- The G-7 mulls over sanctions on Russian diamond exports, a move that could hike up prices of these precious stones.
- Despite other sanctions following Russia's invasion of Ukraine, the diamond trade has so far remained untouched, with Russia pulling in $4.7 billion from diamond exports in 2021.
- The European diamond industry fears the potential shift of diamond trade to other markets, like Dubai, and the G-7 is considering the use of technology to trace the origin of diamonds.
Picture the swanky, luxurious world of diamonds – beautiful, rare, and ever so precious. Now imagine a sudden hiccup in this glittering universe, brought to you by the G-7, the globe's seven most innovative economies. They're contemplating a move that could shake up the diamond market quite a bit, potentially hiking up the price of these sparkling rocks. The culprit? Possible sanctions on Russia's diamond exports. It's like the plot of a Hollywood movie, isn't it?
Since last year's full-scale invasion of Ukraine by Russia, their diamond trade has largely been untouched by international sanctions. This, despite Ukraine and some European countries pushing for it, alongside several rounds of sanctions targeting Russia's energy exports, banks, and billionaires. In 2021, Russia pocketed a cool $4.7 billion from diamond exports, making it the world's eighth-largest diamond exporter. Fun fact: diamonds aren't just for making you look fabulous. These rocks are also used in drilling, dentistry, and computers.
Some nations, like Belgium, which buys a ton of Russian diamonds, want a "global approach" to these potential sanctions. They're wary of the potential fallout of an EU-specific measure that might leave them holding the bag. As Edward Gardner, a commodities economist at Capital Economics, puts it, "Russia could simply divert its exports to non-participating countries," making the sanction less effective.
The stakes are high. If these sanctions are enforced in a way that makes dodging them tough, we could see less Russian bling on the market and higher prices. The European diamond industry is understandably nervous about the prospect of paying more for diamonds and the potential shift of diamond trade to other markets, like Dubai.
So, how does one ensure that these sanctions hit the intended target without backfiring? The G-7 is contemplating using technology to trace the original source of the stones. After all, sanctions on Russian diamonds may be inevitable. As Belgium-based researcher Hans Merket says, "If it is not in the next package, then the one after that."
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