G7 continues to promote sanctions on Russian diamonds, this undermines attempts to revive market - MinFin
MOSCOW. Nov 7 (Interfax) - The G7 countries continue to promote restrictions on diamonds of Russian origin despite the partial easing of sanctions in August, Deputy Finance Minister Alexei Moiseyev said in comments published on the Finance Ministry's website.
In response to multiple appeals from diamond industry representatives, including those in G7 countries, the U.S. and EU introduced exemptions for diamond jewelry and loose diamonds acquired before the restrictions took effect in August 2024, Moiseyev said.
"Nevertheless, the work on the promotion of restrictions continues. As it is well known, recently G7 representatives made another world tour in order to make other countries participate in the G7 certification," he said.
He suggests that diamond-producing countries will first be asked only to formalize their participation and register their diamonds at no cost in the G7's cloud-based digital registry, which would ensure traceability. "At the same time despite the loud statement of numerous suppliers of digital solutions, it is technically impossible to ensure the real traceability of rough and polished diamonds. None of the proposals gives full guarantees and, in fact, they only mislead their partners and customers," he said.
"It will all end with the fact that the trade in rough diamonds of African producers will come under the control of a Western verification tool, the parameters of which will be set by the G7 countries and gradually expanded to all new requirements and approvals, up to pricing or an import ban, or it will go into a gray zone," he said. A move into the gray zone will adversely affect producing countries in terms of employment, income from royalties and tax deductions to their budgets, as well as the quality of their economic development, he said.
More broadly, the industry could face the risk of downscaling - the supply of diamonds will significantly decrease. This will make the industry a niche business, where revenues will be insufficient for investment in generic marketing and maintaining the product's global appeal for consumers, he said.
"Creating uncertainty and stigmatizing diamonds in the minds of consumers as a "source of conflict financing" will lead to the consumer associating natural diamonds with a risky purchase and preferring to move to other segments or alternative products to reduce the risk," he said.
Amid the prolonged crisis in the diamond industry and a challenging macroeconomic situation, the U.S. and G7's sanctions policy undermines the industry's attempts to reach sustainable growth, he said. "In pursuit of 'cancelling' of Russian diamonds, which account for a third of the world's production, the collective West can eventually 'cancel' the entire global diamond industry, causing irreparable damage to it," Moiseyev said.
