{"id":94995,"date":"2023-05-22T22:21:05","date_gmt":"2023-05-22T22:21:05","guid":{"rendered":"https:\/\/tahrir2day.com\/news\/2023\/05\/22\/will-a-russian-diamond-ban-be-effective-2\/"},"modified":"2023-05-22T22:21:05","modified_gmt":"2023-05-22T22:21:05","slug":"will-a-russian-diamond-ban-be-effective-2","status":"publish","type":"post","link":"https:\/\/tahrir2day.com\/news\/2023\/05\/22\/will-a-russian-diamond-ban-be-effective-2\/","title":{"rendered":"Will a Russian diamond ban be effective?"},"content":{"rendered":"
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The UK has announced a ban on Russian diamonds as it tightens sanctions over Russia’s war in Ukraine.<\/b><\/p>\n<\/div>\n

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The G7 countries also want to be able to trace the gems to block Russian exports while trying to limit the flow of money into Russia’s war chest.<\/p>\n<\/div>\n

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But how effective will these systems be and could there be unintended consequences?<\/p>\n<\/div>\n

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Russia’s diamond trade, worth about $4 billion (\u00a33.2 billion) a year, accounts for only a small portion of its total exports.<\/p>\n<\/div>\n

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Before the invasion of Ukraine, Russia’s total exports in 2021 were $489.8 billion, of which $240.7 billion was oil and gas, according to the central bank.<\/p>\n<\/div>\n

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Still, Russia is the world’s largest diamond exporter by volume, followed by African countries.<\/p>\n<\/div>\n

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A state-owned company called Alrosa dominates Russia’s diamond mining — and as of 2021 has mined almost a third of the world’s diamonds.<\/p>\n<\/div>\n

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According to Hans Merket, a researcher at the International Peace Information Service, while profits from Alrosa go to the Kremlin’s war chest, they are nowhere near as important as oil and gas.<\/p>\n<\/div>\n

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Western countries want to cut off this source of income to prevent Russia from going to war.<\/p>\n<\/div>\n

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However, the global diamond trade is complex and lacks transparency.<\/p>\n<\/div>\n

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Diamonds can change hands between mine and market 20 to 30 times, Mr Merket said.<\/p>\n<\/div>\n

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Usually, the gems pass through the major global trading hubs of Antwerp, Dubai, Mumbai and Ramat Gan, which is close to Tel Aviv.<\/p>\n<\/div>\n

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Dealers grade stones by carat (weight), colour, clarity and cut – with different dealers looking for different characteristics.<\/p>\n<\/div>\n

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Then they take the remaining gems, mix them up and sell them on – and the process repeats itself.<\/p>\n<\/div>\n

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Dealers and companies are jealous of where they get their diamonds from – that’s their “secret recipe”, according to Tobias Kormind, managing director of the online jeweler 77 Diamonds.<\/p>\n<\/div>\n

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But the big players in the industry could limit the trade in Russian diamonds if they pull together, he said.<\/p>\n<\/div>\n

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The US has already imposed sanctions to ban Russian diamond exports.<\/p>\n<\/div>\n

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However, there is a \u201cmassive gap\u201d here, said Kormind.<\/p>\n<\/div>\n

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The restrictions apply to rough diamonds – but once they have been cut and polished, the country of origin no longer matters.<\/p>\n<\/div>\n

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People in G7 countries buy around 70% of the world’s diamonds – so a G7 ban could have an impact if the diamonds can be traced, Mr Merket said.<\/p>\n<\/div>\n

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But a G7 ban would mean diamonds are likely to flow to other markets in China and India, Mr Kormind said.<\/p>\n<\/div>\n

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Tracking the diamonds would make it easier to constrain that flow.<\/p>\n<\/div>\n

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There is already a plan to limit the use of “blood diamonds” that fuel conflict, called the Kimberley Process, under which states certify that diamonds are “conflict-free”.<\/p>\n<\/div>\n

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However, it is not possible to trace the diamonds back to their country of origin.<\/p>\n<\/div>\n

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Mr Merket said the easiest way to track down diamonds would be to extend that process to include documentation of the stones’ provenance.<\/p>\n<\/div>\n

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There is also technology that marks stones, and technology is being developed that can scan them to verify their geographic provenance.<\/p>\n<\/div>\n

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The majority of Russian diamonds end up in India, where there is a large cutting and polishing center in Surat.<\/p>\n<\/div>\n

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Smaller diamond shops in the city have already suffered, in part due to the US ban.<\/p>\n<\/div>\n

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In Africa, local miners benefited after US sanctions hit Russian exports. However, many African mining producers are unwilling to participate in a traceability scheme, Mr Merket said, and could be excluded if one were introduced.<\/p>\n<\/div>\n

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In Angola, the Russian company Alrosa is a major mining company, and tightening sanctions could hit local companies.<\/p>\n<\/div>\n

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For Europe, traceability must be \u201cwatertight, scientific, [and] internationally,” said Tom Neys, Head of Media Relations at the Antwerp World Diamond Centre. <\/p>\n<\/div>\n

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If not, Europe risks losing $40 billion a year in trade to countries that don’t have the appropriate anti-money laundering and anti-terrorism frameworks in place, he said.<\/p>\n<\/div>\n

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He added that UK sanctions “will have no impact on sales of Russian diamonds” as the UK accounts for less than 1% of the world diamond trade.<\/p>\n<\/div>\n

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A UK government spokesman said it would work with key partners to restrict Russia’s diamond trade, “including through tracking technologies.”<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The UK has announced a ban on Russian diamonds as it tightens sanctions over Russia’s war in Ukraine. The G7 countries also want to be able to trace the gems to block Russian exports while trying to limit the flow of money into Russia’s war chest. 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