Dubious Dubai Gold Trade Faces Delayed Rejection from Switzerland

The United Arab Emirates has long maintained an image of a country that floats on oil and is drenched in gold. However, all that is known across the world about the Arab nation is one prick away to reveal its hollow reality. Neither has oil been its economic backbone, and even its reputation of gold hub is melting amidst growing controversies.

Maintaining intensive gold relations with the Emirates, Switzerland recently insisted its gold refineries to keep an eye on the imports from the Gulf country, ensuring no involvement of illegal African bullion. In a letter on October 11, Switzerland’s State Secretariat for Economic Affairs told the refineries to take all the necessary measures to identify the true origin of the precious metal coming from the UAE.

For years, the Emirates has been a crucial destination of African gold, importing unrefined gold worth billions of dollars from across Africa. However, in the recent past, there have been large discrepancies in the values and volumes of gold imports and exports between the two nations. In 2016, the value of gold imported by the UAE was recorded much higher than that exported by the African states. Economists viewed it as a red flag for illicit activities.

The United Nations reported that 95 per cent of the gold originating from east and central Africa ends up in the UAE. Besides, the presence of armed groups puts the African region under high risk category. The Emirati regulatory loopholes are increasingly being pointed out for allowing the gold linked to conflict, money laundering and human rights abuse to be traded into the Arab nation. This gold from the UAE then makes its way into the Western markets, raising fears.

Key refining hubs of Switzerland like Valcambi have potentially been a major centre enabling the Emirati gold to enter other foreign markets, like Europe. In 2020, a report by Swissaid criticized the gold trade relations between the UAE and Switzerland, stating that the lack of transparency makes it difficult to determine the actual origin of gold coming from the UAE. It also revealed that the gold supplied by Emirati firms to the Swiss gold refineries comes from mines in Sudan, which are controlled by militias responsible for war crimes and rights violations in the country.

There have been some of the refineries in Switzerland, including Metalor Technologies SA, which stopped accepting gold from Dubai stating the difficulties in identifying its origin. Moreover, the London Bullion Market had also threatened last year to blacklist the countries failing to meet its standards on responsible sourcing. It was seen as a move targeted majorly at the Emirates.

While the darts are constantly denting the gold-plated reputation of the UAE, the country is only failing to remove such marks. The international measures against the Arab nation were long-awaited to fill the gaps of gold smuggling that have been haunting Africa’s rich mines.