Valdai Club

Having worked out the technology and mechanisms for coordinating and promoting sanctions initiatives in the information space over the course of 2022, the G7 plans to introduce a requirement for importers to confirm the non-Russian origin of diamonds appearing on the G7 markets. For a long time, even before the diamond industry was officially subject to sanctions, there was a discussion in European and American circles about how to limit the Russian diamond market without harming their own diamond processing industry.

Preparations for sanctions against the Russian diamond industry began in 2021, when the Atlantic Council, in light of the escalation on the Russian-Ukrainian border, published scenarios for tightening sanctions against Russia, where potential restrictions against Alrosa and the diamond industry as a whole were identified. The document was prepared by Brian O'Toole and Daniel Fried, the "hawks" of the sanctions policy. The preparation was not in vain: on February 24, 2022, the United States almost immediately imposed sanctions against Alrosa, and on March 11 these were applied to all non-industrial Russian diamonds. On April 7, 2022, Alrosa was blacklisted by the SDN. On April 21, 2022, the UK joined the sanctions against the diamond industry.

However, the imposed sanctions did not prohibit the import of diamonds of Russian origin which were processed in third countries. Shortly after the imposition of sanctions against Alrosa, a bipartisan group of congressmen sent a letter to Yellen and Blinken, asking them to consider a complete ban on US imports of diamonds originating in Russia. However, many American diamond companies and marketplaces refused to cooperate, particularly Brilliant Earth. American trade publications such as Rapaport, National Jeweler, InstoreMag and JCK have warned about the risks of buying Russian diamonds, thereby promoting over-compliance among American companies. In addition, Diamond Foundry, the largest producer of synthetic diamonds, advocated the further tightening of sanctions against Russian gems.

Unlike the US and the UK, the EU has not agreed on the adoption of sanctions against Russian diamonds. However, even before the start of the military operation in Ukraine, an information campaign was launched on social networks to lobby for EU restrictions against the diamond industry. On February 22, a number of large lobbyist Twitter accounts called for their introduction. The topic of "blood diamonds" was actively discussed by experts from the Belgian analytical centre IPIS Research. In March, the international association International Gem Society joined the information pressure. In addition, the issue of classifying Russian diamonds as “blood diamonds” was raised by The Kimberley Process, an NGO. The pressure bore some fruit: the issue of a ban on diamond imports was raised in the European Parliament in April by the Socialist MP Kathleen Van Brempt, who later became the most active lobbyist for this type of restrictions in the EP. At the same time, the topic of the ban was raised by the Greens in the Belgian parliament after the NGO Justice et Paix called for a limit on the import of Russian diamonds. However, these attempts failed.

The resumption of the information campaign against Russian diamonds took place in July, when the NGO Transparency International published an open letter to the European Commission demanding restrictions on Russian diamonds. Immediately after that, major media publications including the European Observer, New York Times and Politico published materials on the introduction of sanctions against diamonds into the eighth, September, sanctions package. At the same time, a large-scale promotion of the topic of restrictions against diamonds by Ukrainian bot farms began in the social networks. The American network of NAFO connected with Lockheed Martin; the Pentagon and the US Democratic Party have also joined the campaign. Despite the fact that diamonds were never included in the eighth package of sanctions, during the autumn of 2022 the pressure only increased: major media spoke of the inevitability of European sanctions against Russian diamonds. The number of lobbyists for sanctions in the European Parliament was growing: Belgian Saskia Brimont and Dane Nikolai Willumsen were added to van Brempt. In the Belgian parliament, the Socialist Party also began to call for sanctions.

In anticipation of the tenth round of sanctions, the American media outlets Politico and Bloomberg represented the imposition of sanctions as a done deal. However, despite international and domestic pressure on the government of Alexandre de Croo, Brussels blocked the imposition of sanctions against the diamond industry, fearing massive job losses in Antwerp. At the same time, the Belgian government, seeking to relieve itself of responsibility for the adoption of sanctions against Russian diamonds, in the process of agreeing on the tenth package, put forward a number of alternative proposals. At the end of January, Brussels proposed recognizing Russian diamonds as "bloody" using the tools of the Kimberley Process. Closer to the time of the adoption of the tenth package, De Croo proposed  bringing the ban on the import of Russian diamonds to the G7 level with the creation of special tools for tracking them. A significant role in promoting the ideas of the Belgian government was played by the IPIS think tank, in particular by its leading specialist Hans Merket.

