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14th Apr 2024

EU confirms plans for Russia-diamonds ban

  • European Commission president Ursula von der Leyen (r) and Estonian prime minister Kaja Kallas in Brussels on Friday (Photo: ec.europa.eu)
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The EU has confirmed it's going to strike Russia's diamond industry in upcoming sanctions, spelling trouble for mining giant Alrosa and dozens of other companies.

"We are in the process of preparing the 12th package of sanctions. In particular, we are looking into how to cut the remaining revenues Russia draws from exports of diamonds to Europe and its partners," said European Commission president Ursula von der Leyen in Brussels on Friday (29 October).

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She spoke after meeting the 27 EU leaders, including the Russophile prime ministers of Hungary and Slovakia, Viktor Orbán and Robert Fico.

"We will continue providing much-needed ammunition ... [and] financial relief to Ukraine", von der Leyen pledged, despite the unfolding Gaza war in Europe's southern neighbourhood and the pro-Russian voices at the EU's top table.

The EU has so far paid €83bn in Ukraine assistance and is planning to add €50bn more, she said.

The commission is also finalising plans to confiscate "windfall profits" arising from €211bn of frozen Russian money in EU capitals, she added.

"The idea is to pool them and then to channel them via the EU budget en bloc to Ukraine, for the reconstruction of Ukraine," she said.

Von der Leyen has played the leading role in EU foreign policy on Gaza in the past three weeks and she also schooled Orbán for shaking hands with Russia's pariah-president, Vladimir Putin, in China last week.

"A leader [Orbán] is free and sovereign to choose his or her discussion partners, but what we need is transparency if the contents of the discussion affect European Union interests," she said.

Orbán told press on Friday that the EU strategy on Ukraine "has failed" and that "the Ukrainians will not win on the frontline". Fico said Ukraine was "corrupt".

But going back to diamonds, the commission's trade department has been working with Canada, France, Germany, Italy, Japan, the UK, and the US to trace and ban Russian stones.

The G7 wealthy nations, which account for 70 percent of global diamond demand, are expected to announce their Russia embargo this weekend or early next week.

The EU-27 will replicate the G7 regime in their 12th round of Russia sanctions, which are due by the end of the year, a European diplomat said.

And based on previous EU sectoral sanctions on Russian industry, the EU-27 measures might well come with blacklists of Russian diamond companies and their bosses.

Mining giant Alrosa and Agd Diamonds are Russia's biggest producers of uncut stones.

Alrosa alone has over 50 subsidiaries, including in Antwerp (Belgium), Naples (Italy), and Luxembourg.

Some 20 other major Russian companies handle diamond cutting, processing, trading, and equipment supplies.

These include M. Suresh Vladivostok, an Indian firm which used to be a customer of the Anglo-South African De Beers group, in a sign of how a hard EU ban would send ripples round the world.

Russian firm TBSS also supplies gems to Western luxury brands, such as Chanel, Christian Dior, Christies, and Cartier.

Meanwhile, German-Swiss firm Liebherr sold 68 excavating machines to Russia this year worth €15m. Swedish firm Sandvik sold €3m of drilling rigs, in technology that firms such as Alrosa would struggle to buy outside the EU.

Von der Leyen didn't mention Lithuania and Poland's sanctions proposals on Friday, which include adding bans on Russia's nuclear and liquid-gas industries to the 12th package of sanctions.

Pipeline scare

But Finnish prime minister Petteri Orpo briefed the EU summit on investigations into who tore apart a gas pipeline and two telecommunications cables in the Baltic Sea earlier this month.

Estonian prime minister Kaja Kallas said: "We have reason to believe that the cases of the Balticconnector [pipeline] and communication cables are related".

The incident comes amid EU and Nato concern on the security of underwater infrastructure in the light of Russian aggression in Europe.

Investigations centre on two cargo ships called NewNew Polar Bear and Sevmorput, which were in the area at the time.

NewNew Polar Bear is Chinese-owned but stopped in Russia's Kaliningrad exclave prior to the incident. Sevmorput is Russian-owned.

"Nato and allies are stepping up patrols in the Baltic Sea following recent damage to undersea infrastructure in the region," a spokesperson for Nato's Allied Maritime Command told EUobserver.

Nato already has a Coordination Cell for Critical Undersea Infrastructure and is building a larger Maritime Centre for the Security of Critical Undersea Infrastructure in Northwood, UK.

The "core team" in Northwood has "been established", the Nato spokesperson said.

And the cell "shared information of mutual interest with the allies affected. It continues monitoring the situation closely and remains in close contact with allies Estonia, Finland, and [Nato] partner Sweden," Nato added.

Diamonds to star in new EU sanctions on Russia

"If we linked one [the Ukraine war] with the other [the Gaza war] then the next sanctions to befall Russia would be drastically more powerful," an EU diplomat said.

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