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Industry Groups Voice Concerns over G7’s Russian Sanctions Plan

February 29, 2024  |  Leah Meirovich
WFDB rough diamonds 1280 USED 022924

Several trade groups have published an open letter asking the Group of Seven (G7) to rethink its plan for banning Russian diamonds, arguing that the current setup would have “terrible impacts” on the industry.

Although the US Treasury’s Office of Foreign Assets Control (OFAC) issued a statement earlier this month confirming sanctions on diamonds 1 carat and above would begin March 1, it failed to disclose any guidance on how the ban would be implemented or the process the trade will need to follow. The G7 comprises Canada, France, Germany, Italy, Japan, the UK and the US, as well as the European Union.

Details the EU released revealed a proposal for all diamonds to be funneled through Antwerp for screening and certification as non-Russian, a move that would do more to hurt the remainder of the industry, the letter from the World Federation of Diamond Bourses (WFDB) said Wednesday. The group penned the statement together with the World Diamond Council (WDC), India’s Gem and Jewellery Export Promotion Council (GJEPC) and the International Diamond Manufacturers Association (IDMA).

Forcing dealers operating within the G7 nations to ship their diamonds to Belgium would add increased costs and time that would create a “competitive disadvantage” for non-Antwerp-based traders, the letter explained. It would also increase the desirability of Russian diamonds to G7 consumers, as they would become cheaper if the G7 trade were required to mark up prices to make their margins.

Instead, the industry groups have called for the G7 to make any certification technology currently being implemented in the EU available to all non-Russian producer, trading, manufacturing and consumer countries. The WFDB argued that the governments of those countries could link the technology to the existing Kimberley Process (KP) framework. The ban is especially harsh on the artisanal and small-scale mining (ASM) segment, which doesn’t have access to the finances required to ship goods to Belgium, as well as African governments, in which it will undermine legitimate local industry beneficiation, and may encourage smuggling.

The groups also pointed out that the current restrictions due to start Friday provide no information on what happens with preexisting stock of rough and polished, secondhand diamonds and jewelry, and finished jewelry or watches.

“We stand united against forcing all participants who wish to sell their polished diamonds in the G7 markets to send their rough to Belgium first,” the letter stated. “As diamond experts, we know that this would add no value to the objectives of the G7 member states and would result in a major restriction for all non-Russian diamonds, with terrible impacts on the industry. It would also force a functioning trans-global trade into one centralized point that would create bottlenecks in supply and give unwarranted power and advantage to one participant at the detriment of all others.”

Main image: Rough diamonds under examination. (Shutterstock)

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WFDB rough diamonds 1280 USED 022924 Industry Groups Voice Concerns over G7’s Russian Sanctions Plan

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