US Shows Limited Support for G7 Russian Diamond Ban Following Criticism from Industry

The United States is reconsidering the strictest elements of a ban on Russian diamonds from the Group of Seven major democracies, following opposition from African countries, Indian gem polishers, and New York jewellers. This decision comes after the sanctions package, which was agreed upon in December and includes a ban across the European Union, represents one of the industry’s most significant shakeups in decades.

The U.S. State Department has declined to comment on the matter, but a senior Biden administration official stated that Washington has not changed its position and will continue working with the G7 to strike the right balance between hurting Russia and ensuring implementability.

The G7 sanctions aim to target another revenue stream for the Kremlin’s war effort in Ukraine, even though diamonds represent only a small fraction of the profits Moscow earns from oil and gas. Since March, importers to G7 countries must self-certify that diamonds do not originate from Russia, and sanctions were imposed on direct imports of Russian gems in January.

However, discussions on implementing tracing mechanisms have stalled, with Washington cooling on enforcing traceability. The commitment to implementing a traceability mechanism by September 1 applies to the European Union, not the United States, according to a G7 leaders’ statement in December.

The presidents of Angola, Botswana, and Namibia have expressed concerns about a pre-determined entry point for the G7 market, stating that it would be unfair and hurt revenues. Italy, which holds the G7 presidency, declined to comment on the U.S. position.

Advocates of the sanctions argue that a traceability mechanism is necessary for a robust ban, and without full U.S. engagement, the effectiveness of the ban is in question. The industry pushback is partly due to fears of increased market transparency.