Russia Fights Efforts to Declare It an Exporter of ‘Blood Diamonds’

Russia’s invasion of Ukraine has led to world soul-searching about overreliance on Russian oil and gasoline, however a brand new drama is unfolding over one other of Russia’s main exports: diamonds.

Russia is the world’s largest provider of small diamonds. For years, engagement rings, earrings and pendants on the market in america and past have included diamonds mined from deep within the permafrost in Russia’s northeast.

Now, america and different international locations are taking motion that would formally label Russian diamonds as “battle diamonds,” claiming their sale helps pay for Russia’s lethal aggression in Ukraine.

“Proceeds from that manufacturing are benefiting the identical state that’s conducting a premeditated, unprovoked, and unjustified conflict,” mentioned George Cajati, a U.S. State Division official, in a letter written in Could to the chair of the Kimberley Course of, a global group created by United Nations decision to stop the circulate of battle diamonds.

The European Union, Canada and different Western nations, in addition to Ukraine and a number of other activist organizations, have joined in related requires a Kimberley Course of dialogue concerning the implications of the invasion of Ukraine, together with whether or not Russian gems must be thought of battle diamonds.

Often known as blood diamonds, battle diamonds are generally considered gems offered to finance conflict. The Kimberley Course of, created within the wake of diamonds financing a lethal conflict in Sierra Leone and elsewhere, defines them extra particularly, as “tough diamonds utilized by insurgent actions or their allies to finance battle aimed toward undermining authentic governments.”

However “insurgent motion” doesn’t precisely describe Russia, and officers there vehemently object to labeling the nation’s diamonds as battle gems. They chalk up the trouble by Western governments to take action as “political demagogy,” in keeping with an emailed assertion from the press service of Russia’s Ministry of Finance.

The difficulty is coming into sharper focus as Western nations outraged by Russia’s actions in Ukraine prohibit Russian gasoline and search for long-term alternate options to their reliance on its fossil fuels. Revenues from Russia’s different large exports, resembling diamonds, have gained new world relevance each for Russia in addition to for international locations seeking to punish the nation for its actions in Ukraine.

The gems are one in all Russia’s prime non-energy exports by worth, accounting for greater than $4.5 billion of exports final 12 months, in keeping with U.S. authorities knowledge.

Russian diamonds have for years been fashionable with American jewelers weary of the taint of diamonds from African mines — even these removed from battle areas — that buyers might confuse for blood diamonds. However the debate over Russian diamonds is exposing an often-overlooked actuality concerning the effort to rein within the murky $80 billion world diamond trade, which commercializes the deepest of feelings and has spent years working to reassure people who its gems are reliable by means of Kimberley Course of certification.

Due to loopholes and technicalities, so-called moral diamonds don’t actually exist, many jewelers acknowledge. And the trouble to dam Russian diamonds underscores that truth. “We use the Kimberley Course of as the best greenwashing machine the world has ever seen,” mentioned Martin Rapaport, a number one diamond dealer whose worth checklist is used as a benchmark for the wholesale commerce in polished diamonds.

For Russia’s half, its officers say the nation’s diamonds had been consistent with environmental, social and governance requirements lengthy earlier than they turned trendy within the company world. They are saying Russian mines contribute to the financial system of Yakutia, a desolate space of the nation’s Far East.

Diamond proceeds have paved roads, constructed faculties and hospitals, Russia’s Finance Ministry mentioned in an electronic mail, including that funds are additionally made to institutional and personal buyers. “The livelihoods of 1 million folks of Yakutia totally depend upon the soundness of diamond mining within the area,” the ministry mentioned.

However Ukrainian officers say the diamonds contribute to Russia’s invasion.

“Russian diamonds are concerned in financing the conflict of the Russian Federation towards Ukraine, which makes these diamonds not simply battle, however bloody,” mentioned Vladimir Tatarintsev, deputy director of the State Gemmological Middle of Ukraine, which is a member of the Kimberley Course of.

Western officers have lined up beside the Ukrainians.

On the very day in February that Russia invaded Ukraine, america added to its sanctions checklist Serge S. Ivanov, the chief govt of Alrosa, Russia’s greatest diamond producer and the world’s largest diamond mining firm. Mr. Ivanov is the son of one in all President Vladimir Putin’s closest allies, who was additionally added to the sanctions checklist.

Later, the U.S. banned imports of Russian diamonds together with Russian vodka, caviar and different gadgets.

However the U.S. motion had a significant loophole: It utilized solely to Russian tough diamonds, gems that had been dug from the bottom however had but to be minimize and shined. And few tough diamonds from Russia attain the U.S. market.

After being pulled from the bottom, most diamonds are shipped overseas for transformation, no matter the place they’re mined. The overwhelming majority find yourself in sharpening facilities in India, which has no ban on Russian diamonds. As soon as the diamonds are remodeled and readied for delivery, their origin modifications. Diamonds mined in Russia are not Russian-origin diamonds; they’re labeled Indian-origin.

Boycotts of Russian diamonds had been launched by main jewelers resembling Tiffany. De Beers elevated efforts to hint the gems by means of the provision chain.

