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| A rough diamond at Alrosa's workshop in Moscow, Russia. (Source: Reuters) |
The European Union (EU) is preparing a 12th package of sanctions against Russia, Bloomberg news agency reported. The new package of sanctions could be launched in the first half of October this year.
Accordingly, the proposed sanctions package is intended to prevent Russia's ability to circumvent sanctions imposed by the 27-member bloc through third countries such as Türkiye or the United Arab Emirates (UAE).
Furthermore, if the sanctions package is approved, the EU plans to use the interest from the assets of the Russian Central Bank that are frozen in Europe. The bloc is trying to find a legal way to use this financial resource to support Ukraine in rebuilding the country.
Some countries, such as Poland and the Baltic states, have even called for additional sanctions on Russian liquefied natural gas (LNG) services and the IT sector. The group also supports sanctions targeting Moscow’s nuclear industry.
In the previous 11 sanctions packages, the EU did not adopt proposals for the nuclear industry, mainly because many member states are dependent on Russian nuclear fuel.
Besides, diamonds will be the next Russian product to be banned by Europe.
On September 15, Reuters news agency quoted a Belgian official as saying that the Group of Seven (G7) of leading industrialized countries plans to adopt a ban on Russian diamond imports within the next 2 to 3 weeks.
The regulation is expected to take effect from January 1, 2024. When it comes into effect, purchases will be affected by the direct ban, while the indirect ban will take effect later.
In May 2023, G7 leaders pledged to restrict the trade in diamonds mined, processed or manufactured in Russia in an effort to further cut Moscow’s revenue. The group said it would restrict Russia’s $4.5 billion diamond trade using high-tech tracing methods.
Russia’s diamond trade, worth about $4 billion a year, accounts for only a small portion of the country’s total exports. Before the Russia-Ukraine conflict erupted, Russia’s total exports were $489.8 billion in 2021, with oil and gas accounting for $240.7 billion.
However, Russia is the world's largest exporter of diamonds by volume, followed by African countries. A state-owned company called Alrosa leads Russia's diamond mining, and it mined nearly a third of the world's diamonds in 2021.
Previous attempts to crack down on Russian gems in Europe have been met with resistance from leading importing countries such as Belgium, home to the world’s largest diamond trading centre in Antwerp, which has argued that a simple ban without a global agreement would only shift the Russian gem trade elsewhere.
Meanwhile, Hans Merket, a researcher at the International Peace Information Service, said diamonds can change hands 20 to 30 times between leaving the mine and reaching the market. Typically, the gems pass through the main global hubs of Antwerp, Dubai, Mumbai and Ramat Gan, near Tel Aviv.
“People in the G7 countries buy about 70% of the world’s diamonds. So the Russian diamond ban could be effective and impact these countries if the diamonds can be traced,” he said.
Alrosa currently accounts for about 30% of the global diamond market, and more than 90% of diamonds are cut and polished in India, the researcher added. After being processed in India, the gems receive certificates from the South Asian country's regulatory agency. As a result, Hans Merket said, it is "almost impossible" for the West to determine the origin of diamonds in jewelry.
In fact, Russia has shifted its diamond trade to markets such as China, India, the UAE, Armenia and Belarus, all of which have seen a sharp increase in rough and cut diamonds from Russia in recent times.
On September 18, President Vladimir Putin announced that the Russian economy had fully recovered after enduring unprecedented sanctions pressure from the West. The Russian leader emphasized: "It can be said that the stage of recovery of the Russian economy is complete. We have withstood external pressure, with relentless sanctions from Western leaders and a number of unfriendly countries." Moscow can count on billions of dollars in export revenues to continue to supplement its budget in the coming years, according to Janis Kluge, a senior fellow at the German Institute for International and Security Affairs (SWP). In the first half of 2023, Russia earned more than $200 billion from energy exports, more than enough to cover its import needs. "Even if the G7's oil price cap on Russia is effective, Moscow can still achieve export revenue of about $400 billion per year," the expert emphasized. |
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