Russia is a huge market for U.S.-based jewelers, which rely on Russian rubles to make up as much as 40% of their sales. But Russia has also seen an influx in its gold and diamond reserves since the 1990s, when it began selling resources to help with budget deficits and improve domestic production—and amid sanctions imposed by Western nations after Vladimir Putin’s annexation of Crimea in 2014
The “alrosa diamonds sanctions” is a topic that is often discussed in the news. The United States has imposed sanctions on Russia to try and prevent Russian diamonds from entering the U.S.. However, it seems as though these sanctions are not working.
Despite being sanctioned, politicians and industry players believe that Russian gold and diamonds might still be traded in the United States unless firms and governments improve their controls.
The selling of gold and diamonds from Russia is technically prohibited under US and European sanctions. According to these sources, Russian jewels and precious metals are still likely to infiltrate Western markets, frequently via a difficult-to-police worldwide network of intermediaries.
Rep. Elissa Slotkin (D., Mich.) stated in a statement that more restrictions are required to “ensure Russia can’t utilize its gold stockpiles to bankroll the horrors being perpetrated throughout Ukraine.”
This is due in part to the fact that processed diamonds and completed jewelry are often imported from countries like China, India, and Turkey, meaning they might be legally carried into the United States even if the raw materials originated in Russia, according to jewelers.
According to the World Gold Council, Russia owns around a tenth of the world gold supply and 30% of the diamond supply, with a gold hoard worth over $140 billion. The worth of its diamond stash is unknown, although jewelry industry experts believe it to be in the same ballpark.
Last year, a worker at a Russian factory burned gold. Russia provides almost a tenth of the world’s gold supply.
Andrey Rudakov/Bloomberg News photo
The real provenance of gold and diamonds is sometimes difficult to determine: Russian gold, for example, may be used in Turkish jewelry, or Russian diamonds polished in India and then re-exported. According to industry insiders, this issue might be solved if American jewelers and customers demand complete traceability.
Susan Wheeler, a Chicago-based jewelry designer and ethical-sourcing advocate, remarked, “Gold and diamonds are both incredibly exploitable.” “Consumers need to know that if they purchase from businesses that don’t confirm their supply chain, they might be fueling the conflict in Ukraine,” she said.
In the weeks after the February invasion of Ukraine, the US targeted polished Russian diamonds as part of a wave of penalties. Following appeals from MPs for stronger steps, it sanctioned Alrosa, the big Russian diamond manufacturer responsible for 90% of the country’s entire supply, in April. Questions were not answered by Alrosa.
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A bipartisan group of congressional lawmakers wrote to the Biden administration in April, warning of gaps in the way jewelry movements are handled, particularly the ease with which Russian diamonds may be imported via other nations. They asked the Treasury Department to modify how it defines the nation of origin and to engage with countries like India to prevent sanctioned Russian assets from being funneled through them.
The “Stop Russian Gold Act,” which was presented in March and would bar American people from engaging with foreign nationals who buy or sell Russian gold, has yet to be enacted. Later that month, the Treasury Department warned Russian gold might already be subject to wide penalties imposed by President Biden’s executive order in April 2021, which was intended to penalize Russia for attempting to meddle in US elections.
Requests for comment were not returned by the Treasury Department.
Russian gold and jewelry have also been sanctioned by the European Union.
“There’s so much opacity in the center of the supply chain,” Christina Miller, a sustainable-jewelry consultant and member of the Worldwide Gold Transparency Initiative, said of a global sector dominated by tiny enterprises and a huge network of intermediaries.
A shopper looks at a diamond ring in a Tiffany & Co. store in New York. Tiffany has pledged it will cut Russian diamonds out of its supply chain.
Mike Segar/Reuters photo
The GGTI is encouraging policymakers to tighten sanctions by eliminating loopholes and making it unlawful to handle Russian material supplied from foreign nations. “The issue is that if [politicians] don’t understand how the jewelry business works, they may believe they’re doing something they aren’t,” Ms. Miller said.
The Global Initiative Against Transnational Organized Crime, headquartered in Switzerland, warned in April that sanctioned Russian enterprises and people were likely selling gold on the illicit market by shipping supplies to foreign nations.
Independent organizations such as the Responsible Jewellery Council in the United Kingdom often certify gems and precious metals as ethical. However, the conflict in Ukraine has put this structure under pressure.
Following the council’s refusal to suspend Alrosa in March, some of the world’s largest jewelers—including Gucci owner Kering SA, Pandora A/S, and Cartier owner Compagnie Financière Richemont SA—decided to leave the organization, citing its inactivity on the Russian miner. The chief executive officer of the council also resigned. A request for comment from the former CEO was not returned.
Alrosa, which is one-third controlled by the Russian government, left the company in April. It said in a statement that it was dealing with “extraordinary conditions,” without mentioning sanctions or the Ukraine conflict. Before taking any action, the Council said that it was awaiting legal advice.
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Several big jewelers have independently said they are taking action on Russian gems. Tiffany & Co. owner LVMH Moët Hennessy Louis Vuitton SE has said it is working to rid its supply chain of Russian diamonds, while U.S. jewelry store operator Signet Jewelers Ltd. has said it would stop purchasing Russian diamonds. Neither company responded to requests for comment.
Industry players like Mses. Miller and Wheeler have asked large corporations to be more open about their sourcing in order to demonstrate that they are removing Russian materials from their supply chains.
Smaller jewelers in the United States are likewise attempting to adapt. “It never occurred to me,” said Bob Goodman, a jeweler in Zionsville, Indiana, that Russia may be a troublesome supply of gold and diamonds. He now views Russia as a source of “conflict” gold and diamonds, similar to those found in African, Asian, and Latin American combat zones.
Mr. Goodman said he has asked his New York-based diamond source for guarantees that he would not get any additional Russian-made diamonds. He exclusively buys gold from suppliers who can track their commodities’ origins, he claimed.
With completely traceable gold often costing roughly 20% more, Mr. Goodman believes that many American jewelers are more worried with their profit margins than the possibility of sponsoring foreign wars. Others, he argued, are too fixed in their ways to look for fresh ethical sources.
Mr. Goodman added, “I hear a lot of excuses” from jewelers who are hesitant to be more careful about where their jewels and precious metals come from.
Trefor Moss can be reached at [email protected]
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Russia has been trying to keep its diamonds and gold out of the US for decades. Despite sanctions, Russia is still able to smuggle diamonds and gold into the US. Reference: lab-grown diamonds russia.
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