On September 20th, 2023, Avi Krawitz’s report on Rapaport.com outlined Martin Rapaport’s perspective on the challenges associated with the implementation of measures proposed by the Group of Seven (G7) countries. These measures aim to impose further restrictions on Russian diamonds, which are believed to be funding the conflict in Ukraine. These actions were taken up by the European Parliament on November 9, 2023
Rapaport emphasized that the responsibility for implementing any sanctions program rests with the government, not with the industry. He underscored that the primary authority in any government sanctions program lies with customs offices, rather than the industry operators.
In March 2022, the United States government imposed a ban on the import of diamonds originating from Russia due to the ongoing conflict. However, a significant loophole exists: it is possible to import diamonds from Russian rough if they are processed into finished stones in third-party countries, particularly in India, a major production center.
Despite the ban, Russian diamonds continue to enter the market. Alrosa, a mining company largely owned by the Russian Federation, reported sales of 188.16 billion RUB (1.9 billion USD) in the first half of 2023, a figure very similar to the previous year. This raises the question: Are these sanctions serving their intended purpose?
Rapaport highlighted a lack of clarity from the Office of Foreign Assets Control regarding the possibility of importing Russian diamonds into the United States if they undergo transformation elsewhere.
He explained that India expressed its desire to continue exporting Russian-origin diamonds to the United States. Consequently, sanctions have been imposed, perceived as ineffective, with the aim of not causing any friction with India. He also pointed out that the U.S. government appears to prioritize its image over the interests of the diamond and jewelry industry, drawing a parallel with greenwashing, similar to the Kimberley Process.
Rapaport also voiced concerns about the World Diamond Council (WDC) protocols, which he believes put small and medium-sized businesses at a disadvantage, as they lack the resources to implement supply chain controls through audits.
In response, Elodie Daguzan, the Executive Director of the WDC, rejected Rapaport’s claims, clarifying that the proposal was developed after engaging various stakeholders in the industry, with the goal of effective implementation to support all businesses in the diamond sector.
