Sanctions on exports of Russian diamonds that have been debated by the G7 countries for more than a year may send gem prices soaring globally, CNBC reported on Friday, citing analysts.
So far, importing Russian rough diamonds has been banned by the US. At the same time, Washington still imports gems extracted in Russia if they have been substantially altered in other countries. The UK, Canada, and New Zealand followed suit, adopting similar measures against Russian mining giant Alrosa.
The European Union and G7 have been seeking new ways of hunting down Russian diamonds across borders. However, the proposed step is strongly opposed by major importers of gems, such as Belgium, which is home to the world’s biggest diamond trading hub in Antwerp.
According to data from the Observatory of Economic Complexity, Russia – the world's largest producer of rough diamonds – raked in around $4.7 billion from exports of precious stones, making it the eighth biggest exporter globally.
“The debate has been going on for some time because there is a clear risk that Russia could simply divert its exports to non-participating countries,” Edward Gardner, a commodities economist at Capital Economics, told CNBC. “If sanctions were implemented in a way that made circumvention difficult, though, then we could see less Russian supply coming onto the market and higher prices.”
Opponents of the measure also argue that imposing sanctions without building a global system to track the gems would be pointless, as trade could easily shift to other markets, such as India and China, the same way as Russian crude.
The latest package of Ukraine-related sanctions that is currently being discussed by the EU isn’t likely to target Russian diamonds.
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