With less than two weeks remaining before the deadline to exclude Russian diamonds from global affluent markets, the diamond trade faces a tumultuous situation influenced by various factors. Europe's stringent directive aims to potentially restore its diminishing influence, countered by the opposition from emerging voices in Africa and India. Meanwhile, a new proposal surfaced in the United States, the largest market, suggesting a "self-certification" system for diamond importers, akin to the process applied for fish and seafood imports, offering a potentially smoother path amidst geopolitical chaos.
During a recent meeting between a US government official and leading jewelers who import diamonds polished in India and elsewhere, a glimmer of hope emerged regarding the acceptance of self-certification by American jewelers, affirming that their imported diamonds have no Russian ties. This system contrasts with the European Union's insistence on a centralized certification authority in Belgium, raising concerns about increased costs, transaction delays, and disruptions in the longstanding diamond trade, sentiments echoed by African nations and India, which recently conveyed their concerns to the G7.
The virtual meeting on February 15 with the US official, a senior advisor in the US Department of State, assumes significance in light of reinforced sanctions set to take effect from March 1, 2024, aimed at severing financial flows to the Russian government from rough diamond sales by state-controlled companies. Despite the looming deadline, industry players remain uncertain about the specifics of the proposed certification process, with some attributing the EU's push for a centralized hub to maintain Antwerp's diamond trade dominance amidst relocations to jurisdictions like Dubai.
While stakeholders await clarity on the proposed certification process, anticipation mounts for guidelines from the US, suggesting a potential self-certification system akin to seafood imports, albeit with due diligence requirements on diamond importers to ensure compliance with Russian sourcing restrictions. Concerns also arise regarding the EU's proposed centralized certification system, prompting questions about leveraging technology, possibly blockchain-based, to trace stone origins across customs authorities globally.
As the world's largest rough diamond producer, with Alrosa accounting for the majority, Russia's impact on the diamond market remains substantial. Indian diamond firms seek a standardized procedure well ahead of the September 1, 2024 deadline to mitigate the G7 measures' repercussions. G7 leaders' commitment to curbing Russian diamond trade revenue underscores the multifaceted impact of the Ukraine conflict, with unsold Russian rough stocks adding to supply uncertainties.
