Since the beginning of the war in Ukraine, and the Western policy of sanctions, the trade routes of the precious metal have changed. For exports in international trade, Moscow now focuses on the Gulf country, along with China and Turkey. According to Reuters75.7 tons worth 4.3 billion dollars were imported, which represents a sharp increase compared to the meager 1.3 tons in 2021.
Dubai () – Since the start of the Russian war in Ukraine and the subsequent Western economic sanctions that blocked traditional export routes, the United Arab Emirates (UAE) has become an important trading center for Russian gold. The confirmation comes from customs records, analyzed in an in-depth dossier published by Reuters, which contain details of about a thousand expeditions that have taken place since February of last year. Charts show the Gulf nation imported 75.7 tons of Russian gold worth $4.3 billion, a decisive increase from just 1.3 tons in 2021.
China and Turkey are the other two main destinations, importing around 20 tons each between February 24, 2022 and March 3, 2023. If the import volumes from the Emirates are also added, the three countries add up to 99.8% of total Russian exports for the reference period.
Since the days after the start of the conflict in Ukraine, many international banks, logistics providers and precious metals refiners stopped processing the Russian product, which was usually shipped to London, the international center of trade and storage. Since March 7 last year, the London Bullion Market Association has banned bullion from Moscow, and since the end of August Britain, the European Union, the United States, Canada and Japan have banned all Russian bullion imports.
However, production did not stop, rather the opposite. Moscow quickly found new markets and different nations to interact with, which either do not follow Western sanctions policy or, when it comes to Turkey, are ambiguous. Louis Marechal, an expert on gold supplies at the Organization for Economic Co-operation and Development (OECD), spoke of the risk of Russian gold entering the US and EU markets after having been melted down several times to disguise their origin and avoid sanctions.
The matter demonstrates, once again, how behind the shiny façade of progress and innovation of the Emirates, as well as a policy of tolerance towards other religions, shadows and opacity are hidden: not only gold, oil and trade, but also the more than well-founded suspicion of serving as a “tax haven” for evaders and traffickers. When it comes to the precious metal, the Emirati government body Gold Bullion says the country has clear and consistent processes against illicit goods, money laundering and sanctioned entities. “The UAE,” he explained in a note, “will continue to trade openly and honestly with its international partners, in accordance with all current international standards set by the United Nations.”
In an effort to further isolate Russia, Washington has warned several countries, including the United Arab Emirates and Turkey, that they could lose access to G7 markets if they do business with entities subject to US sanctions. However, the data analyzed by Reuters they did not show any infringement and the trade had been carried out within a framework of apparent legality.
Customs data shows exports of 116.3 tons between February 24, 2022 and March 3 this year, although consultancy Metals Focus estimates that Russia produced 325 tons of gold in 2022. The rest of the precious metal mined in the country stayed there or was sent abroad through transactions that do not appear in the records, although it is difficult – if not impossible – to quantify its actual volume.
Meanwhile, the Emirates has further bolstered its already thriving gold industry. Trade figures show that it imported an average of 750 tonnes of pure gold each year between 2016 and 2021. This means that shipments on Russian records would only account for around 10% of its total imports. The nation is a major exporter of bullion and jewelry, and has reportedly in the past period been buying from Russia at a 1% discount to the world benchmark price, with further incentives for trade. An industry official, speaking on condition of anonymity, added that most of the gold his company sent to the UAE went to refineries, where it is melted down and mixed multiple times. Finally, in most cases customs records only indicate the carriers or merchants involved in the transactions and not the final purchaser. The latter could be a refiner, a jeweler or an investor from any nation, including a European one, without running the risk of violating the sanctions.
