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The EU is trying to sanction diamonds from Russia

AYESHA RASCOE, HOST:

Russia's one of the world's biggest diamond suppliers, and the sale of the product is an important source of revenue for the country. So far, the gems have not been subjected to the same kind of sanctions that the country's oil and banking industries have faced. But NPR's Jackie Northam reports there are efforts underway to change that.

JACKIE NORTHAM, BYLINE: The port city of Antwerp, Belgium, has been the capital of the diamond trade for hundreds of years, with traders and jewelers concentrated within a picture-book area of the city less than a square mile in size. Now the war in Ukraine has arrived at Antwerp's door. The European Union has tried several times to sanction Russian diamonds, but Belgium prevented it.

HANS MERKET: There's always been a pushback. Belgium is the only player in the diamonds business in the EU. It's only - also the only country who would have - who would feel the impact of any sanctions.

NORTHAM: Hans Merket is with the Antwerp-based International Peace Information Service, a group for human rights and sustainable development. He says for Antwerp, what's at stake are the diamonds coming from one Russian mine called Alrosa, partly owned by the Russian government.

MERKET: Alrosa is the biggest business partner of the Antwerp diamond industry. It guarantees an inflow of a substantial amount of diamonds that represent one-fourth, or 25%, of all rough diamond imports into Antwerp every year.

NORTHAM: Merket says Belgian traders argue that if the EU bans Russian diamonds, the stones will just find another way onto the market - most likely Dubai, which is Antwerp's biggest competitor. Marty Hurwitz is the CEO of MVEye, a research company specializing in gems and jewelry. He says Russia is the largest producer of rough or unpolished diamonds in the world by volume.

MARTY HURWITZ: The Alrosa mine is in the 4 to $5 billion a year size of business in terms of their rough sales. It's a gigantic part of the diamond economy.

NORTHAM: Hurwitz says those revenues are going into the Kremlin's coffers for the war in Ukraine.

HURWITZ: Because these diamonds are unquestionably the textbook definition of blood diamonds. They are helping to fund that war.

NORTHAM: But banning Russian diamonds could be hard to do. About 95% of the world's rough diamonds go to India. And there's the loophole. Indian manufacturers bring in stones from mines all over the world. They're often mixed together to fill an order. So a bag of Russian rough stones could get mixed, cut and polished with some from Botswana or Canada, says Merket.

MERKET: And by that time, they're not considered as Russian diamonds anymore.

NORTHAM: At that point, the diamonds are considered mixed origin and could easily include Russian ones. Additionally, a diamond can easily change hands 20 or 30 times by the time it goes from the mine to the customer. Stephen Morisseau is a spokesman for the Gemological Institute of America.

STEPHEN MORISSEAU: There is no scientific or technical way to identify the origin of a specific polished diamond. You just can't look at it and observe its characteristics and say, this came from Country X.

NORTHAM: So Russian diamonds can turn up anywhere, including the U.S., which sanctioned them not long after the invasion of Ukraine. Currently the only system certifying a diamond's origin is the so-called Kimberley Process, which was set up to end the sale of blood diamonds. It certifies the stone's origin when it comes out of the mine but doesn't track it after that. The U.S., its G7 allies and the EU are talking about ways to better track diamonds. Some companies have already been tracking diamonds from the mine to the showroom for years.

UNIDENTIFIED PERSON: This is our nature-inspired collection. Some of our most popular ring styles are here.

NORTHAM: The showroom of Brilliant Earth jewelry store in Bethesda, Maryland, is decorated in muted earth tones. The polished diamonds on display twinkle in the afternoon sunlight.

UNIDENTIFIED PERSON: These two diamonds here that we have are both from Botswana-Sort.

NORTHAM: Brilliant Earth, which has two dozen shops across the U.S., promotes traceability of its diamonds and other gems. Its CEO, Beth Gerstein, says a diamond is added to a blockchain, an immutable database, from the moment it's unearthed from a mine.

BETH GERSTEIN: Diamond A with Mine Operator X, and then as soon as it gets sold to a specific diamond manufacturer, that manufacturer now gets added to the database. Now, let's say that gets traded to a wholesaler. The wholesaler gets added. And so you have this complete document of the entire chain of custody of the diamond that is embedded in technology.

NORTHAM: And if everyone in the diamond industry can play by the same rules, Belgium might just agree to an EU ban on Russian diamonds.

Jackie Northam, NPR News. Transcript provided by NPR, Copyright NPR.

Jackie Northam is NPR's International Affairs Correspondent. She is a veteran journalist who has spent three decades reporting on conflict, geopolitics, and life across the globe - from the mountains of Afghanistan and the desert sands of Saudi Arabia, to the gritty prison camp at Guantanamo Bay and the pristine beauty of the Arctic.

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