US reconsiders G7 ban on Russian diamonds after several countries protest – Reuters

The United States is reconsidering the harshest elements of a ban on the import of Russian diamonds from the Group of Seven nations after African countries, Indian gem polishers, and New York jewellers protested against it.

Source: Reuters, citing seven sources, as reported by European Pravda

Details: The sanctions package, which was agreed upon in December and includes a ban across the European Union, is one of the biggest shocks to the industry in decades.

Two sources familiar with the talks said the US has disconnected from G7 working groups on tight controls, with one describing US representatives as "there but not engaging".

A senior Biden administration official said Washington had not changed its stance and that the United States would continue to work with the G7.

"We will want to make sure that we strike the right balance between hurting Russia and making sure that everything is implementable," said the official, speaking on condition of anonymity because they were not authorised to speak publicly about the talks.

The G7 sanctions aim to disrupt another revenue source for the Kremlin's war effort in Ukraine, even though diamonds contribute only a tiny fraction of the income, approximately US$3.5 billion according to the Russian state mining company Alrosa, in contrast to the revenue Moscow derives from oil and gas.

Since March, importers into G7 nations must self-certify that diamonds are not sourced from Russia. Sanctions on direct imports of Russian gems were initiated in January.

Starting in September, the EU ban will require diamonds of 0.5 carats and above to undergo blockchain-based traceability certification in Antwerp, a centuries-old diamond centre in Belgium.

Sources said that the G7 countries agreed that Antwerp would be a logical first centre, with others to be added later.

However, three sources said that Washington has cooled on strengthening traceability and that discussions on implementing traceability have reached an impasse.

The Biden administration official said that the pledge to implement a traceability mechanism by 1 September concerned the European Union, not the United States, citing the wording in a December statement by G7 leaders.

"We need to do this in a way that takes into account concerns from African partners and African producers, takes into account Indian and UAE partners ... and makes sure we can also make it workable for US industry," the official said.

In February, the presidents of Angola, Botswana, and Namibia penned a letter to G7 leaders expressing concerns that a predetermined entry point to the G7 market would be unjust, impinge on freedoms, and jeopardise revenues. These three countries account for 30% of diamond production.

Italy, which holds the G7 presidency, declined to comment on the US stance.

Any relaxation of the phased ban poses the risk of creating loopholes and enabling Russian diamonds to infiltrate boutiques in New York, London, and Tokyo. This threat became particularly visible when Belgian authorities seized millions of dollars worth of likely Russian stones in February.

Proponents of the sanctions say a traceability mechanism is necessary to ensure a reliable ban and that it cannot be effective without the full participation of the United States, which accounts for 50% of the G7 diamond jewellery market.

Background: 

• Following the virtual summit on 6 December, the Group of Seven countries announced their intention to impose restrictions on Russian-made diamonds.
• The G7 countries, which are the leading importers of rough diamonds, will have created a mechanism for verifying and certifying rough diamonds by 1 September 2024 and will consult with producing countries and partners on this issue.
• On 1 March, Canadian Foreign Minister Mélanie Joly announced that she and her G7 partners would work to strengthen sanctions against Russian diamonds.

Support UP or become our patron!