Saudi Press

Saudi Arabia and the world
Monday, Sep 09, 2024

Will a Russian diamond ban be effective?

Will a Russian diamond ban be effective?

The UK has announced a ban on Russian diamonds as it tightens sanctions over Russia's war in Ukraine.

Countries in the G7 bloc also want to be able to trace the gemstones to block Russian exports as they try to limit cash flowing into Russia's war chest.

But how effective will these schemes be, and could there be unintended consequences?


How important are Russian diamond exports?


Russia's diamond trade, worth about $4bn (£3.2bn) per year, makes up a small proportion of its overall exports.

Before the invasion of Ukraine, Russia's total exports reached $489.8bn in 2021, according to the central bank, with oil and gas making up $240.7bn of that.

Nevertheless, Russia is the world's biggest diamond exporter by volume, followed by African countries.

A state-owned company called Alrosa dominates Russian diamond mining - and it mined almost a third of the world's diamonds in 2021.

Profits from Alrosa do flow into the Kremlin war chest, according to Hans Merket, a researcher with the International Peace Information Service - but it is nowhere near as important as oil and gas.



Why does the G7 want to track Russian diamonds?


Western countries want to cut off this revenue stream as part of efforts to hamper Russia's war.

However, the world's diamond trade is complex, and lacks transparency.

Diamonds can change hands 20 to 30 times between mine and market, Mr Merket said.

Typically the gemstones pass through the main global hubs of Antwerp, Dubai, Mumbai and Ramat Gan, which is near Tel Aviv.

Traders grade the stones for carat (weight), colour, clarity and cut - with different traders looking for different attributes.

They then take the remaining gemstones, mix them up, and sell them on - and the process is repeated.

Traders and firms jealously guard where they source their diamonds - it's their "secret sauce", according to Tobias Kormind, managing director of online jeweller 77 Diamonds.

But the major industry players could restrict the trade of Russian diamonds if they pulled together, he said.


How could the flow of Russian diamonds be restricted?


The US has already brought in sanctions to try to ban Russian diamond exports.

However, there is a "massive loophole" here, Mr Kormind said.

The restrictions apply to rough diamonds - but once they have been cut and polished, the country of origin no longer matters.

People in G7 countries buy about 70% of the world's diamonds - so a G7 ban could have an effect, if the diamonds can be traced, Mr Merket said.

However, a G7 ban would mean diamonds are likely to flow to other markets in China and India, Mr Kormind said.

Tracing the diamonds would make restricting that flow easier.


How could diamonds be traced?


There is already a scheme to try to restrict "blood diamonds" used to fuel conflict, called the Kimberley Process, where states certify that diamonds are "conflict free".

However, this does not allow the diamonds to be traced to the country of origin.

Mr Merket said the simplest way of tracing diamonds would be to extend this process to include documentation of where the stones come from.

There are also technologies that mark stones, and one is being developed that can scan them to check their geographical origin.


What effects would a ban have?


The majority of Russian diamonds end up in India, where there is a major cutting and polishing centre in Surat.

Smaller diamond businesses in the city have already suffered, in part due to the US ban.

In Africa, local mining operations benefitted after US sanctions hit Russian exports. However, many African mining producers are not ready to feed into a traceability scheme, Mr Merket said, and could be excluded if one is brought in.

In Angola, Russia's Alrosa has a significant stake in mining, and tightening sanctions could hit local firms.

For Europe, traceability needs to be "watertight, scientific, [and] international", said Tom Neys, head of media relations at the Antwerp World Diamond Centre.

If not, Europe risks losing $40bn in trade annually to places that don't have the frameworks to deal with money laundering and terrorism, he said.

He added that UK sanctions "will have no impact on the sale of Russian diamonds" because the UK represents less than 1% of the global diamond trade.

A UK government spokesperson said it would work with key partners to help restrict the Russian diamond trade, "including through tracing technologies".

