Russian gold rush . . . in the United Arab Emirates
Since the start of the war in Ukraine and the imposition of Western sanctions, Russian bullion exports have had to find new paths. For Russia the UAE has become a favourite destination for its gold, followed by China and Turkey. Reuters reports that 75.7 tonnes of Russian bullion found its way into the Gulf country in the past year, up from only 1.3 tonnes in 2021.
Dubai (AsiaNews) – Since the start of the war in Ukraine and the subsequent imposition of Western economic sanctions, the United Arab Emirates (UAE) has become a major trading hub for Russian gold after Russia’s traditional export routes were shut down.
Russian customs records show that nearly a thousand shipments were made after February 2022, Reuters reports in an in-depth dossier.
Between 24 February 2022 and 3 March 2023, the Gulf country imported 75.7 tonnes of Russian gold worth US$ 4.3 billion, up from just 1.3 tonnes in 2021. China and Turkey are the other two main destinations, with about 20 tonnes each.
Put together, the three countries account for 99.8 per cent of total Russian exports for this period.
After war broke out in Ukraine, many international banks, logistics providers and precious metal refiners stopped handling Russian gold, which was typically shipped to London, gold’s trading and storage hub.
Since 7 March 2022, the London Bullion Market Association has imposed a ban on Russian bullion, while the United Kingdom, the European Union, the United States, Canada and Japan have banned all imports of Russian bullion in August 2022.
Yet, Russian gold found new markets in countries that did not follow the West in imposing sanctions. For its part, Turkey has maintained an ambiguous attitude.
For Louis Marechal, a gold sourcing expert at the Organisation for Economic Co-operation and Development (OECD), Russian gold could be melted and recast for sale in US and European markets with its origin masked.
Despite its seeming progress and innovation and its relative tolerance towards other religions, the UAE can be a place of murky deals, not only in gold and oil but also other commodities, not to mention a potential tax haven for tax dodgers and traffickers.
For its part, the UAE’s Gold Bullion Committee, a government body, said the UAE follows clear and robust procedures against illegal goods, money laundering and sanctioned entities.
“The UAE will continue to trade openly and honestly, with its international partners, in compliance with all current international norms as set down by the United Nations," it said.
In a bid to further isolate Russia, the United States has warned several countries, including the UAE and Turkey, that they could lose access to G7 markets if they do business with entities subject to US sanctions.
However, in its report, Reuters did not find any apparent violations, noting that transactions were within legal boundaries.
Louis Marechal, a consultant with Metals Focus, estimates Russia produced 325 tonnes of gold in 2022, while Russian customs records show exports of 116.3 tonnes between 24 February 2022 and 3 March 2023.
Thus, the rest either did not leave the country or was shipped out unrecorded; ultimately, it is impossible to know how much Russia actually exported.
Meanwhile, the UAE is a major exporter of bullion and jewellery, and has boosted its already flourishing gold industry
Trade data shows that it imported about 750 tonnes of pure gold on average each year between 2016 and 2021, with Russian gold accounting for only about 10 per cent of total imports.
As an incentive to buyers, Russian bullion was recently sold to the UAE at a discount of about 1 per cent to global benchmark prices.
The manager of a shipping company, who spoke on condition of anonymity, said most of the gold his firm shipped to the UAE was destined for refineries, where it would be melted down and recast.
Since customs records show only shippers or traders involved in the transactions, not the end buyer, which could be a refiner, jeweller or investor, Russian gold could end up anywhere, even in Europe, with no risk of penalties for violating sanctions.
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