been so difficult to agree on a ban for over a year.

Source: Reuters, with reference to documents it has studied

Officials close to the talks told Reuters that these four proposals have been prepared by Belgium, India, a group from the French jewellery industry and the World Diamond Council, and discussions on these options will take place at a technical meeting of G7 representatives on Thursday.

"A G7 ban would hit Russian diamond exports badly because G7 countries – United States, Canada, Japan, Germany, Britain, Italy and France – account for 70% of global diamond demand.

But it would also hit supply, because Russia is the world's biggest producer of rough diamonds, accounting for 30% of them," Reuters explains.

The main objective of the meeting will be to legally agree on a definition of diamond traceability, so that the provenance of the stones can be determined.

"Part of the reason we are stalled is that ... it's an indirect ban – it's on Russian diamonds coming (into G7) from outside of Russia. It's more complicated.

There's tension between keeping momentum with a political statement first or whether the technicals need to be decided in full first," said one of the sources familiar with the discussions, asking that their anonymity be maintained.

"In November, we absolutely need to clear things up if we want to meet the Jan. 1 start," the source said, adding that if a model is chosen which requires state control, it will take longer pass the law.

Reaching an agreement is a challenge as the details of the G7 ban may improve or worsen the business environment for some of the world's major diamond centres in Belgium, India or the US, as well as their share of the global jewellery business, Reuters added.

The main differences between the options on the table relate to the provenance of diamonds entering G7 markets, how checks could be made to establish if they originate from Russia, and what the consequences of breaking the rules would be.

India and Belgium both want their own diamond centres in Mumbai and Antwerp respectively to be the entry point, the French group would like to see multiple entry points to avoid bottlenecks, and the WDC is looking for a more self-regulating system.

Belgium sees its reputation at stake and wants to make sure Russian gems do not circulate and fears getting stung by scandal later. It believes that traceability and technological checks on rough diamonds are very important and best done at its centre in Antwerp, where strict requirements are already in place.

India is concerned that a more stringent model would place a significant burden on its small and medium-sized producers.

The EU and the G7 have been considering a ban on Russian diamonds since 2022 as part of sanctions against Russia over its invasion of Ukraine.

The US has already imposed sanctions on Russian state-owned diamond producer Alrosa (ALRS.MM), , but it seems to have had little impact without a global ban - in the first half of this year, it posted revenues of US$1.9 billion and dividends of $282 million, the agency writes.

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