How Antwerp is struggling with ‘blood diamonds’ from Russia

To enter Johan Van Camp’s dark, shiny tiled jewelery store on the Rijfstraat in Antwerp, in the heart of the Diamond District, customers have to go through two doors before standing at the counter. The years of daily robberies are over after the introduction of the Goudi special police unit, but the diamond business remains a risky and above all very expensive business.

Before the Russian invasion of Ukraine, more than 130 million euros worth of diamonds were funneled through a neighboring building every day. Since then, the diamond trade has dried up. Imports are becoming more difficult and more and more problems arise on the demand side. And they can be felt in the Diamond District, where men with an Indian appearance and briefcases in their hands walk the streets while they try to sell their purchased stones over the phone.

Johan Van Camp tells his cash register that more and more customers have recently been asking where the gemstones in his jewelry come from. Not from Russia?

He usually has no answer, although he knows that a substantial part of his trade is extracted in Siberian mines.

Russia is the largest supplier of rough diamonds; 30 percent of the rough diamonds traded worldwide come from Russia. A third of this goes to Antwerp, via the Indian port of Surat. There, 90 percent of all rough diamonds from all over the world are cut or polished. From that moment on, the stone is an Indian product; a certificate of origin is almost never issued, regardless of where the stone originally comes from.

Van Camp also explains this to his customers. And then some go to a store that only works with gemstones from Canada or Botswana. They are clear about the reason: people do not want to wear conflict diamonds.

Link between diamonds and invasion

That Russian gems can be such is apparent from a recent report by the IPIS (International Peace Information Service), a Belgian research agency that issues advice on human rights in conflict zones. According to the IPIS, there is a clear link between the Russian diamond trade and the invasion of Ukraine.

Russia’s Alrosa, a conglomerate of diamond companies and one of the world’s largest players, is one-third owned by the Russian state and another third is owned by the autonomous region of Yakutia, in Siberia, where the mines are located. As early as 1997, Alrosa invested in a submarine of the Russian Navy with the aim of keeping the ship “combat-ready”, according to one of the company’s newsletters. As a thank you, the submarine was christened ‘the Alrosa’ in 2004. Ten years later, with the support of Alrosa, soldiers were said to have been trained on that same ship for the Russian annexation of Crimea.

The Belgian newspaper The last news found out that Alrosa has been collaborating with Rosatom, the Russian nuclear agency, since 2008. In a response, the company says it has nothing to do with mining uranium or producing nuclear weapons. The collaboration would involve sharing knowledge about safety in a mine.

In late February, a day after Russia’s invasion of Ukraine, the US fired Alrosa’s CEO Sergei Ivanov on a sanctions list for his ties to Russian President Vladimir Putin. Ivanov is one of Putin’s most loyal group of confidants. His assets in the US were frozen and that prevented him from doing business in the US or with Americans.

Two weeks later, the US also decided on a total import ban on rough diamonds from Russia. According to experts, the impact of those sanctions was minimal: the US is primarily a consumer market for diamonds, and the provenance of those processed diamonds is, as mentioned, rarely traceable. In other words: Russian stones continued to find their way.

Fearing reputational damage, international jewelers such as Tiffany & Co, the Swiss watch brand Chopard and the largest global jewelry dealer Pandora subsequently decided to ‘pause’ their collaboration with Alrosa.

But in Antwerp, which has been the world’s most important marketplace for gemstones since the fifteenth century, because of its strategic location, people wanted nothing to do with an import stop for Russian diamonds. Not even after Ukrainian President Zelensky told the Belgian government at the end of March that “peace is worth much more than diamonds”, and confronted the country with an export product that helps finance a war.

Prime Minister Alexander De Croo always refers to the European Commission’s reasoning that sanctions should only be taken if they hurt more in Russia than in Europe. “If we stop importing diamonds, that trade will move to Dubai in one day,” he said. “In that case, the impact on Russia is zero, that on Europe is very large.” He did say that Belgium will not object if the European Commission decides otherwise.

In a boardroom on the ninth floor of an office in Antwerp’s Diamond District, Tom Neys uses words to that effect. He is head of communications at the Antwerp World Diamond Center (AWDC), which represents the interests of diamond dealers in Belgium. “By banning Russian stones, we would only be cutting our own flesh,” he says. “It would cost ten thousand jobs in one fell swoop. And the Russians won’t hurt you. They simply fly their stones to Dubai. You are pouring $1.8 billion into a country where Syrian President Assad was recently welcomed with open arms. Anyone who says that an import ban is a more ethical decision is selling nonsense.”

