Editor’s Note
The G7 is reportedly set to announce a direct ban on Russian diamonds starting January 1, 2024, with further indirect restrictions to follow. This move, expected to be confirmed during a leaders’ meeting, marks a significant expansion of sanctions.
According to media reports citing multiple informed sources, leaders of the Group of Seven (G7) are expected to announce a ban on Russian diamonds and update a series of sanctions on Wednesday (December 6).
The G7 leaders are scheduled to hold an online meeting later on Wednesday. One source stated that the group is expected to announce a direct ban on Russian diamonds effective January 1, 2024, followed by a phased implementation of an indirect ban between March 1 and September 1 next year.
Russia is one of the world’s largest diamond producers and home to the world’s biggest diamond mining and processing company. Since the Russia-Ukraine conflict began, the European Union has imposed multiple sanctions on Russia, with diamonds being one of the few major export products not yet significantly affected.
Sources added that during the phased implementation of the indirect ban, diamond companies will be able to use declaration systems provided by institutions such as the World Diamond Council. These systems will allow the G7 to track and certify diamonds, initially applying to rough diamonds. However, countries have failed to reach an agreement on the certification of polished diamonds.
In addition to the potential new diamond ban, the G7 also plans to strengthen measures related to the price cap on Russian seaborne crude oil exports during today’s meeting. Western nations acknowledge that the impact of the price cap mechanism has weakened, and countries have been seeking ways to reinforce it throughout the year.
A year ago, the G7, the EU, and Australia set a price cap of $60 per barrel, prohibiting services such as insurance and financing for Russian oil transport if the oil is sold above this threshold.
To circumvent Western sanctions, Russia has assembled a “shadow fleet” of aging tankers since the beginning of the year to continue selling energy to countries not subject to trade restrictions.
Latest reports indicate that the EU, in its newly proposed sanctions package, requires transport operators to provide details of “ancillary costs”—such as insurance and freight—and to reduce the sale of older Western tankers to Russia’s “shadow fleet.”
Meanwhile, the United States has begun to strengthen enforcement of the price cap mechanism. Last week, the U.S. Treasury Department designated three tankers as blocked property and imposed sanctions on their owners. These three tankers were reportedly carrying Russian crude oil at prices above the cap.
Furthermore, the G7 will discuss the handling of frozen Russian assets. Reports suggest the value of frozen Russian assets is approximately 300 billion euros, with more than half in cash and deposits, and the remaining “significant” portion in interest-bearing securities.
Most of these assets are held at Euroclear in Belgium. The clearinghouse stated last month that it earned 3 billion euros from frozen Russian assets in the first nine months of this year alone, compared to 347 million euros in the same period last year.
Sources expect the European Commission to propose taxing these interest earnings next week.