( Image courtesy : Reuters )
With an annual production worth around $ 20 Billion, Russia is one of the biggest producers of gold in the world. As an aftermath of the Russian invasion of Ukraine, the Group of Seven Nations and the European Union sanctioned the trade of Russian commodities and thus there emerged major shifts in the world gold networks.
After China and Australia, the Russian Federation is the biggest producer of gold in the world. Producing around 300 tonnes, worth about 20 billion dollars. They are a key player in the world gold trade. However, with the onset of the Russian invasion of Ukraine, Russia has become unable to export commodities to Western buyers who were their normal customers.
Unable to absorb the 20 Billion dollar industry into its local markets, Russia has started selling the commodity to other nations such as Hong Kong and UAE.
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The craving for Russian gold
( Image Courtesy : Reuters )
Since the invasion of Ukraine by Russian forces on the 22nd of February 2022 , the UAE has imported 75.7 tonnes of gold from the Russian Federation. It is worth about $ 4.3 Billion in the global market today. The interesting aspect to be noted is that the previous year the same trade was conducted for a mere 1.3 tonnes.
It has been understood that apart from the UAE, the Russian producers have discovered many other nations that are willing to purchase the finest Siberian gold from them. They include the People’s Republic of China and Turkey.
Russian commodities has for long been rerouted to nations without the same restrictions as the West, according to customs data from an institution called ImportGenius.
The case of Turkey
( Image Courtesy: The Washington Post )
With close to no sanctions on the trade of Russian commodities, Turkey has emerged as one of the ‘ hotspots ‘ for the trade of Russian goods. It has been estimated that gold, worth $305 million has been traded via Turkey’s Istanbul airport in the last half year.
It is unclear if this trade shall increase or decrease with time. Turkey even after condemning the Russian invasion of Ukraine and voting against them in the United Nations General Assembly, has not sanctioned the Russian Federation. Thus they have taken a very strategic position in this war.
The case of Hong Kong
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Hong Kong has become one of the key players in this new trade of Russian goods. Hong Kong has been long used by Chinese banks to channel gold and cash. Firms from Hong Kong have channeled about $300 Million worth of Russian gold in 2022.
The unwavering support offered to Russia by the Chinese has been widely reported and debated. Hong Kong has also taken a similar attitude, supporting the Russian War efforts. Hong Kong has served as a transshipment base for goods such as microchips for the Russians
The curious case of the UAE
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The UAE has seen the biggest increase in gold trade with the Russian Federation, with about half a billion worth of the good reaching the nation after the war in Ukraine. Abstaining from voting against the Russians in the United Nations, the UAE has long taken a favorable stand against the Russian Federation.
The great Russian dilemma
( Image Courtesy: NPR )
Even after the increase in trade conditions right after the invasion, the Russian gold trade has not at all fully recovered to its initial standards. It has also been widely speculated and feared that such an export of gold can open the floodgates to a plethora of illicit Russian gold melted and recast, being exported to Western nations including the United States.
