Sanctions on Russian Diamonds

How G7 countries banned Russian diamonds from 2024, why this was hard to enforce given Surat's role, and what it meant for Indian cutters.

Russia’s Alrosa is one of the world’s largest diamond miners.

Sanctions

After Russia invaded Ukraine in 2022, the US sanctioned Alrosa.
In 2024, G7 countries and the EU banned imports of Russian diamonds, including those cut elsewhere, like in India.

The challenge

Many Russian rough diamonds were cut in Surat and then exported to the West.
Once cut, a diamond’s origin is hard to trace.

Traceability

The G7 planned a traceability system, with certification in Antwerp, raising concerns among Indian exporters about delays.

Effects on India

Indian cutters had to prove origin, adding costs.
Some reduced purchases of Russian rough.
Combined with weak demand and lab-grown diamonds, it hurt Surat.

Economic lesson

Sanctions on goods that are transformed in third countries need traceability, which is costly.

The origin proof

A Surat exporter must document that the rough diamonds in a shipment of polished stones came from Botswana, not Russia, before selling to a European buyer.

Thinking sanctions only affect the target country

They added costs for Indian diamond cutters.

Key takeaways

Alrosa is a major Russian diamond miner.
G7 and EU banned Russian diamonds from 2024.
Tracing cut diamonds' origin is hard.
Indian cutters faced added costs.