Under new EU sanctions, Russian diamonds are set to be banned from import into the European Union. The European Commission has proposed extending the existing sanctions imposed on Russia since its invasion of Ukraine to include diamonds. This move is part of the EU’s 12th round of measures against Moscow, which is expected to come into effect in January.
The ban on direct diamond imports from Russia is set to begin on January 1, 2024.
A traceability mechanism is also being proposed, which would prevent imports of Russian gems that have been processed in third countries.
The traceability mechanism is intended to be coordinated with G7 countries, including the United States, Canada, Britain, and Japan.
The ban on Russian diamonds is aimed at cutting off a significant source of revenue for Russia, as the country is the world’s largest producer of diamonds by volume.
More than 90% of Russia’s diamond business is controlled by a single company, Alrosa.
In 2021, Russia exported around $4 billion worth of rough diamonds, and the absence of sanctions in 2022 only led to a slight decrease in exports.
The diamond industry’s complex supply chain has been a challenge in implementing the ban. Diamonds pass through multiple hands before reaching the final customer, making it difficult to trace their origin.
To address this, the EU and the G7 have been working on an international system of traceability that can track diamonds from the mines to the display windows.
Ideas such as a blockchain-based method have been proposed to ensure transparency and prevent circumvention of the ban.
The proposed sanctions will now undergo negotiations among the 27 member states of the European Union, requiring unanimous backing for approval.
Talks are expected to be laborious, as previous rounds of sanctions have taken time to conclude.