In response to Western economic pressure, Russia has turned to gold to support the economy, evade sanctions, and bolster its international trade, according to a new report from RAND Europe.
The report, ‘Gold rush: How Russia is using gold in wartime’, reveals that Moscow, largely reliant on oil and gas revenues, pivots to gold to shore up its economy in the months leading up to the full-scale invasion of Ukraine. Its reliance on gold has since increased.
Russia—the third most important gold producer in the world—now wields significant influence over international gold production. The report reveals that Russian interests continue to have considerable control over several important gold assets in Central Asia and Africa.
Since 2014, the year it occupied and annexed Crimea, Russia appears to have acquired more gold than any other country in the same period. It is in the top five gold reserve holders in the world with at least 2,322 tonnes stockpiled, and it is the world’s third most important producer of the metal.
Although the exact amount is unknown, a Moscow vault currently holds what are thought to be large reserves. Formally, these are used to balance the budget. Unofficially, Russia seems to be trading gold for hard currency, weapons, and foreign goods, creating a new gold trade route between Russia, Africa, the Middle East, and China.
While Russia seeks to be the world’s most important gold producer, the report finds that production may be slowing. The gold sector has also historically sourced much of its equipment from Western countries but is now far more reliant on China.
John Kennedy, a research leader in RAND Europe’s Defence and Security programme and the lead author of this new report, said:
“By the time of Russia’s full-scale invasion of Ukraine in February 2022, it had been acquiring gold at a faster rate than any other country for a decade. Russia had created one of the largest gold reserves in the world and it planned to become the world’s foremost gold producer.
“Right now, Moscow is using gold to prop up its wartime economy and bolster access to crucial goods, while holding considerable influence over the production of gold in Central Asia and Africa.
“Gold is a crucial feature of Russia’s hybrid threat, and it is important Western governments are aware of this as they seek to maintain pressure on Moscow,” Kennedy added.
– Published courtesy of RAND.
