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Geopolitics And The Future Of Trade

18 april 2022

By Ahmed Bin Sulayem, Chief Executive Officer at DMCC (Dubai Multi Commodities Centre)

ahmed_bin_sulayem_xx_dmcc.pngAs I write, it is the 31st March 2022, and the closing ceremonies of Expo 2020 Dubai are taking place. Having visited and hosted many guests and dignitaries over the past six months, I have not only been overwhelmed by the ingenuity and variety of the exhibitions, pavilions and shows, but the congregation of people and nations who have proudly participated to present the best of what each has to offer.

In his closing speech, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai said, “We portrayed to the world a different version of ingenuity that touched the hearts and minds of every member of society. Our sons and daughters have proven their ability to overcome unprecedented difficulties and challenges. And in every moment of this journey, we reflected the values of the UAE — values of affection and hospitality.”

It has been hard to say farewell to the somewhat utopian spirit of Expo and re-engage with the varying geopolitical conflicts that are occurring around the world, be they territorial, political, creed or culture-based, however, in the spirit of Expo, I am reminded that in the midst of conflict there is always the opportunity for resolution.

On the same day as the closing ceremonies, Ukrainian President Volodymyr Zelensky addressed the Belgian parliament in an empowered speech, which amongst several pleas called for the suspension of diamond imports from Russia, as way of enhancing the effectiveness of the current Western-led sanctions.

In his speech, President Zelensky stated, "There are those for whom Russian diamonds that are sometimes sold in Antwerp are more important. Peace is more valuable than diamonds, than Russian ships in the ports, than Russian oil and gas, so help us."

While a lengthy standing ovation showed the impassioned and empathetic response of Belgium’s parliamentarians, two practicalities are worth illustrating.

Firstly, the suspension of diamond and energy imports are not only very different things but come with very different consequences. In 2020, Russia exported $5.74bn to Belgium, of which its top three commodities were refined petroleum, diamonds and petroleum gas making a total of $3.86bn, or 67.2% of its total Russian imports. While I empathise with President Zelensky’s plight, I agree with Belgian Prime Minister, Alexander De Croo, who concisely summarized, “We are not at war with ourselves.” And he certainly has a point.

Having already suspended the export of diamonds to Russia, there is no doubt that an imposed suspension on imports to Antwerp, for which it is the most significant recipient of rough diamonds, estimated at €1.8 billion in 2021, would cause serious harm to Belgium’s second biggest city and its position as a global diamond capital.

Secondly, and far more severely, an embargo on Russian energy would have the potential to cause significant disruption to Belgium’s economy, let alone its ability to cost-effectively meet consumer demand with the colder months just over half a year away.

As a decision that ultimately rests in the balance of the European Commission, with 49% of Russia’s crude oil and condensate, 74% of its natural gas and 32% of its coal exports currently heading to Europe, the $108 billion question is will suspending trade cause more harm to Europe than to Russia’s ability to continue its invasion of Ukraine, and furthermore how difficult would it be for Russia to continue to sell its highly valued natural resources elsewhere? In the same case for diamonds, again as illustrated by Prime Minister De Croo, should Belgium stop importing diamonds, the trade would move to Dubai in one day, resulting in zero impact to Russia, but a massive impact to Antwerp.

Put more bluntly by the Antwerp World Diamond Centre (AWDC) spokesperson Tom Neys, “We have invested 20 years in making the diamond trade more transparent. Are we really going to throw that all away to reward Dubai, which is already opening its doors for Russian oligarchs?”

While I’ll choose to ignore the cheap comment on oligarchs [see my recent blog for why] it would be all too easy to remind Mr. Neys that 20 years of diamond transparency in Belgium includes a long list of challenges and systemic failures ranging from the Monstrey Case, to the conviction of felon, Agim De Bruycker, a former commissioner of the Antwerp Federal Judicial Police and head of its “Diamond Squad.” It should also be obvious that if any action is ultimately enforced by the European Commission, it has not and will not be because Dubai lobbied for it to be so.

Instead, I would like to talk about the far more extensive list of Belgium’s strengths, its deeper relationship with Dubai, and why I hope the European Commission will maintain Antwerp’s ability to import.

During my recent address at the FT Commodities Global Summit in Switzerland last month, I closed by stating that, “while forging a market for healthy competition is always welcomed, collaboration has and will remain a focal point for the commodities industry, and it is my ambition that Dubai will continue to serve as a vital part of the global supply chain and a strategic partner for those seeking to drive innovative change.”

While Dubai can today be mentioned in the same breath as Antwerp in terms of its diamond industry, this wasn’t always the case. As the new kid on the block, Antwerp has been equally responsible for Dubai’s success as a competitor, a de facto benchmark for the industry for several centuries, and a trusted partner to the overwhelming majority of its stakeholders.

Having visited Belgium on many occasions, I’ve developed strong relationships with many key members of Antwerp’s diamond community, members of parliament and its Jewish community, while also enjoying the country’s rich history, spectacular museums and learning more about its sophisticated relationship with coffee and cacao, two other industries DMCC intends to continue growing.

At a diplomatic level, Belgium and the UAE have forged a closer working relationship through a variety of actions, including the opening of a military attaché office in Brussels, through to proven, long-term business collaborations such as DP World Antwerp’s operation of the Antwerp Gateway terminal, and its associated investment of almost €200 million by 2025 directed towards boosting capacity by a third.

At DMCC, some of our earliest members came from Belgium’s diamond community, including Basem Murad of MSD, not to mention the extensive list of Belgian nationals who have, and continue to work towards developing our diamond industry while building stronger bridges with the international community. Special mention must be made to Peter Meeus, Honorary Chairman of the Dubai Diamond Exchange, Managing Director at PME Consulting as well as Davy Blommaert, Head of Diamond, Government and Large Corporation and Paul de Wachter, Head of Antwerp Representative Office at the National Bank of Fujairah, both of whom have been intrinsically valuable in driving short-term trade finance to established rough and polished diamond traders and manufacturers.

Additional Belgian-led enterprises to make a significant impact in our community include Almas Diamond Services. Led by manager Filip Hendrickx, his team of artisans which include Technical Manager, Alain Leysen and Master Polishers, Marc Nevelsteen and Leo Van Heurck provide a broad range of services including state-of-the-art boiling, evaluation and polishing in the very heart of the DMCC.

Aside from the lengthy list of Belgian contacts, whom I’m proud to call friends as well as business associates, I recently had the pleasure of meeting with the ‘Muscles from Brussels’ himself, and recently appointed DRC ambassador, Mr. Jean-Claude Van Damme, who similarly to His Excellency Peter Claes, Belgian Ambassador to the United Arab Emirates, is a natural promoter for all things Belgian, not to mention a hugely popular figure across the UAE.

Even the construction of Uptown Tower, the forthcoming headquarters of DMCC is being managed by Besix, the Brussels-based main contractor, whose track record and attention to detail and quality secured them the deal to deliver the 340-metre tower.

In the same way that sanctions may not have the intended consequences on Russia, neither do ill-informed comments or false media narratives help to protect industries or jobs. Ultimately, healthy competition is fundamental to any industry as a driver for innovation, lower prices as well as higher quality goods and services, however, greater benefits can be found in ’coopetition’, where industry-specific economies work together to create higher standards that benefit the entire supply chain, while remaining resource efficient.

While I may not agree with all of Mr. Neys comments, I agree that sanctions on Belgium’s diamond industry would be “a mistake of historic proportions” and it is my wish for Antwerp to return to full strength and join in not only providing a competitive market, but working with Dubai to drive positive change for the industry’s wider benefit.