G7 to impose new sanctions on Russian ships, planes and diamonds

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The G7 countries are preparing new sanctions against Russiathat covers ships, planes, individuals and diamonds, officials say, as they try to put economic pressure on the Kremlin’s war machine.

The plan to reduce diamond imports from Russia – which arrives as G7 leaders meet in Hiroshima, Japan – is targeting one of Moscow’s few remaining export industries still relatively unscathed by Western sanctions.

The top of the group of major economies is expected to be dominated by the Kremlin’s invasion of Ukraine and efforts to expand sanctions, which have already hit Russia’s energy revenues hard.

The meeting, which begins on Friday and ends on Sunday, will seek to curtail Russia’s diamond mining revenue through a mechanism for tracking and tracing individual gemstones, which does not exist today.

The “traceability” initiative, included in a draft of the G7 joint statements seen by the Financial Times, is intended to prevent Moscow from circumventing sanctions by using India, which runs the world’s largest diamond polishing industry, as an intermediary.

A senior US official added that Washington would apply new sanctions to more than 300 Russian people, ships and planes.

He said the US Commerce Department would also add 70 Russian groups to the “entity list,” a blacklist that effectively prevents companies from exporting products with American technology to Russia.

“We are increasing the economic pressure on Russia,‘ the official said.

This came as the British government said it was preparing new individual designations targeting 86 other individuals and companies from President Vladimir Putin’s military industrial complex, as well as the energy, metals and shipping industries.

Rishi Sunak, the British prime minister, will also announce plans for a unilateral ban on imports of Russian diamonds, copper, aluminum and nickel.

London said it has already fined state-owned diamond maker Alrosa and raised tariffs on Russian diamonds by a further 35%.

“Today’s announcement goes further. Later this year, we will legislate to ban imports of Russian diamonds and end all imports of copper, aluminum and nickel of Russian origin, building on existing bans on Russian iron and steel,” a spokesman said.

This came as the British government said it was preparing new individual designations targeting 86 other individuals and companies in President Vladimir Putin’s military industrial complex, as well as the energy, metals and shipping industries.

Rishi Sunak, the British prime minister, will also announce plans for a unilateral ban on imports of Russian diamonds, copper, aluminum and nickel. London said it had already imposed sanctions on state diamond producer Alrosa and raised tariffs on Russian diamonds by a further 35%.

“Today’s announcement goes further. Later this year we will legislate to ban imports of Russian diamonds and end all imports of copper, aluminum and nickel of Russian origin, building on existing bans on Russian iron and steel,” the UK government said.

The war is entering a crucial phase, with Ukraine poised for a military counteroffensive, even as some of Kiev’s allies warn that support for its fight may be reaching a fever pitch.

Meanwhile the decline in Russia’s energy revenue, which fell more than 50% in the first quarter of this year, has heightened the importance of other funding sources for the Kremlin’s war machine. Diamond exports generated $4 billion in 2021.

The G7 has been grappling for months on how to set up a system to trace Russian diamonds in order to impose restrictions on their import.

Alrosa, already subject to Western sanctions, produces about 40 percent of the world’s diamonds by volume from its mines, according to Edahn Golan, a diamond industry analyst.

The EU was unable to agree on a ban on Russian diamond imports before the G7 summit. But member state officials say they are making progress in finding unanimous support among the 27 countries.

EU officials say the bloc is first focusing on getting India and other non-Western countries to agree to the G7 initiative to track and identify diamonds produced in Russia.

“We are confident that we will have a [diamond-tracing] system in place. . . months to come,” said an EU official involved in the G7 discussions.

Another EU official said the deal was being drafted. “We no longer see any objections. We convinced others.”

Italian Prime Minister Giorgia Meloni and Japan’s Fumio Kishida said in a joint statement after a bilateral meeting that they “affirmed continued tough sanctions against Russia and strong support for Ukraine.”