Belgian diamonds lose sparkle amid Russia sanctions talks – POLITICO


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ANTWERP, Belgium – Russian diamonds are on Europe’s radar again – as is Belgium’s difficult role in the industry.

Despite six rounds of sweeping European Union sanctions against Moscow, Russian diamonds have remained a shining absence from the embargo list.

Their omission is partly due to Belgium’s leading role in the diamond industry. Antwerp has, for generations, served as a hub for diamonds arriving in Europe, including from Russia.

But that can change. Russia’s commitment to stepping up its military campaign in Ukraine prompted the EU to speed up work on a new sanctions package. And several diplomats have said Belgium’s hesitation over a Russian diamond ban is increasingly untenable.

Publicly, Belgium has pledged not to block diamond sanctions. He also expressed concerns that such a move could hurt EU economies more than Russia’s stock market. Privately, Belgian diplomats successfully lobbied EU officials to keep the gems off the sanctions list, according to many diplomats familiar with sanctions talks.

“This position is getting more difficult,” said an EU diplomat.

The result is that Belgium – and its unwavering support for an industry long linked to autocrats, dictators and conflict zones – is once again in the spotlight. The EU has already sanctioned Russian gold and other luxury goods. And now those who have long called for diamond sanctions, including the Baltic states, Poland and the Netherlands, are trying to pounce.

“We have been calling for sanctions on Russian diamonds for months,” said another EU diplomat.

Diamond Divergence

Russian rough diamonds currently account for 30% of the world’s gemstone trade. And the US Treasury Department estimates that diamonds are one of Russia’s top 10 non-energy exports, totaling more than $4.5 billion in 2021.

Yet even in the midst of the war, Belgian leaders did not walk away from the country’s diamond industry. Just last week Belgian Prime Minister Alexander De Croo was in Antwerp to voice his support at an industry conference. He has repeatedly argued that any diamond ban would hurt Europe more than Moscow.

“For six centuries, Antwerp has proven that it still manages to remain resilient and innovative in turbulent times,” he said in a speech that did not mention Russia.

Diamond industry executives in Antwerp remain confident even after the new sanctions debate launched this week.

Other countries have taken a different approach.

“For six centuries, Antwerp has proven that it still manages to remain resilient and innovative in times of turbulence,” said Belgian Prime Minister Alexander De Croo | Paul O’Driscoll/Getty Images

The United States banned the import of “non-industrial” diamonds from Russia soon after the invasion. It also sanctioned Sergei Sergeevich Ivanov, the chief executive of Russia’s largest diamond mining company, Alrosa, and his father, Sergei Borisovich Ivanov, former chief of staff to Russian President Vladimir Putin.

The EU has not followed suit.

Roland Papp, who tracks illicit financial flows for Transparency International, said the EU was showing “moral hypocrisy” on the subject.

“Over the summer the EU added Russian gold to the sanctions list, it’s not too late to add diamonds,” he said.

In July, the anti-corruption NGO wrote to EU officials urging them to include diamonds in its Russian sanctions regime. Papp said the EU did not respond to the letter.

Tom Neys, spokesperson for the World Diamond Center in Antwerp, argued that the diamond trade, already under enormous pressure from regulators and consumers, is responding organically to consumer demands, which include current ethical and sustainable practices.

“We have invested for 20 years to make the diamond trade more transparent,” Neys said in an interview with POLITICO at the Antwerp conference. “Are we really going to throw everything away to reward Dubai, which is already opening its doors to Russian oligarchs? he added.

These arguments left Ukrainian officials furious. In April, Ukrainian President Volodymyr Zelenskyy lashed out at Belgian lawmakers during a video appearance outside the country’s parliament.

“There are those for whom Russian diamonds, sometimes sold in Antwerp, are more important,” he said.

A historical link

The fight against money laundering, tax regulations and greater transparency did not come naturally to Antwerp diamond dealers.

Since the end of the 1990s, the Belgian diamond industry has been linked to civil war, armed struggle and corruption throughout Africa. The world’s first-ever trial against a smuggler of “blood diamonds” from Sierra Leone was held in Antwerp in 2004.

The Belgian government has long been criticized for turning a blind eye.

In 2008, Human Rights Watch wrote to then-Belgian Deputy Prime Minister Didier Reynders, now EU justice commissioner, urging Brussels to crack down on diamond smuggling in Zimbabwe and human rights abuses. who accompanied him.

But NGOs then accused Belgium of doing the opposite and pressuring the EU to lift sanctions on Zimbabwe’s top diamond producer, which it did in 2013, giving the despotic ruler a boost of the country, Robert Mugabe.

Similarly, a group of Antwerp-based politicians in the early 2010s, known as the “Diamond Club”, have been accused of dictating government policy and laws for the benefit of industry.

As far as Russia is concerned, the Belgian Prime Minister at the time, Charles Michel, now President of the European Council, was another defender of the Antwerp diamond scene. In January 2018, Michel met Dmitry Medvedev, then Russian Prime Minister, in Moscow to discuss business opportunities.

“Our investment cooperation has not stalled,” Michel said at the time, referring to recent EU sanctions against Russia for its annexation of Crimea. “Russian companies have been working in Antwerp for a long time.

Michel and Reynders declined to comment.

Russia divides the diamond industry

Besides sanctions, the diamond industry has also been divided on how to approach Russia’s war in Ukraine.

Since 2002, the so-called Kimberley Process has been a United Nations-endorsed certification system designed to assure consumers and traders that the diamonds they buy are not fueling wars in Angola, Sierra Leone and the Republic Democratic Republic of the Congo.

But critics say the Kimberley Process is failing to resolve current conflicts, such as Russia’s war in Ukraine. Yet Bruce Cleaver, the chief executive of De Beers, told POLITICO that his company supports reform of the Kimberley Process instead of eliminating it.

“We believe this is an important part of maintaining consumer confidence that the diamonds they are buying are not conflict diamonds or [had] the child labor involved in it,” he said.

Reform may be impossible, however. Papp, of Transparency International, said pro-Russian members are resisting pressure to expand the narrow Kimberley Process definition of conflict, which only covers diamonds funding rebellions seeking to overthrow legitimate governments.

Indeed, at a Kimberley Process meeting in June, members such as China, Belarus and the Central African Republic interrupted any discussion on the subject.

Hans Merket, who covers natural resources for Antwerp-based think tank IPIS, said the Kimberley Process was struggling to protect consumers from fears they were funding Russia’s conflict in Ukraine.

“It risks becoming less and less relevant,” he said.

Barbara Moens contributed reporting.

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