Sanctions against Russian diamonds were not included in the tenth package of sanctions, but the initiative to ban their import was taken up by Western structures for coordinating sanctions. On February 26, 2022, the American association of manufacturers of precious stones and metals, the Jewellers Vigilance Committee, announced the tightening of the global sanctions regime against the Russian diamond industry. On February 28, Canada announced new sanctions against the Russian diamond industry, banning any dealings in diamonds of Russian origin. Such wording seems unprecedented, since it covers diamonds processed in third countries (in particular, in India, where Russian stones account for more than 30% of the market). The intention of the Americans to tighten sanctions on March 17 at a meeting of the JWC association was announced by the head of the sanctions coordination office, James O'Brien. According to him, the tools of the Kimberley Process and the precedent of sanctions against Myanmar’s precious stones will be used as a basis. According to Politico, the US and EU countries plan to decide on the Russian diamond import ban by mid-May.

However, a tracking tool should be a key element of the proposed ban. There are currently two possible ways. The first is TrackR, which is used by the diamond giant De Beers in the company's internal purchases. The second is the Australian blockchain system Everledger, which verifies the origin of valuable assets. The founder and CEO of the company, Lian Kemp, is a member of the IBM Board of Directors and the Blockchain Council of the World Economic Forum. In light of the discussion of tougher sanctions against Russian diamonds, Kemp promised to support the G7 efforts, thereby offering her services in creating a system for verifying the origin of stones. Thus, if everything goes well, a tricky way will be found, using a formally transparent blockchain system, in fact, to make the process of verification of origin completely under control, cutting off only what’s “unnecessary”, i.e. actually transferring the sphere of movement of diamonds to the manual control mode. the Road with Trekking: How to Sanction Diamonds of Russian Origin .

Having worked out the technology and mechanisms for coordinating and promoting sanctions initiatives in the information space over the course of 2022, the G7 plans to introduce a requirement for importers to confirm the non-Russian origin of diamonds appearing on the G7 markets. For a long time, even before the diamond industry was officially subject to sanctions, there was a discussion in European and American circles about how to limit the Russian diamond market without harming their own diamond processing industry.

Preparations for sanctions against the Russian diamond industry began in 2021, when the Atlantic Council, in light of the escalation on the Russian-Ukrainian border, published scenarios for tightening sanctions against Russia, where potential restrictions against Alrosa and the diamond industry as a whole were identified. The document was prepared by Brian O'Toole and Daniel Fried, the "hawks" of the sanctions policy. The preparation was not in vain: on February 24, 2022, the United States almost immediately imposed sanctions against Alrosa, and on March 11 these were applied to all non-industrial Russian diamonds. On April 7, 2022, Alrosa was blacklisted by the SDN. On April 21, 2022, the UK joined the sanctions against the diamond industry.

However, the imposed sanctions did not prohibit the import of diamonds of Russian origin which were processed in third countries. Shortly after the imposition of sanctions against Alrosa, a bipartisan group of congressmen sent a letter to Yellen and Blinken, asking them to consider a complete ban on US imports of diamonds originating in Russia. However, many American diamond companies and marketplaces refused to cooperate, particularly Brilliant Earth. American trade publications such as Rapaport, National Jeweler, InstoreMag and JCK have warned about the risks of buying Russian diamonds, thereby promoting over-compliance among American companies. In addition, Diamond Foundry, the largest producer of synthetic diamonds, advocated the further tightening of sanctions against Russian gems.

