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Russian sanctions are like anniversaries. They go: oil, gas, diamond.

The G7 countries are planning to come up with a scheme that would broaden the definition of "blood diamonds" as a way of cutting off Russia's diamond exports, according to a draft document seen by the Financial Times.

Putin In The Sky With Diamonds

Russia's had a bad week. The country's victory parade showcased one very lonely tank, and the sanctions imposed on its energy industry caused the Kremlin to bite the bullet and raise taxes on oil production. Compared to the mountainous energy sector, Russia's diamond trade is like a pebble, but given how strapped for cash Putin is right now any dampener on the country's revenue streams could have an effect -- especially since Russia imposed a $244 million windfall tax this year on diamond mining company Alrosa.

The US has already imposed its own restrictions on Russian diamonds, banning imports and sanctioning Alrosa, but the big plan now is to get an international agreement on how to best throttle the flow of diamonds out of Siberia:

  • The EU currently has no sanctions on Russian diamonds, partly because member state Belgium has wanted to shield its diamond dealers in Antwerp. Now, however, Belgian Prime Minister Alexander de Croo says the country's ready to take action.
  • "We want to carve out Russian diamonds from Western markets. But we won't achieve this with the existing direct bans of Russian diamonds. They haven't had any meaningful impact on the financial flows for Russia's war machine," De Croo told the FT.

Diamonds In The Bureaucratic Rough: Part of the problem with existing sanctions is that diamonds move in a very international market and don't require a ton of documentation. Many Russian diamonds, for example, end up in India for polishing, and then become nearly impossible to trace back to Mother Russia. The G7's plan would create an industrywide paper trail; because we all know that paper beats rock.