EU states: Import ban on diamonds from Russia

Russian war of aggression - EU states: Import ban on diamonds from Russia

Russian diamonds and diamond jewelry may no longer be imported into the European Union in future. On Monday, the 27 member states decided on a corresponding import ban as part of the twelfth package of sanctions due to the Russian war of aggression against Ukraine. It is intended to deprive the state leadership in Moscow of an important source of income and thus also limit its ability to finance the war against Ukraine. The EU Commission recently estimated Russia's revenue from the sale of diamonds at around four billion euros per year.

According to the decision, the import ban will apply to diamonds coming directly from Russia from January 1. By September 1, Russian diamonds and jewelry products processed in third countries such as India must also be gradually banned from the market. To ensure effectiveness, a verification and certification system for rough diamonds is to be set up within the Group of Seven Western industrialized nations (G7) in order to trace the origin of the diamonds.

Liquid gas imports also targeted

In addition to the diamond ban, the twelfth EU sanctions package provides for the price cap on Russian oil exports to third countries to be tightened. There are also trade restrictions for other goods as well as punitive measures against individuals and organizations that support the Russian war of aggression.

Specifically, these include an import ban on raw materials for steel production, processed aluminum products and other metal goods, as well as export restrictions on goods such as lithium batteries, thermostats and certain chemicals. There is also a new import ban on liquefied petroleum gas (LPG) from Russia, which, according to the Commission, affects imports of more than one billion euros per year. It will also affect existing contracts after a maximum of twelve months following a grandfathering clause.

Business worth billions with diamonds

One of the reasons why a ban on the import of Russian diamonds has only now been decided was Belgium's initial resistance. The Flemish port city of Antwerp has been one of the most important diamond centers in the world since the 16th century. Russia, in turn, is considered the world's largest producer of rough diamonds. In 2021, the state diamond miner Alrosa had revenues of 332 billion roubles (around 3.4 billion euros).

In addition to the economic sanctions, according to EU information, sanctions are planned against more than 140 other individuals and organizations that support the Russian war of aggression against Ukraine. They would then no longer be able to dispose of assets held in the EU. The individuals concerned would also no longer be allowed to enter the EU. They are to come from the Russian military, defense and IT sectors, for example.

The last sanctions package to date came into force in June. It included, for example, an instrument to prevent the circumvention of sanctions that had already been imposed. A far-reaching ban on imports of crude oil, coal, steel, gold and luxury goods as well as punitive measures against banks and financial institutions have been in place for some time.

Oil price cap no longer working properly

In order to improve the effectiveness of the oil price cap, the monitoring measures and documentation requirements are to be tightened according to the plans. This could make it more difficult for shipping companies to circumvent Russia sanctions with impunity in future.

The price cap came into force around a year ago together with an extensive ban on the import of Russian oil into the EU. It is actually intended to force Russia to sell oil to customers in other countries for a maximum of USD 60 per barrel (159 liters) in future.

Targeting the shadow fleet

According to researchers at the Kyiv School of Economics, however, the latest data suggests that more than 99 percent of Russian crude oil exported by sea in October was probably sold at a price of more than 60 US dollars (56 euros) per barrel. This is probably possible because fake price certificates were provided, they write. In addition, Russia could increasingly rely on a "shadow fleet", i.e. ships that are not owned by Western shipping companies or insured by Western insurers.

In order to enforce the price cap for exports to non-EU countries, it was decided that important maritime transport services for Russian oil exports may only be provided with impunity if the price of the exported oil does not exceed the price cap. Western shipping companies can therefore continue to transport Russian oil to countries such as India, China or Egypt with their ships. The regulation also applies to other important services such as insurance, technical assistance and financing and brokerage services.

The goal is Russia's war chest

The hope is that the price cap will lead to an easing of tensions on the energy markets in the long term and also relieve the burden on third countries. It is also intended to ensure that Russia can no longer profit from oil price increases and thus fill its war chest.