Gujarati Diamond Merchants In Antwerp Fleeing To Dubai After EU Scrutiny

Gujarati Diamond Merchants In Antwerp Fleeing To Dubai After EU Scrutiny

This shift comes in the wake of the European Union and G7 sanctions imposed in response to Russia's invasion of Ukraine

Melvyn ThomasUpdated: Saturday, March 30, 2024, 11:25 AM IST
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Antwerp, the heart of the global diamond trade for centuries, is witnessing an exodus of Gujarati diamond merchants.  These merchants, traditionally based in Antwerp, are setting up shop in Dubai to escape the intense scrutiny of the Antwerp police and customs department on diamond imports suspected of being Russian-in-origin. This shift comes in the wake of the European Union and G7 sanctions imposed in response to Russia's invasion of Ukraine. The sanctions, which began in January 2024, targeted Russian diamond imports to cripple Moscow's finances.  The measures were further tightened in March 2024, with a wider ban on Russian diamonds even if they are routed through third countries.

The heightened scrutiny has had a chilling effect on Gujarati diamond businesses in Antwerp.  A prominent Surat-based diamond merchant, with a long-standing trading office in Antwerp, faced the brunt of the stricter regulations.  Four individuals associated with the company were arrested by the Antwerp police on suspicion of importing $8.6 million worth of diamonds believed to be of Russian origin.  The Surat-based diamond trading company, considered the largest importer of rough diamonds from Russia, is considered as the key functionary of the Surat Diamond Bourse (SDB).

Sources allege that the Gujarati diamond trader manipulated the diamonds' origin documentation, falsely declaring them as originating from Angola to bypass the sanctions.  Following the G7 ban, rough diamond shipments worth millions of dollars destined for this company have been confiscated by Antwerp authorities, suspected to be of Russian origin.

Anirudda Lidbide, diamond industry analyst said, “The exodus of Indian diamond traders, who are in the majority in Antwerp diamond district, started way back when Dubai emerged as the diamond trading hub for its tax exemptions. The European and G7 sanctions on Russian-origin diamonds has further exacerbated things as increased scrutiny on Jews and Gujarati diamond traders, has resulted in the exodus to Dubai” Diamond traders in Antwerp argue that the physical properties of a diamond make it nearly impossible to definitively determine its source.  They claim the additional scrutiny has caused significant delays, holding up deliveries to customers by up to two weeks.  However, faced with the cumbersome EU regulations and the fear of further repercussions, European and Indian diamond dealers are increasingly looking towards Dubai as a more business-friendly alternative.

The Antwerp diamond industry, a powerhouse for centuries, accounted for over half of Russia's total diamond exports in 2021.  That year, Russia exported a staggering 28.2 million carats, valued at approximately $2.5 billion, with a significant portion finding its way to Surat for cutting and polishing. A Gujarati diamond merchant in Antwerp, who wished to remain anonymous, expressed the growing sentiment among his peers: "Since the sanctions, diamond merchants in Antwerp are treated like criminals.

The Antwerp authorities' excessive red tape has significantly impacted European and Indian diamond traders. It's simply better to relocate to Dubai than operate in Antwerp under this cloud of fear and uncertainty." The migration of Gujarati diamond merchants from Antwerp to Dubai threatens to dismantle a centuries-old trading hub.  As the EU tightens its grip on diamond imports, only time will tell if Antwerp can retain its position as the global center of the diamond trade.

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