Editor’s Note
This article examines a critical gap in EU sanctions, detailing how Russian diamonds continue to generate significant revenue for the Kremlin’s war effort through the Antwerp trading hub.
Despite sanctions, Russia is allowed to export diamonds to the EU – and fill the war chest for the Ukraine war. Why?
Antwerp/Moscow – Cement, steel, even vodka or caviar – due to Russia’s war in Ukraine, the European Union (EU) has banned the import of almost all Russian products. Only one thing can still be traded despite EU sanctions: diamonds. At the trading hub in Antwerp, Russia can continue to trade “Putin’s blood diamonds” on a large scale – and thereby fill the war chest of President Vladimir Putin for the Ukraine war.
While the stalling weapons and tank production is causing problems for Putin, resistance is stirring against the flourishing trade in Europe. EU politicians are insisting that the billion-dollar business with blood diamonds must finally be stopped. Will they succeed?
For Kathleen Van Brempt, diamonds from Russia are a problem.
the Belgian EU parliamentarian told *Welt*, demanding a clear provision in the EU sanctions.
she added, because the deals would help finance and prolong the Ukraine war.
Indeed, the Belgian port city is one of the world’s largest trading places for the gemstones. Nine out of ten rough diamonds are cut and resold in Antwerp – a billion-dollar business. The stones come from Angola, South Africa, or Canada, but also from Russia.
In Russia, according to the media report, the company Alrosa extracts millions of diamonds in the east of the country. The company is considered the world’s largest trader and belongs to Sergey Ivanov, an old friend of Putin. The USA has long placed him on a sanctions list. That the oligarch can continue to do business unhindered is due to the EU. The Europeans have bundled nine sanctions packages to drain the Russian economy. However, the diamond ban was repeatedly removed from the list during negotiations. Talks on the tenth package are currently underway.
The sanctions are indeed having an effect. Due to the import stop on important goods such as steel, cement, or chips and semiconductors, large parts of Russian production are at a standstill. And the gas and oil embargo is causing enormous revenue losses in the state budget. The deficit has now become so large that Russia must sell off part of its gold reserves, as the state news agency Tass reported.
To cover gaps in the state budget, Moscow reportedly drew on its gold and currency reserves in Chinese yuan in January. A total of 2.27 billion yuan (approx. 309 million euros) and 3.6 tons of gold were sold.
Given the financial problems, the revenues from diamond mining represent an important source of income. Although it is not clear how much of the estimated four-billion-euro annual turnover flows towards the Kremlin. But in the past, according to *Welt*, important armament projects have been cross-financed with Alrosa’s help. Example: the submarine “B-871 Alrosa”.
Semi-private cross-financing does not seem unusual in Russia. The notorious Wagner Group, which plays a central role in the Ukraine war in the conquest of the strategically contested regions around Bakhmut, has also discovered mining as a lucrative source of income. As reported by the US magazine *Politico*, the mercenary private army of “Putin’s chef,” alias Yevgeny Prigozhin, is said to be involved in many mining projects in Central Africa – and raking in billions in profits. According to the report, US officials have long warned that this secures the recruitment of Wagner mercenaries and the purchase of new weapons for the Ukraine war.
Against this backdrop, drying up the diamond business would certainly be an important step in the fight against Russia’s war in Ukraine. However, whether the EU can bring itself to expand the sanctions remains to be seen. Above all, Belgium is in no hurry; after all, up to 30,000 jobs in the small country depend on the lucrative gemstone business. There, it is also pointed out that many traders are letting their supply contracts with Russia expire on their own, and as a result, business has already noticeably slumped. But that is not enough for Ukraine. They insist on a clear ban.
