Diamonds have proved to be Europe’s best friends – because while European sanctions have stopped imports of many raw materials and goods from Russia, the precious metals business continues.
Hoffenirstraat in Antwerp is about 300 meters long. The heavily guarded street is the center of the global diamond trade. Almost all diamonds in the world passed through the shops of the small street at some point. According to the authorities in Antwerp, the value of traded products is about 47 billion euros each year.
Almost every third Hofenirstraat diamond comes from Russia, including in wartime. The reason is that Russian uncut diamonds are excluded from the European Union’s system of sanctions. The fourth package of EU sanctions has banned the sale of Russian diamonds, but imports of unprocessed gems are still allowed. This contrasts with the sanctions imposed by the United States and Britain.
Diamonds are important for the Belgian economy
The exceptions are logical, said Tom Nais of the World Diamond Center in Antwerp. The import ban would have “zero impact” on Russia, he continued. The reason is that, unlike oil and gas, Putin can sell small stones without much effort in other markets, such as Dubai or India. But 30% of the market in Antwerp could disappear, and “thousands of jobs” and international security standards in the fight against money laundering could be put at risk.
The diamond trade is important for the Belgian economy. It accounts for about five percent of the country’s exports. That is why, according to European diplomats, it was Belgium that lobbied for this exception. Ukrainian President Volodymyr Zelensky rebuked the Belgian parliament in late March for “those who believe that Russian diamonds, such as Antwerp, are more important than the war in Eastern Europe.”
Exceptions are also made for precious metals
But diamonds are no exception. Metals such as palladium, titanium, nickel, copper, aluminum, and iron ore may also continue to be imported from Russia into the EU. The embargo on them has never been the subject of political debate.
According to the sanctions, ships flying the Russian flag are no longer allowed to dock in European ports. However, the rule does not affect Russian ships flying a foreign flag – a concession made by certain countries during the negotiations.
Russian gas also continues to flow to the EU. The import ban is still being discussed but is not yet being implemented, not least because of Germany’s interests and dependencies.
The oil embargo is in question
To end dependence on Russian energy sources, the European Commission last week proposed imposing a future oil embargo. It envisions most member states suspending imports of Russian oil by the end of the year. But the transition period for Hungary, the Czech Republic, and Slovakia will be longer. Bulgaria also wants to win an exception for itself.
According to DPA and Reuters, the three Visegrad countries will be allowed to continue buying Russian oil until 2024 due to their high dependence. Member states have yet to vote on the European Commission’s proposal.
The oil embargo is overdue and too volatile, says economist Guntram Wolf of the Brussels-based think tank Bruegel. He also commented that the planned transition period is too long, and Russia will continue to have “huge revenues” from oil sales over the next six to eight months. At the same time, rising commodity prices will also have an impact. Bruegel believes that despite the sanctions, Russia’s trade surplus will increase this year.
