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

Russia’s invasion of Ukraine has led to international 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 within the United States and past have included diamonds mined from deep within the permafrost in Russia’s northeast.

Now, the United States and different nations are taking motion that might formally label Russian diamonds as “conflict diamonds,” claiming their sale helps pay for Russia’s lethal aggression in Ukraine.

“Proceeds from that production are benefiting the same state that is conducting a premeditated, unprovoked, and unjustified war,” mentioned George Cajati, a U.S. State Department official, in a letter written in May to the chair of the Kimberley Process, an worldwide group created by United Nations decision to forestall the stream 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 Process dialogue concerning the implications of the invasion of Ukraine, together with whether or not Russian gems must be thought-about battle diamonds.

Also often known as blood diamonds, battle diamonds are generally thought of as gems offered to finance battle. The Kimberley Process, created within the wake of diamonds financing a lethal battle in Sierra Leone and elsewhere, defines them extra particularly, as “rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments.”

But “rebel movement” 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 accomplish that as “political demagogy,” in accordance to 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 limit Russian gasoline and search for long-term options to their reliance on its fossil fuels. Revenues from Russia’s different massive exports, resembling diamonds, have gained new international relevance each for Russia in addition to for nations wanting to punish the nation for its actions in Ukraine.

The gems are one of Russia’s prime non-energy exports by worth, accounting for greater than $4.5 billion of exports final year, in accordance to U.S. authorities information.

Russian diamonds have for years been well-liked with American jewelers weary of the taint of diamonds from African mines — even these removed from battle areas — that buyers may confuse for blood diamonds. But the talk over Russian diamonds is exposing an often-overlooked actuality concerning the effort to rein within the murky $80 billion international diamond business, which commercializes the deepest of feelings and has spent years working to reassure folks that its gems are reliable by Kimberley Process certification.

Because of loopholes and technicalities, so-called moral diamonds don’t actually exist, many jewelers acknowledge. And the hassle to block Russian diamonds underscores that reality. “We use the Kimberley Process as the greatest greenwashing machine the world has ever seen,” mentioned Martin Rapaport, a number one diamond dealer whose value checklist is used as a benchmark for the wholesale commerce in polished diamonds.

For Russia’s half, its officers say the nation’s diamonds have been according to environmental, social and governance requirements lengthy earlier than they grew to become trendy within the company world. They say Russian mines contribute to the economic 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 e mail, including that funds are additionally made to institutional and personal traders. “The livelihoods of one million people of Yakutia fully depend on the stability of diamond mining in the region,” the ministry mentioned.

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

“Russian diamonds are involved in financing the war of the Russian Federation against Ukraine, which makes these diamonds not just conflict, but bloody,” mentioned Vladimir Tatarintsev, deputy director of the State Gemmological Center of Ukraine, which is a member of the Kimberley Process.

Western officers have lined up beside the Ukrainians.

On the very day in February that Russia invaded Ukraine, the United States added to its sanctions checklist Serge S. Ivanov, the chief govt of Alrosa, Russia’s largest diamond producer and the world’s largest diamond mining company. Mr. Ivanov is the son of one of 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.

But the U.S. motion had a serious loophole: It utilized solely to Russian tough diamonds, gems that have been dug from the bottom however had but to be reduce 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, regardless of the place they’re mined. The overwhelming majority find yourself in sharpening facilities in India, which has no ban on Russian diamonds. Once the diamonds are remodeled 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 have been launched by major jewelers such as Tiffany. De Beers elevated efforts to trace the gems through the supply chain.

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

But critics mentioned the ban failed to shut the loophole and left open the likelihood that Alrosa’s subsidiaries may nonetheless discover a method to get diamonds which can be reduce and polished overseas into the U.S. And they observe that whereas the U.S. is the largest market 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 year and is chargeable for 90 % of Russia’s diamond mining capability, have plummeted. It was successful for a company 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 shoppers have been cautious of atrocities in diamond mining that fueled wars in African nations.

“Alrosa has a very strong focus on environmental and social issues and conforms to the highest standards of corporate social responsibility,” the company mentioned in an emailed assertion. Its website highlights efforts aimed toward defending water and soil, serving to Indigenous populations and making a park to defend reindeer and different wildlife.

The debate over Russian diamonds reached the Kimberley Process forward of the group’s scheduled meeting in June. A motion was already afoot by the U.S. and different Western nations to decide 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 Process for an growth of the definition of battle diamonds, in search of to broaden it to apply to points resembling human rights, labor and the atmosphere. But as a result of the group is ruled by consensus — all choices should be unanimous among the many greater than 80 nations — the motion has stalled.

Tensions over Russian diamonds cut up the Kimberley Process member nations alongside more and more acquainted geopolitical traces, 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 a giant presence together with by its mercenaries who function in diamond mines.

The Kimberley Process “has less and less to do with diamonds and in a way has become another geostrategic theater,” mentioned Hans Merket, a diamond industry and human rights researcher whose group is an element of civil society membership within the Kimberley Process.

At the June meeting in Botswana, discussions about Russia’s invasion of Ukraine, and its implications for the Kimberley Process, ended after vetoes by Russia, China and Belarus. Journalists have been requested to depart periods they usually could be allowed to attend, some members 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 periods led by Russian representatives.

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

The meeting left him and different members annoyed and frightened that necessary work was being sidetracked.

A brand new course of awaits evaluate for exporting diamonds from the war-torn Central African Republic, the place Russian mercenaries function within the diamond business and have been accused of human rights violations. Reports of violence in diamond mines in Brazil and Venezuela aren’t 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.

Within the entrenched business, the place jewellery companies are handed down for generations, defenders of the Kimberley Process say that regardless of the issues it largely works.

“It’s not a perfect world,” mentioned Edward Asscher, president of the World Diamond Council, which represents the diamond business within the Kimberley Process. Nevertheless, Mr. Asscher, whose household diamond business dates to the 1850s, mentioned he believed that 99 % of diamonds licensed by the Kimberley Process have been conflict-free.

Still, stress over Russian diamonds threatens to overshadow work at a Kimberley Process meeting scheduled for November. “The Kimberley Process cannot stay silent following a military aggression of one participant against another,” mentioned Xavier Cifre Quatresols, a spokesperson for international affairs and safety coverage on the European Union.

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

Nearly everybody in attendance agreed that, in a technique or one other, the business wanted reform.

Ronnie VanderLinden, a pacesetter within the U.S. diamond business and longtime jeweler based mostly in New York City’s famed diamond district, mentioned that “all diamonds in the United States are ethical diamonds,” however acknowledged the system had flaws. “It depends,” he mentioned, “on what your definition of ethical is.”