【Germany】Import Ban on Russian Diamonds: Will Jewelry Become More Expensive?

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Editor’s Note

This article highlights concerns from the German jewelry and watch industry that the EU’s import ban on Russian diamonds may lead to higher prices for consumers, arguing the measure could inadvertently harm local businesses more than its intended target.

Das Einfuhrverbot von russischen Diamanten könnte der deutschen Schmuck- und Uhrenindustrie gewaltig schaden.
Industry Fears Price Increases

The German jewelry and watch industry fears that the import ban on Russian diamonds could lead to price increases in Germany.

Ban Harms Wrong Targets

Instead of punishing Russia, the ban harms the German industry, workers in diamond mines, and global cutters and traders, according to the industry. Further international and national crises also do not point to high revenues in 2024, experts warn.

Executive’s Warning
“We fear a price increase due to significantly higher costs in the supply chain, especially for non-Russian diamonds,” said Guido Grohmann, Managing Director of the Federal Association for Jewelry, Watches, Silverware and Related Industries (BVSU) based in Pforzheim, on Friday. “The damage to our industry will be significantly greater than to the Russian diamond trade.”

Both the European Union (EU) and the Group of Seven (G7) major industrial nations have imposed sanctions to curb Russian revenues from diamond exports in response to Russia’s war of aggression in Ukraine.

“The little we know about the implementation plans leads us to fear that those really affected by the sanctions are not in Russia, but at the mines in Africa and among the cutters and traders in India and other places around the world,” explained Grohmann.
Ineffective Sanctions

The current sanctions plan will not be able to effectively impact the Russian diamond trade, according to the BVSU, a view shared by industry experts worldwide. The EU Commission recently estimated Russia’s revenues from diamond sales at around four billion euros per year. According to industry experts, this figure is at least 50 percent too high.

“Since the EU and G7 sanctions in their final stage will only apply to goods from 0.5 carats upwards, and the Russian company Alrosa is particularly known for its small goods, the sanctions will only affect a fraction of Russian production volume.”
Gloomy Outlook for 2024

Due to expected bureaucratic hurdles and the still unclear implementation of the measures, the industry anticipates revenue losses for 2024.

“The war in Ukraine, the ongoing fighting in Gaza, and domestic dissatisfaction with the government’s self-discovery process cloud the prospects for a carefree and economically successful year,” the statement continued.

In a survey, about four out of ten member companies stated they expect less favorable revenue development this year. Only among larger companies does a small portion (eight percent) anticipate a more favorable trend.

2023 Market Performance

Regarding the past year, the BVSU referred to figures from the Jewelers’ Trade Association published at the Inhorgenta jewelry fair in Munich. The total market for jewelry and watches in Germany maintained the strong level of the previous year in 2023, with sales rising by 0.3 percent to 5.32 billion euros. The share of jewelry was 4.07 billion euros. The slight plus in trade was offset by a slight minus in the industry, indicating moderate inventory reduction in the trade sector.

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⏰ Published on: March 21, 2024