UAE’s Illicit Gold Market to Become Another Benefit for Russia

The Russian invasion of Ukraine prompted a number of foreign governments to unite and isolate Vladimir Putin’s country. Consequently, the United States, the United Kingdom, the European Union, and some other countries imposed several significant sanctions against the Russian President, the government members, and various sectors and entities in Moscow. The massive international boycott led to a financial crisis in the Asian countryUAE 

In the declining situation of Russia, gold became an attractive investment to safeguard the economy from the potential impact of international sanctions. As Gold price tend to increase during the times of crisis, it is one avenue for Russia to make its economy resilient to the sanctions. However, on March 24, Joe Biden’s administration, along with its G7 partners, barred the Russian gold reserves from all sorts of trade by signing an executive order. It restricted Russia from selling its gold reserves in the international market. While there is a chance for Russia to lose its safe-haven asset during the crisis, analysts have suggested that it can use its influence in Africa.

For years, Russia has been maintaining a strong foothold in the gold-rich West African nations and warm ties with their governments. It has also used the Kremlin-linked private military company, Wagner Group, to acquire personal benefits from the African countries. In 2017, Russia deployed the Wagner Group in Sudan to protect Omar al-Bashir from the protests against his regime, and received an exclusive gold rights in the country as compensation. A similar case was related to the Central African Republic (CAR), which permitted Moscow access to their mineral deposits. The Wagner Group was also deployed to Mali, where studies have asserted a possibility of another exchange of security of mineral rights.

Since 2014, Russia has worked to build an influence in these African countries. Meanwhile, the United Arab Emirates has been one of the largest gold importers from such nations. The Emirates has been a dominant player in the financial and gold flows worldwide. However, previous reports have revealed the Arab country’s involvement in illicit trade of gold, which is smuggled from African countries before being exported to the global market.

Analysts claimed that Russia could move towards the UAE to sell its African gold. One reason could be the Emirates’ own involvement in facilitating illegal gold and financial flows, and the lack of legal regulations in the country to allow Russia to evade sanctions. Moreover, sanctioned Russian oligarchs have been relying on the Arab nation and moving their assets and wealth to the UAE. A number of Russian elites have moved their yachts to Dubai, invested in Emirati properties, and have also transferred their funds to banks in the UAE.

The lack of regulations in the Emirates have been providing a safe haven to such actors and entities from across the world. Abu Dhabi’s deficiencies in combating the issue of terror-funding and money laundering prompted the Financial Action Task Force (FATF) to list the country in its grey list. The decision taken in March 2022 has put the Emirates under increased monitoring by the financial watchdog. Currently, the UAE is assisting the Russians to escape the isolation strategy of foreign nations. The equally corrupt acts of the Emirates and its growing ties with Russia are proving to be a threat for Ukraine and global peace.