Belgium plans to become West’s leading partner in attempts to cut Russia's revenue from diamond sales, Prime Minister Alexander de Croo told the Financial Times on May 10, claiming that Belgium wants to squeeze Russian diamonds out of the Western markets.

As followed by bne IntelliNews, Russian diamonds are still making it to the international market legally despite the sanctions for the full-scale military invasion of Ukraine. In September 2022 the outlook of Russian diamond major Alrosa indicated that the company remained upbeat on mining prospects, as it confirmed a $2bn investment in the restoration of its major Mir mine.

The US and the UK have already sanctioned Alrosa. The US has banned imports of non-industrial diamonds originating from Russia. The US has also banned debt and equity transactions with Alrosa and its CEO, Sergey Ivanov. 

But Alrosa was not included in the eighth package of EU sanctions, despite previous reports that the company would be directly targeted. Reportedly the sanctions were blocked by Belgium, which hosts the world's largest diamond hub and accounted for 40% of Alrosa’s revenues in 2021.

According to the Financial Times, Belgium still objected to any inclusion of diamonds in the upcoming 11th package of sanctions against Russia over the fears of disrupting its role as the international diamond trading centre, but later changed its mind.

But the possible change in policy signalled by De Croo was due to the plan to be proposed by the G7 that would include an effective mechanism for tracking and tracing individual gemstones that currently doesn’t exist, the Financial Times claims citing the draft of the plan.

While De Croo said that direct prohibitions that have no significant impact on Russia’s financial flows would be ineffective, he suggested a tracking mechanism to prevent relabelling of Russian diamonds in the third countries in conjunction with a direct prohibition.

Antwerp would reportedly be more comfortable with an inspection regime that would not simply divert gems to other diamond hubs, and the US tightening up its own sanctions.

Such diamond tracking would include a declaration of origin of any incoming diamonds and extend the concept of “blood diamonds” to gemstones used to bankroll state-backed warfare, as well as rebel activity.

bne IntelliNews followed how the EU and Canada were pressing for Russian diamonds to be designated as "blood diamonds". The issue of Russian diamonds was reportedly raised at the June 2022 meeting of the Kimberley Process in Botswana. However, it failed to get a ban due to vetoes by Russia, China and Belarus. In addition, Moscow was supported by Kyrgyzstan as well as Mali and the Central African Republic (where Russian mercenaries reportedly operate in diamond mines).

Most notably, for India removing Russian diamonds from circulation would risk hundreds of thousands of jobs in the diamond dealing and polishing industry that have a 60% reliance on Russian gems, Indian market participants told the Financial Times.

According to the US government, diamonds accounted for more than $4.5bn of Russian exports in 2021. Diamonds are one of Russia’s top 10 non-energy exports, so the sanction will make a discernible difference to Russian economic output.