'Conflict diamond' tag on Russian stones causes more bad blood

A war of words has broken out over 'blood diamonds' which conjure images of smugglers, shady syndicates and terror from the 2006 political thriller. Today, a wider use of that grisly term is about to disturb a 20-year-old delicate balance in the global diamond trade as Western countries label gems mined in Russia as 'blood' or 'conflict' diamonds - a tag that Russia vehemently opposes.

Like Russia, for many in the business, the trade of conflict stones by definition bankrolls terror groups and non-state actors while the Russia-Ukraine conflict is a war between two nations. The tussle brewing for the past one year is now coming to a head.

A fortnight before the crucial plenary session of the Kimberley Process - a trade regime established in 2003 and involving 85 countries to weed out conflict diamonds - Russia's deputy finance minister Alexey V Moiseev has warned in a letter that the "massive anti-Russian propaganda" and the sterner sanctions planned by the G7 against the largest global supplier of rough diamonds would "lead to a massive trade distortion".


The letter dated October 26 is addressed to Zhemu Soda, the Zimbabwean minister of mines who chairs the Kimberley Process (KP), two persons aware of the communication told ET.

Accusing the western powers of launching a hate campaign against Russia within the Kimberley Process, Moiseev said their "double-hearted rhetoric in support of Ukraine" is only a "cover-up for their subversive activities". Russia accounts for 33% (27% in value terms) of global supply of rough stones.

'Parallel structure'
To many in the diamond trade, G7 actions mask a ploy of some of the western countries to corner Russia which has emerged as a formidable force in the world of diamonds.

The curbs on Russia - feared to be announced soon - will take the form of a "structure parallel to KP" and "substitute the unambiguous and equal for all parameters of regulation of the diamond industry", said Moiseev.

Senior trade members from India and officials of the ministry of commerce are expected to attend Kimberley session beginning November 6 at Victoria Falls in Zimbabwe.

Moiseev's letter bluntly puts that the development of alternative market practices and their economic implications may spark social unrest and insurgency in certain regions, and hurt local communities of the producing and processing countries.

Over the years, the KP has attempted to sanitise the diamond trade and stop it from financing African warlords, rebels, private militias, and illegitimate players. Against this backdrop, diamantaires closely tracking the developments leading to Kimberley, feel that sweeping sanctions against Russian miners would compare the attack on Ukraine to an act of terror.