G-7’s fresh sanctions on Russia will push a million workers into poverty in India

After the recent G-7 summit in Hiroshima imposed fresh sanctions on Russia, over a million diamond workers in Gujarat's Surat may become jobless.

G-7's fresh sanctions on Russia will push a million workers to poverty in India

Following the fresh sanctions on Russia and its diamond mining by the G-7 countries at Hiroshima, over a million diamond workers in India, particularly in Gujarat’s Surat, face threats to their jobs, The Wire reported in an article.

About 90% of the diamonds in the world, including those from Russia, are cut and polished in India. India imports diamonds from Alrosa, Russia’s major diamond conglomerate. Roughly 40% of the diamonds processed in Surat come from Russia. These diamonds are exported to G-7 nations by Indian businesses after adding value through cutting and polishing. With fresh sanctions on Russia by the G-7 countries, this trade may suffer a lot.

According to Gem & Jewellery Export Promotion Council (GJEPC) chairman Vipul Shah, if the sanctions are maintained then one million jobs might be lost. Most of them will be in the diamond heartland of Surat, where migrant workers from Bihar, Odisha, West Bengal and other states flock to make a living.

The fresh sanctions on Russia by the G-7, especially its diamond trade, will affect these workers more than Russia. The diamond traders of Surat import a large chunk of their raw material, uncut diamonds from Russia. If the fresh sanctions on Russia stay, then it will affect the import of raw materials and leave the industry in a disarrayed state.

While Prime Minister Narendra Modi, who hails from Gujarat and whose Bharatiya Janata Party (BJP) has been in power in the state for nearly two and a half decades, attended the G-7 summit in Hiroshima as a guest, neither he nor his party raised the issue of the diamond traders.

While the diamond industry in India, especially in Surat, has been coping with the fall in overall demand for diamonds globally due to a massive economic slowdown that has engulfed the West, where diamonds have a large market, the fresh sanctions on Russia and its diamond trade will aggravate the crisis this industry has found itself in.

The Wire reported Shah as saying that the diamond industry can cope with the situation now, but the situation may worsen if the demand for diamonds increases shortly. This isn’t the first time the industry is facing this challenge. Since Moscow declared its special military operations in Ukraine, the West imposed sanctions on Russia, which impacted its diamond export.

In December 2022, 250,000 diamond workers—nearly a quarter of the workforce—were put on two weeks’ unpaid leaves as the businesses scavenged for raw materials and faced a severe dip in demand. Many organisations reduced the working hours from 12 to eight and reduced the days of work to manage their operational expenses. The smaller ones shut down.

Now, as the threat of a major recession looms large on the Indian diamond business and as the G-7 summit’s fresh sanctions on Russia further crippled the industry, Gujarat Diamond Workers Union (GDWU) president RD Zilariya and vice-president Bhavesh Tank demanded ‘vacation salary’ for workers who have been sent on unpaid leaves by the employers and financial aid from the government. So far, the BJP-led state government remains non-committal on the issue and has not assured the diamond traders.

On February 24th 2022, Russian President Vladimir Putin announced a special military operation in Ukraine. The US and the West immediately started imposing sanctions on Russia to destroy its economy. The sanctions on Russia, however, failed to achieve their goals even after a year, rather they backfired on the West, bringing an overall economic recession.

Although the earlier sanctions as well as the fresh sanctions on Russia failed to achieve their purported targets, the people of lower- and middle-income countries like India have to bear the brunt of these unilateral actions by the US. As the G-7 summit’s fresh sanctions on Russia proved that it’s not the Kremlin at the receiving end, but the poor, working class of the Global South, who are facing the heat.

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