As G7 nations prepare to unveil new sanctions against Russia for its invasion of Ukraine, they are looking to take the shine off the Russian gems that are Moscow’s most significant source of revenue. Western nations are sending representatives to India, home to 90% of the world’s cutting and polishing of rare gems. Two Biden administration officials said that officials will discuss the potential effects of any G7 restrictions on imports of rough Russian diamonds.
In a statement released Friday, G7 leaders condemned Russia’s “illegal and unprovoked war against Ukraine,” noting that it killed thousands of civilians and destroyed homes, hospitals, schools, critical infrastructure, and historic cities across the country. They called on Moscow to end its war “without delay” and to stop using “destabilizing activities, including armed incursions into sovereign territory, to undermine democracy, stability, the rule of law, and human rights.”
But the G7 leaders’ move may also have unintended consequences for India’s booming diamond processing industry. The US, Britain, Canada, France, Germany, Italy, Japan, and Russia are expected to announce an import ban on diamonds from the Russian Federation, including those cut and polished elsewhere. That is expected to be a severe blow for the Indian industry.
According to estimates from the World Diamond Council, India’s rough diamond mining, polishing, and cutting sector is worth about $10 billion. The G7 leaders’ action will put about 120,000 people out of work and slash annual exports by more than half, the council says.
One way to minimize the ban’s impact is for luxury jewelry players like Richemont and LVMH Moet Hennessy Louis Vuitton to stop buying Russian diamonds. But even that could be not easy. “The problem is that it’s a complex supply chain, where you have many intermediaries,” the executive director of Jewelers Vigilance Committee, a nonprofit organization focused on ethics via legal compliance and policy advocacy in the gem industry, told Axios. “It’s difficult to enforce that.”
That’s why the US and others are turning to India for help. “There’s a trip next week to India; several countries are going to sort of verify certain implementation elements,” the senior official said. “I think that will be important to people’s decisions.”
India has disappointed American hopes for decades by prioritizing its struggle for independence from the British Empire and warm ties with Russia over its alliance with the West during the Cold War and beyond. But the BJP’s current leadership is appointing away from its pro-Kremlin positions, signaling that India and the United States can build stronger ties in the future.
