Editor’s Note
This article examines the challenges of enforcing sanctions on Russian diamonds, highlighting how complex supply chains and geopolitical alliances can undermine such measures.
The United States has prohibited the import of diamonds from Alrosa, a Russian company and the world’s largest producer, but the complex network created for their sale makes control difficult. In recent years, the Russian company has expanded its operations in Africa, such as in Angola. Furthermore, the Central African Republic sought Putin’s help in 2017 to regain control of mines held by militias.
If you have considered boycotting Russia over the invasion of Ukraine, you might want to avoid buying diamonds. Russia was the world’s largest producer of diamonds in 2021, accounting for 32% of the total (116 million carats), according to estimates by the US consultancy Bain & Company. The next largest exporting countries were Botswana (19%), Canada (15%), Democratic Republic of the Congo (12%), South Africa (8%), and Angola (7%).
Alrosa is the largest producer of this crystalline mineral by volume, although its competitor De Beers – now owned by Anglo American – is the largest in terms of revenue, as noted by Reuters.
The main shareholders of Alrosa are the Russian Federation, which holds a 43.9% stake, and the Republic of Sakha-Yakutia (25%). Its mines are primarily located in this Siberian republic and in the Arkhangelsk Oblast.
In early March, the United States sanctioned Alrosa and Sergei Ivanov (its CEO), but only went as far as prohibiting debt and equity transactions, meaning companies could still buy and sell Russian diamonds. So Biden took a further step and on March 11 banned the import of these precious stones.
Indeed, the Indian newspaper The Economic Times reported on March 17:
In recent days, Signet – the world’s largest diamond jewelry retailer – announced it had halted all trade in precious metals and diamonds from sanctioned Russian sources.
Blood diamonds are rough diamonds used by rebel movements or their allies to finance armed conflicts aimed at undermining legitimate governments, as defined by the website of the Kimberley Process, the certificate that guarantees the ‘clean’ origin of these precious stones. In many cases, slaves or people in semi-slavery conditions are used for diamond extraction, as depicted in the famous 2006 film starring Leonardo DiCaprio, Jennifer Connelly, and Djimon Hounsou.
Russia has re-established ties in recent years with Angola, where Alrosa extracts diamonds from the local Catoca and Luaxe mines. Additionally, in the Central African Republic, “where the diamond industry is mired in civil conflict and government greed,” Russia has offered weapons and instructors to train the country’s soldiers.