Unlike the US and the UK, the EU has not agreed on the adoption of sanctions against Russian diamonds. However, even before the start of the military operation in Ukraine, an information campaign was launched on social networks to lobby for EU restrictions against the diamond industry. On February 22, a number of large lobbyist Twitter accounts called for their introduction. The topic of "blood diamonds" was actively discussed by experts from the Belgian analytical centre IPIS Research. In March, the international association International Gem Society joined the information pressure. In addition, the issue of classifying Russian diamonds as “blood diamonds” was raised by The Kimberley Process, an NGO. The pressure bore some fruit: the issue of a ban on diamond imports was raised in the European Parliament in April by the Socialist MP Kathleen Van Brempt, who later became the most active lobbyist for this type of restrictions in the EP. At the same time, the topic of the ban was raised by the Greens in the Belgian parliament after the NGO Justice et Paix called for a limit on the import of Russian diamonds. However, these attempts failed.

The resumption of the information campaign against Russian diamonds took place in July, when the NGO Transparency International published an open letter to the European Commission demanding restrictions on Russian diamonds. Immediately after that, major media publications including the European Observer, New York Times and Politico published materials on the introduction of sanctions against diamonds into the eighth, September, sanctions package. At the same time, a large-scale promotion of the topic of restrictions against diamonds by Ukrainian bot farms began in the social networks. The American network of NAFO connected with Lockheed Martin; the Pentagon and the US Democratic Party have also joined the campaign. Despite the fact that diamonds were never included in the eighth package of sanctions, during the autumn of 2022 the pressure only increased: major media spoke of the inevitability of European sanctions against Russian diamonds. The number of lobbyists for sanctions in the European Parliament was growing: Belgian Saskia Brimont and Dane Nikolai Willumsen were added to van Brempt. In the Belgian parliament, the Socialist Party also began to call for sanctions.

In anticipation of the tenth round of sanctions, the American media outlets Politico and Bloomberg represented the imposition of sanctions as a done deal. However, despite international and domestic pressure on the government of Alexandre de Croo, Brussels blocked the imposition of sanctions against the diamond industry, fearing massive job losses in Antwerp. At the same time, the Belgian government, seeking to relieve itself of responsibility for the adoption of sanctions against Russian diamonds, in the process of agreeing on the tenth package, put forward a number of alternative proposals. At the end of January, Brussels proposed recognizing Russian diamonds as "bloody" using the tools of the Kimberley Process. Closer to the time of the adoption of the tenth package, De Croo proposed  bringing the ban on the import of Russian diamonds to the G7 level with the creation of special tools for tracking them. A significant role in promoting the ideas of the Belgian government was played by the IPIS think tank, in particular by its leading specialist Hans Merket.

Sanctions against Russian diamonds were not included in the tenth package of sanctions, but the initiative to ban their import was taken up by Western structures for coordinating sanctions. On February 26, 2022, the American association of manufacturers of precious stones and metals, the Jewellers Vigilance Committee, announced the tightening of the global sanctions regime against the Russian diamond industry. On February 28, Canada announced new sanctions against the Russian diamond industry, banning any dealings in diamonds of Russian origin. Such wording seems unprecedented, since it covers diamonds processed in third countries (in particular, in India, where Russian stones account for more than 30% of the market). The intention of the Americans to tighten sanctions on March 17 at a meeting of the JWC association was announced by the head of the sanctions coordination office, James O'Brien. According to him, the tools of the Kimberley Process and the precedent of sanctions against Myanmar’s precious stones will be used as a basis. According to Politico, the US and EU countries plan to decide on the Russian diamond import ban by mid-May.

However, a tracking tool should be a key element of the proposed ban. There are currently two possible ways. The first is TrackR, which is used by the diamond giant De Beers in the company's internal purchases. The second is the Australian blockchain system Everledger, which verifies the origin of valuable assets. The founder and CEO of the company, Lian Kemp, is a member of the IBM Board of Directors and the Blockchain Council of the World Economic Forum. In light of the discussion of tougher sanctions against Russian diamonds, Kemp promised to support the G7 efforts, thereby offering her services in creating a system for verifying the origin of stones. Thus, if everything goes well, a tricky way will be found, using a formally transparent blockchain system, in fact, to make the process of verification of origin completely under control, cutting off only what’s “unnecessary”, i.e. actually transferring the sphere of movement of diamonds to the manual control mode.