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 nations are taking motion that might 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 battle,” 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 forestall the circulation 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 comparable requires a Kimberley Course of dialogue in regards to the implications of the invasion of Ukraine, together with whether or not Russian gems needs to be thought of battle diamonds.

Also called blood diamonds, battle diamonds are generally considered gems offered to finance battle. The Kimberley Course of, created within the wake of diamonds financing a lethal battle 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 respectable 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 hassle 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 problem 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, akin to diamonds, have gained new world relevance each for Russia in addition to for nations trying 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 yr, in keeping with U.S. authorities information.

Russian diamonds have for years been widespread 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 in regards to 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 those 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 hassle to dam Russian diamonds underscores that reality. “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 in keeping with environmental, social and governance requirements lengthy earlier than they grew to become modern within the company world. They are saying Russian mines contribute to the economic system in a desolate a part of the nation, close to an space referred to as Yakutia, that might be in any other case destitute.

Diamond proceeds have paved roads, constructed colleges 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 individuals of Yakutia totally depend upon the soundness of diamond mining within the area,” the ministry mentioned.

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

“Russian diamonds are concerned in financing the battle of the Russian Federation in opposition to Ukraine, which makes these diamonds not simply battle, however bloody,” mentioned Vladimir Tatarintsev, deputy director of the State Gemmological Heart 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 government 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 reworked and readied for delivery, their origin adjustments. Diamonds mined in Russia are not Russian-origin diamonds; they’re labeled Indian-origin.

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

The U.S. escalated its motion not lengthy after, concentrating 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 comparable motion.

However critics mentioned the ban failed to shut the loophole and left open the chance that Alrosa’s subsidiaries might nonetheless discover a strategy to get diamonds which can be minimize and polished overseas into the U.S. They usually observe that whereas the U.S. is the most important marketplace for Russian diamonds, Alrosa can nonetheless promote diamonds freely in different main markets akin to China, which has taken no motion in opposition to Russian gems.

Regardless, shares of Alrosa, which the U.S. says generated greater than $4.2 billion in income final yr and is answerable for 90 p.c 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 marketing campaign in America, hoping its Russian id could be a bonus in a nation the place savvy customers had been cautious of atrocities in diamond mining that fueled wars in African nations.

“Alrosa has a really sturdy deal with environmental and social points and conforms to the very 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 controversy 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 nations 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 akin to human rights, labor and the setting. However as a result of the group is ruled by consensus — all selections should be unanimous among the many greater than 80 nations — the motion has stalled.

Tensions over Russian diamonds break up the Kimberley Course of member nations alongside more and more acquainted geopolitical traces, with quite a few Western nations pitted in opposition to Russia, which was backed by China Belarus and Kyrgyzstan in addition to Mali and Central African Republic the place Russia has a giant 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 change 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 contributors mentioned, and talks with the group’s chairman grew to become 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 change into “an organ of bureaucrats” who log off on diamonds which can be problematic but obtain endorsements that falsely reassure jewellery consumers. “Shoppers anticipate one thing that isn’t true,” he mentioned.

The assembly left him and different contributors annoyed and anxious that vital 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 usually are not being investigated, some contributors 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 p.c of diamonds licensed by the Kimberley Course of had been conflict-free.

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

And simply final month, comparable tensions stuffed 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 method or one other, the trade wanted reform.

Ronnie VanderLinden, a frontrunner 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.”