Diamond exporters are now processing euro payments through German banks to avoid problems related to sanctions imposed on Russia in response to the February invasion of Ukraine.
Colin Shah, Chairman of the Gem and Jewelery Export Promotion Council (GJEPC), told The Economic Times: “According to Alrosa’s ordering schedule, orders for these diamonds were placed in early March. They are arriving now.”
“Exporters make payments through various banks that deal with the euro or another currency,” Shah said.
While payments through German banks have been known to delay the payment process by a week, it offers a temporary solution to allow transactions to continue while the sanctions are in place.
Exporters hope that the Indian government will soon be able to use the traditional ruble and rupee settlement mechanism as a long-term solution to trade diamonds with Russia.
The trade agreement, which was terminated several years ago, allowed India and Russia to trade currencies just before the implementation of a global financial information system called SWIFT, which was blocked by Russia as part of the sanctions.
The Jeweler previously reported that the Indian government has expressed its intention to bypass restrictions on cross-border banking by restoring currency trading arrangements with Russia.
“However, for diamonds listed in April, traders prefer the rupee-ruble mechanism. The authorities are investigating this and will resolve some issues,” Shah said.
ALROSA is the largest diamond mining company in the world. It is estimated that it accounts for 95% of diamonds mined in Russia and about 30% of diamonds mined in the world. Meanwhile, India has the largest diamond cutting and polishing industry in the world.
Since many of the large diamond operations operated by the Gujarat Diamond Company operate in Russia, disruptions in the supply of rough diamonds will seriously affect the diamond industry in India.
Although the place of the jewelry industry in the ongoing Russian-Ukrainian conflict remains vague for most, some have taken a straightforward stance.
Cristina Villegas, director of Mines to Markets, told The Guardian that her organization views Russian diamonds as conflict diamonds.
“These are objectively conflict diamonds, and they finance armed conflicts of state actors against peaceful neighbors,” Villegas said.
“It will take time for these things to come to a new definition. But the silence is overwhelming – it’s hard not to think it’s because much of the industry wants it to disappear or be forgotten.”
For another industry insider, the bigger question is the nature of the economic sanctions imposed by the West and how effective they are.
A diamond from India, originally rough from Russia, has undergone enough physical alteration to be considered new under US customs regulations. Therefore, it can be imported and available to US consumers in solid form.
Martin Rapaport, founder of online diamond trading network RapNet, told the Guardian that the sanctions had little effect on relations between India and Russia.
“Sanctions are basically very ineffective. They don’t do anything. They won’t stop Russian diamonds.”
India’s finance ministry has announced that it is evaluating the impact of sanctions imposed by the West while developing alternative payment mechanisms for trade with Russia, mainly for rough diamonds, fertilizers and oil.
“We will wait for details on any unilateral sanctions. In particular, their impact on our economic relations with Russia will be considered,” Arrin Dunbach, a spokesman for the Treasury, said at a press conference.
The UK has publicly expressed concern about India’s stance on the invasion of Ukraine.
On Saturday, India abstained in a vote on a US-sponsored UN Security Council resolution against Russia’s “aggression” in Ukraine, with its representative saying dialogue is the only way to resolve the dispute.
Speaking to the press, UK Trade Secretary Anne-Marie Trevelyan said: “We are very disappointed but will continue to work with our Indian partners and hope their views change.”
She added that negotiations are ongoing and there is an opportunity to benefit both sides. She also said there was still time for India to change its stance and support calls for sanctions against Russia.
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Post time: Aug-26-2022