The United States is reevaluating the strictest elements of the G7's ban on importing Russian diamonds following objections from African countries, Indian gem polishers, and jewelers in New York.

Background: The sanctions package, agreed upon in December and inclusive of an EU-wide ban, represents one of the most significant shake-ups in the industry in recent decades.

Source of Information: The developments are reported by Reuters, citing seven sources and are detailed in the European Truth publication.

Negotiations Update: Two sources familiar with the negotiations reported that the Americans have stepped back from active participation in the G7 working groups dealing with strict controls, with one describing them as "present but not participating."

US Position: A high-ranking official from the Biden administration clarified that Washington has not shifted its stance and will continue collaborating with the G7. "We want to ensure that we strike the right balance between harming Russia and ensuring feasibility," said the official, who chose to remain anonymous due to not being authorized to speak publicly on the negotiations.

Impact of Sanctions: The G7 sanctions aim to cut off another revenue stream for the Kremlin’s military efforts in Ukraine. According to the Russian state-owned mining company Alrosa, diamonds only contribute a small fraction—approximately $3.5 billion—of the revenues compared to those obtained from oil and gas.

Operational Changes Since March: Importers in G7 countries have had to independently verify that diamonds are not sourced from Russia, the world's leading producer of uncut diamonds. Direct import sanctions on Russian gems were implemented in January.

EU Measures from September: Diamonds of 0.5 carats and larger will need to pass through Antwerp, a centuries-old diamond center in Belgium, for traceability certification using blockchain technology starting in September.

G7 Agreement: Sources revealed that G7 countries have agreed that Antwerp will be the logical first center, with other centers to be added later.

Stalled Discussions: Three sources indicated that Washington has cooled on enhancing traceability, leading to a stalemate in discussions about implementing traceability measures.

EU Commitment: The Biden administration official stated that the commitment to implement a traceability mechanism by September 1 pertains to the European Union, not the United States, referring to the wording in the G7 leaders' statement from December.

Global Concerns: "We must do this in a way that accounts for the concerns of African partners and producers, considers partners from India and the UAE... and ensures that it can also be workable for the American industry," the official added.

Letter from African Leaders: In February, presidents of Angola, Botswana, and Namibia—countries that account for 30% of diamond production—wrote to G7 leaders expressing that a predetermined entry point into the G7 market would be unfair, infringe on freedoms, and harm revenues.

Italy’s Stance: Italy, currently presiding over the G7, declined to comment on the US position.

Potential Risks of Easing the Ban: Any relaxation of the phased ban risks creating loopholes that could allow Russian diamonds to enter boutiques in New York, London, and Tokyo—a threat highlighted when Belgian authorities seized likely Russian stones worth millions of dollars in February.

Advocates for Sanctions: Proponents argue that a reliable tracking mechanism is essential for an effective ban, and without full participation from the United States, which accounts for 50% of the G7 diamond jewelry market, the ban cannot be effective.

Future Steps: By September 1, 2024, G7 countries, which are major importers of uncut diamonds, will establish a verification and certification mechanism for uncut diamonds and will consult with producing countries and partners, as agreed by G7 leaders.

Canadian Foreign Affairs Minister's Statement: On March 1, Canadian Minister of Foreign Affairs Melanie Joly announced an enhancement of sanctions against Russian diamonds with G7 partners.