We are standing in front of a showcase in the Belgian city of Antwerp. The Belgian port has been a hub of gemstone business since the 15th century. Discreetly and confidentially according to the Antwerp World Diamond Centre the commercial turnover from the gemstone amounts to 37 billion euros every year.
Asked where the diamonds come from, the jeweller answers with a smile: "I prefer not to ask." His reluctance has some basis. The rough diamonds come from Angola, Congo, Sierra Leone, South Africa and also from Russia, as Sigal Vanjowski, owner of Binson Diamonds in Antwerp, explains. They are taken to factories in Belgium to be polished, then processed into jewellery and sold, including in her shop.
Which side is Belgium on?
This is a very special for luxury tastes, a niche market with sales in the billions, from which Russia, despite the war in Ukraine, continues to benefit. Since the start of the war the EU has imposed numerous sanctions on Moscow. For example, the import of certain goods such as gold, vodka and caviar has been stopped, but Russian diamonds have been spared for some reason. According to the Russian Ministry of Finance, in 2021 Russia exported over 48.6 million carats of rough diamonds abroad the highest volume since the start of the observation period in 2007.
Turnover has not been quantified. Major export destinations: United Arab Emirates and Belgium. Thus Belgium, the country where the EU is based, plays a key role in the diamond industry and even lobbied in the negotiations to keep Russian diamonds out of the measures. "From an economic point of view, Europe will hurt itself with the sanctions," says Kohen Fadenbeck, dean of the Faculty of Economics at the University of Antwerp.
If imports of Russian rough diamonds are stopped, an entire industry will be lost and relocated to Dubai or Mumbai places that place far less emphasis on transparency or sustainability than Antwerp, he says. "Because many countries, such as India, Israel or the United Arab Emirates, were not involved in the sanctions, Russian gemstones eventually found their way onto the global market," explains Joachim Dinkelman of the German Jewellers and Watchmakers Association (BJV). "Any tightening of regulations or laws against Russia would not affect this at all." However, the Kremlin is likely to benefit from the "frenzy" for diamonds. One of the largest producers is the Russian diamond giant Alrosa, which claims to be "partly" owned by the state. Experts estimate the state's stake at around 33%. Alrosa accounts for 95% of Russia's diamond production about 27% worldwide. This means that at least every fourth gemstone in markets around the world comes from Russia. The giant operates several mines in the Sakha Republic, in northeastern Russia, and in Arkhangelsk, in the northwest, and also has interests in mines abroad, such as in Angola.
How Russian are the diamonds after all
In contrast to Fadenbeck, commodities expert Larissa Stanzio stresses that a ban on the import of Russian rough diamonds would mean less money would flow into state coffers through Alrosa. "This would have both a direct and indirect impact on the war support budget, although the revenues from the diamond trade are significantly less than the revenues from the gas and oil trade." Alrosa CEO Sergei Ivanov is no stranger to this either. He was among the first oligarchs from Putin's circle to be sanctioned by the US. While the EU is hesitant, the US administration already imposed sanctions on Alrosa shortly after the outbreak of war and then tightened them. "I always get a little cynical about it," says Fadenbept, noting critically that Europeans are naïve when they think the Americans are doing something that hurts their own economy. According to him, jewellery sales in the US make up 50% of the global market. There is also a loophole in the US sanctions regulation thanks to wording that leaves a lot of room for interpretation.
That is, when a diamond is significantly altered in another country through processing, it can claim that country as its place of origin. Thus, Russian gems polished in India, for example, could continue to be imported into America and hide their origin.
"It is technically almost impossible to determine the country of origin of a gemstone," says expert Fadenbeck. However, there are procedures for certifying rough diamonds, such as the so-called Kimberley Process, which customs sources say is designed to prevent so-called "blood diamonds", those from war-torn regions, from being imported into the EU. In Germany, according to BVJ CEO Dinkelmann, the industry has a very strong interest in not buying any goods from Russia, 'and that includes diamonds in particular'. Since the spring, many suppliers have assured that their gems do not come from Russia. "Neither retailers nor consumers want goods from Russia and we are doing everything possible to ensure that."
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