UAE becomes Russian gold trade hub due to western sanctions

ByNews Desk- The Cradle 

The wealthy Gulf state has become an important outlet for Russian trade and investment following the imposition of western sanctions due to Russia’s war with Ukraine

The United Arab Emirates (UAE) has become a key facilitator for Russian gold sales since Western sanctions over the war in Ukraine blocked Russia’s more traditional export routes, Reuters reported on 25 May.

Russian customs records viewed by Reuters show the UAE imported 75.7 tonnes of Russian gold worth $4.3 billion in the past year, after imports reached just 1.3 tonnes during 2021.

China and Turkey each imported about 20 tonnes of Russian gold in the year following the start of the war in February 2022.

Immediately after the start of the Ukraine conflict, western financial institutions stopped brokering Russian gold sales, however, Russian gold producers found new markets in countries willing to fill the void.

The UAE government Gold Bullion Committee stated that “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.”

China’s Ministry of Foreign Affairs said the country’s cooperation with Russia “shall be free from disruption or coercion from any third party.”

In July 2022, the United States, Britain, and their allies blocked purchases of Russian gold as part of an effort to cut off Russia from the international financial system and harm its ability to fund the war effort.

The western powers had already frozen hundreds of billions of dollars of Russian central bank assets held in western banks and blocked Russian banks from using the SWIFT system, which facilitates international payments.

Russia is the world’s second-largest gold-producing nation, and its exports of the precious metal to the London market were estimated to be worth $15.5bn in 2021.

Last year, Russia mined 314 tonnes of gold, accounting for nearly 10 percent of the gold produced globally.

The UAE has also become a hub for Russian purchases of real estate, providing a further outlet for Russian investors facing financial restrictions in western countries.

Russian nationals have become the largest buying group of real estate in Dubai since the war in Ukraine began, driving sales to a new record high.

In 2022, Dubai recorded more than 86,000 sales, surpassing the previous record in 2009 with 80,000 sales, according to Dubai-based Better Homes brokerage.

The estimated worth of real estate bought in 2022 is a staggering $56.6 billion, an increase of nearly 80 percent since 2021.