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Saudi Leaders Strengthen Global Ties at GCC-India Meeting and International Events
Saudi Arabia Unveils Phase 2 of King Fahd Cultural Center Amidst Global Developments
Saudi Crown Prince Meets Russian FM; GCC-Indonesia Trade Talks Begin; Saudi Achievements Highlighted in Global Forums
Pope Francis Visits East Timor: A Landmark Journey for Unity and Hope
Global Turmoil: Jailbreak in Portugal, Tragedy in Nigeria, US School Shooting, Afghanistan's Malnutrition Crisis, Saudi Arabia’s FinTech Boom, and Sudan Conflict Escalation
Trigana Air Incident Highlights Indonesia's Aviation Challenges; Saudi Mortgage Boom and New India Sea Route; UAE's GDP Growth; Kentucky Manhunt Suspends Schools
Make Army Real Again
Bangladesh Seeks Extradition of Sheikh Hasina for War Crimes Amid Global Tension and Tragedies
Iraq and U.S. Plan Military Pullout Amid Regional Shifts; Pentagon Warns of Budget Impacts
Severe Flooding in Morocco Leaves 4 Dead and 14 Missing
Global Tensions Rise: From Egypt's Quest for Nefertiti's Return to Russian Drone Incursions and Migrant Tragedies in the Mediterranean
Amid Regional Unrest, Saudi Leaders Congratulate Algerian President on Controversial Re-election
From Saudi Date Harvest to Turkish Military Secular Oath: Global Updates
Saudi-Egyptian Diplomacy Strengthened as GCC Ministers Convene and Saudi Debt Market Doubles Amid Jeddah Tourism Boost
Kamala Harris Launches 'New Way Forward' Campaign as Saudi Arabia Advances Economic Vision and Bangladesh Seeks Aid for Rohingya Crisis
Global Updates: Trump’s Sentencing Delayed, Innovations in Saudi Healthcare, and Humanitarian Efforts for Gaza
Saudi Arabia Awards $6.13 Billion in Contracts for AMAALA Tourism Project Amidst Vision 2030 Success
Saudi Arabia to Host UN World Data Forum 2026, UK Suspends Arms Sales to Israel, and Major Economic Developments Affecting Global Markets
Iran's President to Visit Iraq Amidst Regional Turmoil, Saudi Aramco Adjusts Oil Prices, and Humanitarian Efforts Continue in Yemen
Saudi Arabia to Host 2026 UN World Data Forum: A Hub for Global Statistical Innovation and Collaboration
Middle East Turmoil and Economic Shifts: Gaza Conflict, Saudi Restructuring, and Omani Credit Growth
Venezuelan Opposition Leader Seeks Asylum in Spain Amid Election Crisis
Paris Court Charges Duo for Plotting Terrorist Attacks Amid Heightened Iran-Europe Tensions
Global Tensions and Tech Unveilings: From Ukrainian Shelling in Russia to AI Innovations in Berlin
Gaza War Marks Its 12th Month
Saudi Arabia Honors Cultural Pioneers Amidst Broader National Challenges
Jill Stein Criticizes US-Israel Ties, Pakistani Academic Defies Norms, and Tragedy Strikes British Tycoon: Today's Top Stories
Riyadh Mayoralty Inaugurates Second Nursery and Saudi Red Crescent's Air Ambulance Heroics Highlight Healthcare Advancements Amidst Regional Tensions
Iran's Missile Support to Russia Raises Global Tensions; Saudi Minister's Innovation Tour in Hong Kong Amid Middle Eastern Conflicts
Saudi Arabia Slashes Customs Fees and Introduces New Yacht Regulations under Vision 2030
Saudi Arabia Eyes Strategic Green Hydrogen Partnerships with Europe Amid Varied Global Crises
Libya Migrant Crisis and Global Tensions: From Deadly Shipwrecks to International Protests and Defense Initiatives
Gaza’s Children Face Grim Future as Conflict Halts Formal Education for Second Year
Escalating Ethnic Violence in Manipur Closes Schools; North Korea's Balloon Stunt Roils Seoul; Pope Calls for Peace in Papua New Guinea Amid Global Tensions
Tim Walz Advocates for Palestinian Rights Amidst Tensions in Gaza, Highlighting Humanitarian Concerns
Saudi Achievements in Cloud-Seeding and Mining Collaborations, Global Calls for Ceasefire, and Biden's Diplomatic Moves
Global Developments: UK Targets Smugglers, Ukraine Seeks Aid, and Thailand Welcomes Youngest PM
U.S. Probes Shooting of Turkish-American Activist by Israeli Forces; NATO Urges China to End Russia Support; Emergency Landing in Turkiye Amid Bomb Threat
Saudi Arabia to Host Groundbreaking Exhibition of Chinese Contemporary Art in Diriyah
Griffon Vultures Revive, New Sports Academy, and FinTech Booms: Saudi Arabia's Multifaceted Progress
Global Unrest: Elephants Rescued in Myanmar, NATO's Appeal to China, and Food Prices Fluctuate Amid Growing Crises
Toronto Film Festival Kicks Off Amid Protests, Tragedy Strikes Kenyan School, Saudi Real Estate Loans Surge, Philippines Ex-Mayor Faces Charges, China Halts International Adoptions, World's Largest Indoor Ski Resort Opens in Shanghai
Rare Eurasian Griffon Vulture Colonies Discovered in Saudi Reserve Amid Global Vulture Awareness Efforts
Israeli Withdrawal from Jenin, Pope Francis's Indonesian Visit, and Global Events Highlight a Turbulent Week
UK Bolsters Ukraine's Defense Amid Russian Attacks; US Commits Millions to Aid Haiti; Hunter Biden Faces Tax Evasion Charges; Trump Plans Antisemitism Crackdown and Federal Overhaul
Global AI Summit in Riyadh Highlighted by Commemorative Passport Stamp Amid Global Turmoil
Muvi Cinemas Launches Sensory-Friendly Sessions for Children with Autism in Saudi Arabia
Saudi Arabia's Vision 2030: Housing Success, Women's Achievements, and New Regulations Propel Kingdom to Economic Growth
Algeria Votes Amid Tebboune’s Expected Victory; UK Universities Seek Higher Tuition Fees; Egypt Holds Interest Rates Steady; IMF Praises Saudi Housing Program; OPEC+ Extends Oil Supply Cuts
Saudi Arabia’s NHC Dominates GCC Real Estate as UAE Celebrates First Nuclear Plant Amid Regional Tensions and OPEC+ Oil Cuts
×