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An employee inspects rough diamonds at an Alrosa sorting centre, in Mirny, Russia, on July 1, 2019.

ALEXANDER NEMENOV/AFP/Getty Images

Ian Smillie, a leader in the campaign to end blood diamonds, is the author of Blood on the Stone: Greed Corruption and War in the Global Diamond Trade and Diamonds.

The increasingly tough economic sanctions placed on Russia and its oligarchs are designed to send powerful messages to President Vladimir Putin about the barbaric invasion of Ukraine. But one area has so far escaped serious attention: the Russian diamond trade.

Russia is one the world’s largest producers of rough diamonds. Most are exported, earning Russia about US$3-billion every year in the foreign exchange that is becoming scarcer as sanctions start to bite. More than 90 per cent of its diamonds are mined and exported by Alrosa, a publicly traded company that is one-third owned by the Russian government. Russian oligarchs are also heavily involved, including its CEO, Sergei Sergeyevich Ivanov, whose father is a permanent member of the Security Council of the Russian Federation and a close ally of Mr. Putin.

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Alrosa has already caught the attention of the White House, which on Feb. 24 placed restrictions on its ability to raise money in the United States and imposed travel restrictions on its CEO. This is a very small first step. The next step should be to target Antwerp, where 80 per cent of the world’s rough diamonds, including those of Alrosa, are traded. The Alrosa office there should be closed, and Antwerp’s auction and bourse facilities denied. The 61 companies that have purchasing contracts with Alrosa through 2024 should be pressed to suspend or cancel them.

Diamonds are valuable and they are small. They are, in a sense, like water, with a unique ability to find their way through cracks to places of least resistance. To be effective, an embargo in Antwerp would require an embargo in Dubai, an up-and-coming diamond hub, and lesser trading centres in Israel and New York.

After Antwerp is India, which imports US$10-billion worth of rough diamonds every year for its enormous cutting and polishing industry. India, apparently no friend of Ukraine, produces 70 per cent of the world’s polished diamonds. Alrosa has already assured India of a steady supply of diamonds and India is set to revive its rupee-ruble trade arrangements, bypassing SWIFT banking restrictions, as it has in the past. India must be persuaded to join the embargo and to demonstrate that none of its diamond exports have started their journey in Russia.

India must guarantee that it is not polishing and re-exporting Russian diamonds, otherwise an embargo on its diamonds would become essential. The United States, where half of the world’s gem diamonds are sold, could begin by invoking CAATSA (Countering America’s Adversaries Through Sanctions Act).

There’s also Angola, which mines and exports US$1-billion every year in rough diamonds. Alrosa owns more than one third of the country’s Catoca operation and is also a major investor in the new Luaxe mine, tapping one of the largest diamond deposits on earth. Alrosa’s access to Angolan diamonds and their proceeds must be halted as part of a general embargo, and recent deals in Zimbabwe and the Democratic Republic of Congo should also be suspended.

In addition, Alrosa should be suspended from international bodies concerned with good practices in the diamond industry: the World Diamond Council, the Responsible Jewellery Council and the Kimberley Process.

In taking such measures, the fallout must be considered. Large parts of the international diamond trading and polishing business would be negatively affected and Alrosa would almost certainly seek loopholes in places like China, another country whose ambivalence toward Ukraine has been demonstrated. But China’s capacity for an Alrosa bailout is limited, and as with India, a Western embargo could be applied to unidentified Chinese goods.

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Diamonds have long been symbols of love, beauty and commitment. Nothing could be more apt than a global embargo on those from a source that promotes the opposite. The point is to hit hard and quickly with a message that can be heard and felt in the Kremlin, not only by Mr. Putin but by those around him who benefit from Russia’s trade with the West.

Diamonds, as they say, are forever, and when Russia has come to its senses, the glittering showrooms of London, Paris and New York can be opened to them once again.

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