After prolonged discussions, the European Commission appears to be moving closer to implementing a significant ban on the import of diamonds from Russia.
This measure, part of a wider series of sanctions that include an oil price cap, marks the 12th sanctions package aimed at Moscow. With discussions underway, this proposal seeks unanimous approval from all 27 EU member states and could be finalised in the coming weeks.
Set to be effective from January 1, 2024, the ban specifically targets direct imports of Russian diamonds. A critical component of the sanctions includes the establishment of a traceability mechanism from March.
This system aims to prevent the indirect import of Russian gems processed in third countries, addressing a loophole in the current sanctions.
Analysis of Martin Rapaport’s Open Letter
In a detailed open letter to the EU, Martin Rapaport, Chairman of the Rapaport Group, provides a nuanced critique of the proposed diamond ban. He highlights the ineffectiveness of existing U.S. sanctions, which fail to stop the flow of Russian rough diamonds due to the ‘Russian Source’ loophole. These diamonds, often processed in India, re-enter global markets as ‘Indian origin’ diamonds, bypassing sanctions.
Rapaport criticises the World Diamond Council G7 Protocol for enabling this loophole, thus diminishing its efficacy in reducing Russian diamond revenues. As a countermeasure, he proposes the “US Diamond Protocol,” which calls for stronger regulatory oversight and increased supply chain transparency to effectively restrict the circulation of Russian-sourced diamonds.
What This Means for Professional Jewellers
For the jewellery industry, the impending EU sanctions herald a significant shift. The Russian diamond ban will likely alter supply chain dynamics, necessitating strategic adjustments in sourcing. Moreover, the industry must brace for new compliance and regulatory requirements, especially concerning the traceability of diamonds.
Jewellers are advised to remain alert and adaptable to these upcoming changes. Emphasising ethical sourcing and transparency will be more crucial than ever, as the industry navigates through these evolving international standards and market realities.
As the EU edges closer to formalising these sanctions, staying informed and prepared will be vital for jewellers to effectively manage the challenges and opportunities of a rapidly changing diamond trade environment.