Surat : UAE banks block millions of dollars, hurting diamond firms amid Russia-Ukraine war

Surat :  The heart of the global diamond cutting and polishing industry, Surat, is facing significant financial setbacks as the economic sanctions imposed by the United States on Russia in light of the Russia-Ukraine conflict have led to the freezing of millions of dollars worth of funds. This unprecedented situation has left numerous diamond companies in a precarious position, with their international transactions coming to a halt.

Several prominent diamond companies in Surat maintain amicable relations with Alrosa, a Russian state-owned diamond mining company. In the past, these companies often made payments in US dollars through their international banks based in the United Arab Emirates (UAE) for the supply of rough diamonds. However, the far-reaching impact of the US sanctions on Russia has left these international banks with no alternative but to freeze these payments, rendering them inaccessible to the diamond businesses.

Industry estimates suggest that approximately $26 million worth of funds have been effectively seized by international banks due to the ongoing US sanctions on Russia in the UAE. A notable number of diamond companies in Surat are now grappling with the implications of this frozen financial flow, as their essential funds remain stuck in limbo due to these unforeseen developments.

Sources indicate that these diamond companies have received special instructions from their banks to halt any further transfers of funds until further notice. This interruption in financial transactions has caused a significant disruption in the diamond supply chain, impacting the operations of the companies involved.

Speaking on the issue, Chairman of the Gems and Jewelry Export Promotion Council (GJEPC), Vipul Shah, emphasized the urgency of addressing this financial crisis. Shah stated, “We have taken up this matter with the Ministry of Commerce, and our priority is to ensure that these frozen payments are released to the Russian companies. This will facilitate the negotiation and supply of rough diamonds, which is crucial for the stability of the diamond industry.”