Botswana, the first victim of sanctions on Russian diamonds

The freezing of assets in the diamond sector is part of the sanctions imposed on Russia by the West. Botswana will be the justice of the peace in the standoff between the United Kingdom and India.

“Botswana is aiming to increase its diamond production and play a bigger role in the diamond industry,” Botswana President Mokgweetsi Masisi told Bloomberg over the weekend. Tunisia online sales site.

But the head of state of Botswana seems overwhelmed by events.Tunisia online sales siteWhile rising diamond prices did not wait for the Ukrainian conflict or sanctions against Russia, Botswana stands to be the big loser from the diamond shortage.

Read: Does Botswana still really have control of its diamonds?

Because as in all sectors where Russia is one of the world's leading exporters – Moscow is the leading producer and exporter of rough diamonds in the world – the sanctions against Moscow seem, at first glance, to benefit its competitors.

However, the Botswanan state had, since the start of Masisi's mandate, ceded the country's diamond production chain and exports, in large part, to the South African magnate Nicky Oppenheimer and his British holding company Anglo American.

“Despite Russia's hegemony in the diamond market, almost no export of Russian diamonds came directly from Russia. The largest suppliers by far were Botswana, Angola and South Africa, with smaller amounts from Canada and Tanzania. (…) More than half of these diamonds passed through India”. Ian Smillie

Oppenheimer came under fire in the first week of January 2022 from the world's biggest buyers of natural diamonds — Tiffany, LVMH, Cartier, Bulgari, Signet and others — due to an aggressive price hike, dubbed by some of unfair competition Tunisia online sales site.

An operation with serious consequences, which weakened the assets listed in London, Antwerp and New York, but also strengthened the competitiveness of … India.

India pulls out of the game

However, without Mumbai's involvement, Western sanctions against Russian diamond dealers had the opposite effect.

For the author of "Diamonds" and former witness against the ex-president of Liberia Charles Taylor, Ian Smillie, the sanctions against Russia are a godsend for Russian diamond dealers. Among the latter, the Alrosa company, whose boycott by the West was intended to attack the fortunes of Sergei Ivanov, son of Vladimir Putin's ex-adviser, and of the Russian State which owns two-thirds of the group.

In Western markets, especially in Antwerp and New York, Alrosa's earnings only suffered a drop of 3%, with exports increasing by 127%. These gains have doubled on the Bharat and Surat Stock Exchange (India), where Russian diamond dealers now dominate the market.

Even major multinational diamond trading companies don´t feel the heat to suspend relations with Russia´s state-owned diamond miner Alrosa because they operate outside public sight. “If you're not in the industry, you don't know these names” https://t.co/HEy0E6GePL

— Hans Merket (@hansmerket) March 25, 2022

Read: Why rising diamond prices will not benefit Africa

Meanwhile, the Belgian, British and American diamond markets are in freefall. Enough to threaten the finances of Botswana in the event of an increase in production.

Botswana's revenues are closely linked to Anglo American, which markets Botswanan diamonds almost exclusively on Western diamond exchanges.

In addition to the diamonds mined by Anglo American subsidiary De Beers, Anglo American owns 50% of the shares of the two state diamond companies, DTCB and Debswana.

"Once diamonds are cut and polished in India, they lose their original identity, and when they make their way to showrooms in Paris, London and New York, they are 'Indian' diamonds." Ian Smillie

Mokgweetsi Masisi in the eye of the storm

What “larger role in the diamond industry” is the Botswanan president talking about? Mokgweetsi Masisi, who had, against all expectations, voted for the condemnation of Russia by the United Nations, traveled to Dubai last week. There he met representatives of the world's two leading diamond cutters, both Indian, Shrenuj Diamonds and SuaShish Diamonds. A meeting that would have given nothing.

Meanwhile, Nicky Oppenheimer, who fell ten places in the ranking of the world's richest in 2022, is struggling to position herself in the Indian market. What, in short, prevent Botswana from speculating on the effect of the Russian-Ukrainian conflict on the diamond market.

On the side of Anglo American's direct competitor, Alrosa, the Russian diamond giant assured the Indian industry that there would be "no interruption in supply", and that "the rupee-ruble exchange agreements circumvent SWIFT banking restrictions”.

What, therefore, put a stop to the plans of Mokgweetsi Masisi. In a difficult political position, in particular because of an ever-increasing dependence on diamond revenues, what solutions will he find to the socio-economic crisis?