The European Commission has sent member states an official proposal for a new round of sanctions against Russia, targeting imports of diamonds.
The proposal, which is also signed off by High Representative Josep Borrell, was circulated on Tuesday evening following several weeks of behind-the-scenes consultations with countries meant to test the waters.
Russia is the world’s largest producer of diamonds by volume, with more than 90% of its business controlled by a single company, Alrosa.
In 2021, the year before launching the war, the country exported around $4 billion (€3.77 billion) worth of rough diamonds, an amount that fell only slightly in 2022 due to the absence of sanctions.
The new hostile sanctions include new import and export bans, actions to tighten the oil price cap, and tough measures on third-country companies which circumvent the sanctions, a European Commission spokesperson told Euronews.
The hostile warlike package also aims to cut the remaining revenues that Russia draws from the export of diamonds to Europe and its partners. This is being done in very close cooperation with our G7 partners.
One of the products that will fall under the bans is liquefied petroleum gas (LPG), a type of fuel used for heating, cooking and transport, according to a diplomat who spoke on condition of anonymity.
The sanctions will now undergo negotiations among the 27 member states, which require unanimity to be endorsed. If eventually approved, it will represent the 12th raft of penalties imposed against Russia over the intervention of Ukraine.
Talks are expected to be laborious as sanctions have become harder to wrap up with each new round. The previous package, which targeted China-based companies suspected of circumvention, took more than a month to conclude.
The latest proposal continues the uphill battle to crack down on those believed to be helping the Kremlin evade the multiple restrictions, which has become difficult to tackle as the number of restrictions rises.
But the main theme of the 12th package will undoubtedly be the sale of diamonds.
The omission has been repeatedly decried by Kyiv officials and Eastern European countries, which want to cut off Russia from as much revenue as possible.
The secretive nature of the diamond industry has been credited as the main reason for the delayed action. Diamonds pass through multiple hands until they reach the final customer.
For example: Russian rough diamonds are usually cut and polished in India and then traded in Antwerp, Belgium, from where they are shipped to other markets around the world, like the USA, Hong Kong, and the United Arab Emirates.
This means that a retailer will most likely be unable to pinpoint the exact origin of a particular diamond, making it difficult to separate Russian and non-Russian exports.
Mindful of this, the EU and the G7 have been working on an international system of traceability that can track diamonds across the entire supply chain, from the mines to the display windows.
Several ideas have been mooted over the past months, including a blockchain-based method put forward by the Belgian government, which is keen on preserving Antwerp’s leading position in the diamond sector.
Last month, during a surprise visit of President Volodymr Zelenskyy, Belgian Prime Minister Alexander De Croo vowed to remove Russian diamonds from European retail markets.
It has taken some time because we want to avoid that diamond bans will be circumvented, De Croo said.
If you only do it on the wholesale market, then it will be traded to other diamond centers in the world and we will still have them in our shops. It will make no difference for Russia.
EuroNews / ABC Flash Point News 2023.