Upon inception, the group had a mandate of curbing the instability of oil prices as the world was plunged in a global energy crisis following disruptions caused by decisions by oil producing countries. Over the years, this role has progressively changed and now the Group of 7 presides over the coordination of economic policy and other global issues of interest to them.
The G7 commands a cumulative GDP share of 40% of the world’s total economic output, marking itself as a block of affluent and elite nations. The economic affluence enables the nations to be the leading purchasers of luxurious goods such as diamonds.
The G7 accounts for 70% of global diamond demand meaning that 70% of the diamond market sales are made in these countries. Diamonds are luxury goods, sold mostly as jewellery to well-off consumers who are mostly found in these developed countries. If these countries ever decided to block their citizens from buying diamonds, as a non-essential commodity, the sparkling stone’s value would crumble to being an order stone or piece of glass. The G7 countries are therefore directly responsible for assigning value to diamonds and when their economies slow down, things get very tough for diamonds. What the G7 says about diamonds goes.
As discussions get heated about sanctions on Russian diamonds, it is important to note the weight of the G7s voice over this issue. Russia is a former member of the G7 when it was called the G8. The exit has since marked Russia as an enemy of the interests of the G7 group. While different organisations and international institutions deliberate over what is best practice around banning Russian diamonds, by virtue of being the major buyers of diamonds, the G7 is attempting to make its weigh felt.
The G7 proposals for sanctioning Russian diamonds also appear to continue a pattern where rich nations usurp the role of the United Nations and dictate their own solutions to global issues. The Kimberley Process is the UN-backed body responsible for weeding out dirty diamonds in the world. The situation echoes criticisms made about the OECD, another economic group of economic super-powers, which is muscling through a global minimum tax, ignoring the platform provided by the UN.
African nations have made competing proposals through industry partners and their governments. Major state producers such as Botswana who have built up decades of global brand goodwill as ethical miners, are suddenly no longer trusted to administer their own source certification.
Some cynics have said part of the G7’s agenda in tackling Moscow’s diamonds is to cripple a major geopolitical contender and global power threat. Those with this viewpoint say the crumbling of the Russian economy will serve the interest of America and its allies as a result the G7 will not stop at anything to have its demands met.
How the standoff between diamond producers, who are mostly African, and the G7 who represent the market, will work out, remains to be seen.
