Issue of Russian diamond exports is raised as EU readies its 10th sanctions package 

Europe has already imposed nine different sanction packages against Russia. Several products are no longer allowed to be imported into Belgium. Coal, oil, steel, cement, timber, cigarettes, Russian vodka, gold, and caviar are a few examples. Numerous embargoes aimed at Vladimir Putin's war chest should have been lifted long ago. However, Russian diamond exports have not been affected. And all thanks to a town in northern Belgium.

Alrosa, a Russian state-owned company, mines and sells diamonds in eastern Russia, between the forests and glaciers of the Siberian region of Yakutia. Despite the fact that Putin's war on Ukraine has been ongoing for nearly a year. And, despite the fact that the West appears to be doing everything possible to isolate Russia from the global economy. What makes this possible?

The EU's sanctions must be decided unanimously. During the most recent rounds of negotiations, 26 member states supported a ban on the importation of Russian diamonds, according to diplomats in Brussels. One country has always been opposed to it. Belgium. Antwerp, one of the country's largest and most beautiful cities, is a reason. 

It has been the center of the world diamond trade for over 500 years. There are no other places where so many gems are processed. On their long journey between mines and customers, 85% of all rough diamonds and half of all cut diamonds pass through Antwerp.

In Belgium, this industry employs about 30,000 people. As a result, the country's government may be reluctant to impose sanctions on gemstones. Previous EU pressure appears to have had little effect, and calls from Ukrainian President Volodymyr Zelenskyy have gone unheeded. “Peace is more expensive than all the diamonds,” Zelenskyy said during a video call with the Belgian parliament in March. Nonetheless, trade through the Antwerp hub continued.

Oil and gas are more important to Putin than diamonds. A European jewelry embargo would not have had the same impact on the Russian economy as a ban on fossil fuel imports. However, it would be a symbol. Things are finally moving. 

The EU is planning its tenth sanction package

Many EU member states, including Poland and Lithuania, want to resume imports of Russian diamonds. In addition, the Belgian government has made it clear for the first time in recent days that it may consider retaliatory measures. Imports are unlikely to be banned immediately. Imports are also likely to be unlimited in quantity. However, the new system may make it easier to trace the origin of diamonds.

For example, Russian diamonds could have been polished and cut in Mumbai before being imported into Europe as Indian diamonds. The Belgians believed that if one could better understand the journey that gems take around the world, the market would take care of it, with no reference to Russia's sanctions.

The US has a different point of view. Russian diamonds were banned in the country nearly a year ago. According to the Treasury Department in Washington, Alrosa allegedly assisted Putin in financing his war. The Yakutia region and the Russian state jointly control 66% of the group. Its owner was among the first oligarchs sanctioned by the US because the country regards him as a close ally of Putin.

Belgium is more affected by US sanctions than by European ones

Alrosa's ties to the Kremlin are undeniable. The group is said to have financed the Russian navy's B-871 Alrosa diesel-electric submarine 30 years ago. It has been modernized several times and is still in service with the fleet, being equipped with cruise missiles. The fact that Europe is banning Russian coal, oil and steel, but not jewelry, is even more surprising.

Belgium may have avoided European sanctions, but it has felt the effects of US ones. Before Russia invaded Ukraine, Alrosa mines supplied nearly one-third of the rough diamonds traded in Antwerp. Belgium will import EUR 1.8 billion in Russian diamonds in 2021.

Imports fell by roughly 80% the previous year. Because one of the largest buyers from the US defected, the Antwerp trade in Yakutia jewelry must soon come to an end.