The U.S. escalated its motion not lengthy after, focusing on the mining large Alrosa, which is majority-owned by the Russian federal and regional governments. It added Alrosa to a U.S. Treasury checklist that primarily bans U.S. nationals from doing enterprise with it. Canada, the UK, New Zealand, and the Bahamas took related motion.

However critics mentioned the ban failed to shut the loophole and left open the chance that Alrosa’s subsidiaries might nonetheless discover a technique to get diamonds which might be minimize and polished overseas into the U.S. And so they observe that whereas the U.S. is the largest marketplace for Russian diamonds, Alrosa can nonetheless promote diamonds freely in different main markets resembling China, which has taken no motion towards Russian gems.

Regardless, shares of Alrosa, which the U.S. says generated greater than $4.2 billion in income final 12 months and is answerable for 90 % of Russia’s diamond mining capability, have plummeted. It was successful for an organization that 5 years in the past had launched a brand new advertising and marketing marketing campaign in America, hoping its Russian id could be a bonus in a nation the place savvy shoppers had been cautious of atrocities in diamond mining that fueled wars in African international locations.

“Alrosa has a really sturdy give attention to environmental and social points and conforms to the best requirements of company social accountability,” the corporate mentioned in an emailed assertion. Its web site highlights efforts aimed toward defending water and soil, serving to Indigenous populations and making a park to guard reindeer and different wildlife.

The talk over Russian diamonds reached the Kimberley Course of forward of the group’s scheduled assembly in June. A motion was already afoot by the U.S. and different Western international locations to find out whether or not Russia was exporting battle diamonds and to rethink Russia’s management roles within the group.

Russia itself had been among the many quite a few nations that for a number of years had been pushing inside the Kimberley Course of for an growth of the definition of battle diamonds, searching for to broaden it to use to points resembling human rights, labor and the atmosphere. However as a result of the group is ruled by consensus — all choices should be unanimous among the many greater than 80 international locations — the motion has stalled.

Tensions over Russian diamonds cut up the Kimberley Course of member international locations alongside more and more acquainted geopolitical strains, with quite a few Western nations pitted towards Russia, which was backed by China, Belarus and Kyrgyzstan in addition to Mali and the Central African Republic, the place Russia has an enormous presence together with by its mercenaries who function in diamond mines.

The Kimberley Course of “has much less and fewer to do with diamonds and in a means has turn into one other geostrategic theater,” mentioned Hans Merket, a diamond trade and human rights researcher whose group is a part of civil society membership within the Kimberley Course of.

On the June assembly in Botswana, discussions about Russia’s invasion of Ukraine, and its implications for the Kimberley Course of, ended after vetoes by Russia, China and Belarus. Journalists had been requested to depart classes they usually could be allowed to attend, some members mentioned, and talks with the group’s chairman turned tangled in disputes over whether or not Russia ought to participate. The U.S. and British representatives boycotted classes led by Russian representatives.

Mr. Merket mentioned the group had turn into “an organ of bureaucrats” who log out on diamonds which might be problematic but obtain endorsements that falsely reassure jewellery patrons. “Shoppers anticipate one thing that isn’t true,” he mentioned.

The assembly left him and different members annoyed and nervous that necessary work was being sidetracked.

A brand new course of awaits assessment for exporting diamonds from the war-torn Central African Republic, the place Russian mercenaries function within the diamond trade and have been accused of human rights violations. Reviews of violence in diamond mines in Brazil and Venezuela are usually not being investigated, some members mentioned. Allegations of violence involving safety officers at mines within the Democratic Republic of Congo, Angola and Tanzania have gone unaddressed.

Inside the entrenched trade, the place jewellery companies are handed down for generations, defenders of the Kimberley Course of say that regardless of the issues it largely works.

“It’s not an ideal world,” mentioned Edward Asscher, president of the World Diamond Council, which represents the diamond trade within the Kimberley Course of. Nonetheless, Mr. Asscher, whose household diamond enterprise dates to the 1850s, mentioned he believed that 99 % of diamonds licensed by the Kimberley Course of had been conflict-free.

Nonetheless, rigidity over Russian diamonds threatens to overshadow work at a Kimberley Course of assembly scheduled for November. “The Kimberley Course of can’t keep silent following a army aggression of 1 participant towards one other,” mentioned Xavier Cifre Quatresols, a spokesperson for overseas affairs and safety coverage on the European Union.

And simply final month, related tensions crammed the room at a gathering of diamond trade leaders in New York, the place jewelers and merchants who lengthy have labored with Russian counterparts had been now within the uncomfortable place of distancing themselves from the gems.

Practically everybody in attendance agreed that, in a technique or one other, the trade wanted reform.

Ronnie VanderLinden, a pacesetter within the U.S. diamond trade and longtime jeweler based mostly in New York Metropolis’s famed diamond district, mentioned that “all diamonds in america are moral diamonds,” however acknowledged the system had flaws. “It relies upon,” he mentioned, “on what your definition of moral is.”