Movie Blood Diamond

The Belgian diamond sector has recovered somewhat in recent years after the successful Hollywood film Blood Diamond caused the necessary damage in 2006. That film, starring Leonardo di Caprio, is set in Sierra Leone, where precious stones are sold for the benefit of murderous rebel groups. Diamond dealers, already part of a closed network of formerly mainly Jewish but now Indian families, withdrew even further in shuttered office buildings in the Diamond District, often with only a desk and a lamp to value diamonds.

Partly because of the film, the diamond sector in Antwerp realized that regulation was necessary to regain consumer confidence. Quality marks were introduced that made money laundering and fraud more difficult. Many companies moved to Dubai because of the lack of supervision there. What remained in Antwerp were companies that prided themselves on their transparency and ethics. They said they only work with gems certified by the Kimberley Process, a United Nations-initiated body that monitors compliance with a trade ban on conflict diamonds.

But lately, the Kimberley Process has been criticized because Alrosa’s diamonds still bear its hallmark. This is because the body only decides by consensus. And since Russia is a part of it, it doesn’t look like the Russian diamond will be classified as a bad commodity anytime soon.

NRC asked the Kimberley Process chair, Zimbabwean Jacob Thamage, if it plans to discuss conflict diamonds from Russia at its upcoming meeting in June. There was no answer.

“Blood diamonds have been eradicated for more than sixteen years,” said Tom Neys on behalf of the AWDC. “What is happening in Russia now is different from what happened in Africa back then. If you’re going to ban Russian diamonds now, you might as well stop using cell phones. We also trade with the wrong regimes for the raw materials in batteries and screens. Do you call your cell phone a blood phone†

Hans Merket, who conducts research on behalf of IPIS and the University of Ghent into conflicts in places where natural resources are in the ground, thinks that in Antwerp, and thus in the European Commission, “until now it was hoped that this conflict is a storm which blows over. But the war in Ukraine is not over. You feel that the Russian diamond will have a negative connotation for a long time. I hope Antwerp sees that too. And feel the need to take action.”

According to Merket, the global diamond world should work together to ban Russian diamonds. “With the US you have the largest consumer market in the world that is turning its back on Russia. If Antwerp participates, you complicate that part as well. Together you have to increase the pressure on India and Dubai. Only then can you have an impact. Belgium always presents itself as a leader for ethical diamonds in the world. Then I think it is now up to the Belgians to proactively set up coordination.”

However, the chance of international cooperation being achieved is small. The World Diamond Council (WDC), the organization that represents the industry at the Kimberley Process, does not intend to call for a boycott of Russian diamonds, says Dutch President Edward Asscher. “Then you would run the risk of being accused of cartel formation by Russia. It would mean that we could be held liable for damage suffered by Alrosa. Moreover, a country like India, also a member of the WDC, will never agree.”

The diamond file is discussed repeatedly in the Belgian government. The federal government parties Vooruit and Groen have been trying for weeks to get the CEO of Alrosa on the European sanctions list, but diamonds were also excluded in the sixth EU package.

The threat of a European ban is already having consequences. Traders are no longer sure of their ordered stones. The supply of Russian diamonds in Antwerp has dried up since Russian planes were banned from landing in the EU. It could be months before a new contract is signed elsewhere in the world, especially in Africa. And there too many mines have come into the hands of Alrosa in recent years.

For example, the uncertainty in the Antwerp diamond district is increasing. Outside a jeweler’s office on Hoveniersstraat, two Indian men in suits are talking loudly to each other about the color and clarity of stones. 750 euros go from one inner pocket to the other. “What more can I get from you?” it sounds. The man on the right frowns. “My stocks are running out. Because you know…”

The men are preparing for the worst, one of the two says after the transaction. He does not want his name in the newspaper because that would worsen his negotiating position. “It is inevitable that the war in Ukraine will lead to bankruptcies here. There is no plane that brings Russian stones, and no one wants to insure them.” The sector is gasping for breath.

Due to the great uncertainty, the Indian diamond merchant Akash Jain, one of the smaller traders in Antwerp, recently decided to stop all trade in Russian diamonds. He won’t say how much his International Gem Organization was dependent on ‘Russian’, that is business-sensitive information. But it is more flexible than the larger companies that are tied to multi-year contracts with Alrosa.

Jain says he quit not only for economic reasons, but also for “humanity”. He can’t sell to himself by co-financing a war. “Russian diamonds have become blood diamonds,” he says bluntly. He doesn’t want anything to do with that anymore.