Thanks to “laundromat” in Emirates
How Russia smuggles diamonds into the West
October 17, 2023, 3:56 p.m
Russia is one of the largest producers of rough diamonds, and there are only a few sanctions so far. Even though many luxury companies no longer want to buy Russian stones, the industry has found ways to disguise the origin.
Big brands like Cartier and Tiffany claim they don’t sell Russian diamonds – but a report suggests they are misleading their customers. According to Investigation by the “Kyiv Independent” Russian stones will most likely end up in the jewelry of the big luxury companies, which are intended to gloss over their origin.
Instead of being stopped by the sanctions, Russian diamonds simply changed their route, the report said. Instead of going through the EU, where regulations ensure some transparency, most Russian diamonds are now sold through Dubai, which industry insiders have dubbed the diamond market’s “laundromat.”
In order to prevent wars and conflicts from being financed with diamonds, there is actually the Kimberley Process, a system that uses certificates of origin to prevent the trade in such blood diamonds. However, this only includes diamonds whose mining is linked to rebel groups – Russian rough diamonds are therefore not subject to the process.
About India or Dubai
According to the report, Russia has found two ways to circumvent US sanctions and the self-imposed purchase ban of major luxury brands. The first approach is to have the rough diamond cut by a company in the Indian city of Surat – after which it is no longer considered “Russian” under US law. Ninety percent of the world’s rough diamonds are reportedly cut in Surat.
The second variant, according to industry insiders, more commonly practiced by Russia, is to mix the rough diamonds in packages in Dubai and later sell them to cutters. Packages are primarily used for smaller stones under one carat – the origin doesn’t matter here, just size and quality. Major luxury brands then buy from middlemen who knowingly or unknowingly purchase diamonds from Russia, industry insiders say. Import-export data analyzed by the Ukrainian newspaper should prove this.
The US has imposed sanctions on Alrosa, the main producer of Russian diamonds, which is partly owned by the Russian state. The company, which accounts for 30 percent of the global diamond trade, did not suffer for long and actually increased its sales in 2023. Part of the profits could be used to directly support the Russian military – the company sponsors, among other things, a submarine that is part of the Russian Black Sea Fleet and carries Caliber missiles. Such missiles have been used extensively against Ukrainian cities, killing civilians.
The G7 countries want to impose an indirect ban on the trade in Russian diamonds. At least that’s what Belgian government circles said in mid-September. The ban could come into effect in January.