No Sanctions on Russian Diamonds—For Now

The United States and the European Union announced new sanctions on Russia yesterday, and diamond-industry people were relieved to see that Russian producer Alrosa wasn’t on the list.

Still the sanctions do affect Russian banks, including one with close ties to the miner, and there was concern that could affect the ability to make payments. But an Antwerp source says the “focus at this point is only on professional transactions between banks, and not on commercial transactions,” and most transactions shouldn’t be affected.

Cecilia Gardner, president and CEO of the Jewelers Vigilance Committee, agrees. “It is a very narrow range of activity that is addressed,” she says. “It is letters of credit and commercial loans. It does not mean that you cannot transact business with those facilities.” (Alrosa did not respond to a request for comment at press time.)

Here in the United States, the sanctions have already had an impact, as Alrosa has canceled tenders meant for New York City. That has had a serious effect on already-beleaguered local cutters.

Antwerp has been quite public in warning that any sanctions could prove devastating to the industry there, as all those sales would likely move to Dubai.  

Yesterday’s announcement quoted a treasury official as saying, “We are prepared to continue to expand these sanctions if Russia refuses to change course.” Some observers believe that sanctions against Alrosa are very much in play. The U.S. Department of State has warned industry representatives to be on alert about the situation in Ukraine and that it is “not business as usual” with Russia. And an E.U. paper, seen by EUobserver.com, says that sanctions targeting Russian luxury goods, including diamonds, are being considered as an early part of so-called stage-three sanctions against Russia. But it’s not clear if that would include raw stones.

So for now, while it may not be completely business as usual with Russia, trade in Russian diamonds will go on. But if the situation continues to spiral downward, things could change.

JCK News Director