Added-value for Russia diamond ban, as G7 and EU prepare sanctions

The EU expects its 27 member states to follow suit.

A proposed ban on Russian liquid gas imports would harm the Kremlin's war-chest more.

But even if the EU can't agree a gas embargo, the diamond ban would have the added value of hindering Russian corruption schemes in Europe and Africa, Ukraine says.

Just think

Considering buying a Russian diamond for your loved one?

Then think "the money you pay for it will be spent by Russia on weapons that will take the life of a bride or groom in Ukraine. Or their child", said Agiya Zagrebelska, the head of the sanctions department in Ukraine's National Agency on Corruption Prevention (NACP).

"Can you imagine what it's like to delete phone numbers from your address book, almost every day, because these people were killed by weapons purchased with money from the civilised world?," she added, speaking to EUobserver from Kyiv.

"Stop buying anything produced and sold by the aggressors," she said.

A diamond embargo would "first of all, demonstrate solidarity with Ukraine," its EU ambassador, Chentsov Vsevolod, also said in Brussels.

Diamonds "generate significant profits to finance the war against Ukraine," he said.

Similar appeals had gone unheeded ever since Russia invaded Ukraine last February.

Belgium, the world's top diamond trader, imported some €1.4bn of Russian stones last year.

But after a growing political outcry at home and abroad, the EU country is now finalising plans with the G7 states — Canada, France, Germany, Italy, Japan, the UK, and the US — to ban Russian gems.

"We do expect a G7 announcement in the coming weeks," the Belgian foreign ministry told EUobserver on Thursday (28 September).

"We can confirm Belgium takes part in the G7 delegation to India," it added, after Western diplomats travelled to New Delhi this week to seek the Asian diamond hub's cooperation on traceability.

Uncut stones are hard to trace, especially if Russian ones are mixed with others before being cut and polished.

"As of today, no 'fingerprinting' technology (which would enable the origin of a diamond to be identified by analysis of the diamond itself) exists," said British-South African mining firm De Beers.

But Belgium has been working with industry to create blockchain-protected G7 certificates of origin that would be used by customs officials to filter Russian stones at import "nodes", such as the Antwerp Diamond Quarter.

Meanwhile, the EU is currently brainstorming ideas for its 12th round of Russia sanctions.

It is expected to follow the G7's lead on diamonds.

"Depending on the nature of the G7 agreement, if an agreement is reached, the [EU] Council may need to adopt new legal acts [to implement it]," the EU foreign service said.

"Such decisions are taken by unanimity by the 27 member states," it added, leaving scope for potential delays by Russia-friendly EU capitals.

But for Vicky Reynaert, a Belgian MP from the centre-left Forward party: "There must be an import ban on direct imports of Russian diamonds into the EU and Alrosa [Russia's giant diamond firm] must be blacklisted".

"That's what we want from the G7 announcement," she said.

Liquid gas

As the 12th-round talks get under way, Lithuania and Poland have redoubled calls to add a Russia liquid-gas embargo to an EU diamonds one.

"The EU should prohibit Liquefied Petroleum Gas (LPG) imports from Russia in order to preserve the integrity and transparency of the LPG market and avoid distortion of competition," Poland said in its EU-sanctions proposal, seen by EUobserver.

The EU bought some €5bn of liquid gas from Russia last year, a whopping 39 percent higher than in 2021, and way more than the Kremlin's diamond income.

Instead, the EU should be focusing on greater supplies from the US and Qatar "to move away from dependency on Russian gas," Ukraine's ambassador said.

"Ukraine can contribute to the energy security of the region by providing its vast underground storage tanks to accumulate gas reserves," Vsevolod added.

A consensus on liquid gas may be harder to reach than a post-G7 EU deal on diamonds, diplomatic sources indicated, although the EU-sanctions talks are still at a preliminary stage.

But gas dependency aside, the Kremlin also uses diamonds in money-laundering schemes in Europe and Africa, giving the gemstone ban a strategic value beyond a symbolic or financial one, Kyiv pointed out.

Added value

"Diamonds can be used by Russia to pay for [EU or US-sanctioned] weapons and components, bypassing the financial system," the NACP's Zagrebelska said.

"Diamonds are also a tool of geopolitics," she added, referring to Russian-owned diamond mines in the Central African Republic and Sudan, used by Kremlin mercenaries to forge ties with local leaders.

Speaking more broadly, she said: "The Kremlin regime is based on corruption. It's the glue that unites the [Russian] elites around [Russian president Vladimir] Putin. Diamonds are one of the components of this glue".

Russian officials laundered €140,000 via the purchase of 10 carats of diamonds in Antwerp in 2008 in one hypha of the corruption-mycelium, which was previously investigated by EUobserver.

A Putin-friendly oligarch and a Chechen mobster used private jets to fly black-market diamonds out of Antwerp some 10 years ago, in a more sinister scheme, which implicated a Belgian intelligence officer and a Nato colonel.

"We live in a complex, real world and it's naive to think that one decision [a diamond ban] could destroy the influence structures that the Kremlin has been building for decades, but every right decision brings us closer to this," Zagrebelska said.