What was the role of gold in Russia's wartime trade relations?
Gold has become an important strategic resource for the Russian government since the invasion of Ukraine.
According to recent research by RAND Europe, Russia has used gold as a means of obtaining hard currency, weapons and other goods, particularly from countries such as China, Turkey and Iran.
Between November and December 2023, Russia was the world's fifth largest holder of gold reserves, with more than two thousand tons. The USA took first place with 8,133.5 tonnes, followed by Germany with 3,352.6 and Italy and France with 2,451.8 tonnes and 2,437.0 tonnes respectively.
"By the time of Russia's full invasion of Ukraine in February 2022, it had mined gold at a faster rate than any other country for a decade. Russia had built up one of the world's largest gold reserves and planned to become the world's largest gold producer," said John Kennedy, a research leader at RAND Europe's Defense and Security Program.
Western sanctions have successfully cut off Russia's ability to trade gold, as well as other precious metals and stones. Sanctions have also contributed to a slowdown in gold production within Russia.
Before the invasion of Ukraine, Germany was the largest supplier of foreign vital mining equipment to Russia, accounting for 29% of the total, while the US was responsible for 21%.
Now, given Russia's aging mining equipment from the Soviet era, it is much more dependent on supplies from China, which is making Russian gold producers unable to keep up with demand.
"Right now, Moscow is using gold to prop up its wartime economy and bolster access to essential commodities, while having significant influence over gold production in Central Asia and Africa," Kennedy said.
"Gold is an essential feature of Russia's hybrid threat, and it is important that Western governments are aware of this as they seek to keep pressure on Moscow."
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