In the aftermath of last year’s outbreak of war, the Western nations swiftly implemented sanctions against Russia. Consequently, Western buyers began to steer clear of Russian gold, causing a significant shift in the bullion market. This created a void that was swiftly filled by other countries, with the United Arab Emirates emerging as a pivotal trade hub for Russian gold.
The UAE’s prominence in Russian gold trade grew, particularly after sanctions disrupted Russia’s more traditional export channels. Reports indicate that the Gulf State imported a substantial 75.7 tons of Russian gold, valued at $4.3 billion, during the period following the onset of the Ukraine conflict. This marked a significant surge from a mere 1.3 tons in 2021. The next major destinations for Russian gold are China and Turkey, each importing around 20 tons between February 2022 and March 2023. Remarkably, these three countries, including the UAE, collectively accounted for a staggering 99.8 percent of Russian gold exports during this timeframe, based on customs records accessed during that period.
The United Arab Emirates has assumed a pivotal role in the trade of Russian gold, capitalizing on disruptions caused by Western sanctions. Despite warnings from the West, the allure of Russian gold remains strong, with potential consequences for global markets and geopolitics.
However, a significant risk looms for the Western nations.
If Russian gold is melted down and recast, it could potentially re-enter U.S. and European markets, its origin cleverly concealed. To deter countries like the UAE and Turkey from engaging with Russian gold, the West issued a stern warning – either abandon Russian gold or face exclusion from G7 markets.
Notably, the UAE has long maintained a thriving gold industry, importing an average of 750 tons of pure gold annually between 2016 and 2021. Thus, shipments recorded in Russian records would represent only about 10 percent of its total imports. Furthermore, Russian firms had been selling bullion in the UAE at a discount of approximately one percent compared to global benchmark prices, providing an incentive for trade. Reports from Reuters suggest that a substantial portion of the gold destined for the UAE was intended for refineries, where it would be melted down and recast. However, the Emirates has vehemently denied these claims, asserting that it had not purchased any Russian gold and operated in full compliance with applicable laws, subsequently ceasing any transportation of such gold.
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