SANCTIONS

Photo Credit: Shutterstock/Sergey Chayko

Since Russia’s invasion of Ukraine on February 24, 2022, international pressure to stop doing business in Russia has landed at the doorstep of many multinational corporations. Despite no connections to the Russian government, companies like McDonald’s and Kentucky Fried Chicken saw pressure mount over the company’s continuing business in Russia. Both eventually gave in to the pressure, with McDonald’s vowing to continue to pay staff until its doors reopen. 

As many outlets, including the International Gem Society, have mentioned since the beginning of the Russian invasion, the diamond industry in Russia does link directly with the government, and its revenue is likely being used to support Putin’s ongoing military efforts. Recently, the ongoing pressure from consumers led multiple luxury jewelers to say they would stop buying diamonds that are of Russian origin.

The United States brand Tiffany & Co said in a statement that the company would stop buying diamonds mined in Russia as of March 21st of this year. “Tiffany has paused the sourcing of all rough diamonds from Russia, as well as serialized diamonds of Russian origin regardless of where they are cut and polished,” a Tiffany & Co spokesperson said to Barron’s.

The Tiffany & Co statement aligns with a conversation this outlet had with Kiran Nasir Gore, International Disputes Lawyer & Adjunct Professor at George Washington University Law School. “We cannot expect that all nations will implement identical approaches and timetables for phasing out sanctions. The need for strict due diligence and compliance efforts, throughout the supply chain and in oversight of foreign subsidiaries, will linger for likely years to come,” Gore said to International Gem Society recently.

The Executive Order on Prohibiting Certain Imports, Exports, and New Investment with Respect to Continued Russian Federation Aggression signed on March 11, 2022, by United States President Joe Biden extended sanctions on imports of Russian origin but did not clarify if diamonds polished in other countries (most are polished in India) would fall under the Executive Order. Tiffany & Co’s decision seems to be motivated by public relations instead of pure legality.

In a statement to Rapaport News, Swiss watch and jewelry-maker Chopard announced the company would not purchase diamonds mined in Russia with immediate effect on March 31st, stating its commitment to the “highest standards of ethical sourcing.”

“As part of its ‘Journey to Sustainable Luxury,’ Chopard continually reviews its supply chains to ensure the procurement of responsibly sourced stones,” the statement begins from the Geneva-based company. “Towards this end, and in light of the current international context, Chopard has ceased the purchase of newly mined…diamonds from Russian sanctioned entities with immediate effect.”

Signet, the world’s largest retailer of diamond jewelry, and Pandora, the largest jewelry maker, also announced they would stop buying diamonds and any other materials that are of Russian origin. However, Stephen Lussier, chairman of the Natural Diamond Council (NDC) and outgoing executive vice president for brands and consumer markets at De Beers Group, told Women’s Wear Daily that Russian sanctions won’t impact the overall supply and demand for diamonds.

“(Russian sanctions) may have a limited impact on the overall supply and demand of diamonds…there are a lot of markets that aren’t going to follow the EU and US lead [on sanctions] and some consumers aren’t going to be influenced by them. So it may be that the overall supply and demand is not really impacted.”
Sanctions against Russian state-owned Alrosa do not prohibit the company from selling diamonds, just dampen its ability to transact. Therefore, it may be in the hands of consumers to push more companies to refuse to do business with Alrosa, which is responsible for approximately 80% of the diamond industry in Russia.