It’s worth recalling that Yerevan had previously frozen its participation in the CSTO and announced its intention to cease involvement in the organization’s activities. At first glance, it appears that Armenia is positioning itself as a “military and political foothold of the West in the South Caucasus.” However, these political disagreements have not prevented the “friendly allies,” who quarrel yet cooperate, from earning billions of dollars by circumventing Western sanctions. Geopolitics has given way to a thirst for profit in Yerevan’s golden marketplace.
According to official statistics, trade between Armenia and the United Arab Emirates in the first 10 months of 2024 increased more than fivefold, reaching $5 billion. This figure does not include the final two months of the year, which are unavailable in the statistics. However, preliminary estimates suggest the volume grew to an impressive $6 billion.
Based on open government sources in Armenia, Armenian exports accounted for over 98% of the total trade volume with the UAE. What stands out? The share of genuinely Armenian goods in this trade remains negligible. This raises a key question: what caused such a dramatic surge in export volumes?
The Armenian Statistics Committee provides an answer to this question. According to the committee, the total volume of imports and exports of gold, diamonds, and other jewelry in Armenia increased more than fivefold from January to October 2024. Imports amounted to $6.8 billion, while exports reached $7.4 billion.
Although gold production, diamond cutting, and the jewelry industry have been pillars of Armenia’s economy and trade since Soviet times, these staggering figures are mind-boggling. It seems that external factors are driving this remarkable growth.
One key observation stands out: Russian exports to Armenia during the same period increased by $5.6 billion, reaching nearly $8.3 billion. Throughout 2024, Armenian media reported a sharp increase in supplies of Russian gold—and to a lesser extent, diamonds—to Armenia, which were subsequently re-exported, possibly after some processing, to third countries.
The United Arab Emirates is among these “third countries.”
Armenian customs authorities revealed that in the first half of last year, the country imported 66 tons of gold worth $4.4 billion. The majority of this gold also came from Russia.
Armenia exported almost as much gold as it imported from Russia. The UAE absorbed about two-thirds of this export, with the remainder going to China. This explains why Armenian exports to China nearly tripled from January to October, reaching approximately $1 billion.
Armenian media has identified more than ten companies involved in the import and export of Russian gold.
One of these companies is reportedly owned by the family of Khachatur Sukiasyan, one of Armenia’s wealthiest businessmen, a close ally of Pashinyan, and a member of parliament from the ruling “Civil Contract” party.
It appears that Russian diamonds, which are subject to U.S. and EU sanctions, also played a significant role in Armenia’s profitable trade operations. Reports indicate that in 2023, Armenia exported approximately 4.5 million carats of diamonds—primarily to the UAE—valued at around $590 million. This volume significantly exceeds the combined annual production capacity of Armenian diamond-cutting companies. The Armenian customs service has not yet published diamond export data for 2024.
This raises a logical question: after Russia launched its large-scale aggression against Ukraine, didn’t the U.S., European Union, and the UK impose a ban on gold exports from Russia? Before the sanctions, Western countries were the primary importers of Russian gold, which was traded through the London Bullion Market. The UK was the largest buyer, purchasing about 270 tons of Russian gold in 2021 alone.
However, after the war began, the U.S. and other Western nations, including the EU and the UK, imposed successive sanctions on Russian gold.
Russia’s gold mining industry began to suffer from potential restrictions even before they were officially introduced. Industry representatives previously expressed concerns that they would not be able to sell their products on international markets, and whatever volumes were sold were traded at significant discounts. Gold miners urged the authorities to support the industry by purchasing gold at market prices for the state reserve.
In June 2022, the U.S. Department of the Treasury imposed sanctions on Russian gold as part of agreements reached at the G7 summit.
Following the U.S., the European Union also banned gold imports from Russia.
“We are effectively banning Russia’s most important export after energy,” said Josep Borrell, then head of the EU’s foreign policy department.
The European Commission clarified in its communiqué that the ban covers the purchase, import, or transfer, directly or indirectly, of gold originating from Russia and exported either to the EU or to third countries. The embargo also extends to gold jewelry.
On July 21, 2022, the UK imposed a ban on the import of Russian gold. That same year, Japan and Canada followed suit.
Russia is known to be one of the world’s largest producers and exporters of gold. According to the Russian Ministry of Finance, the country produced 346.4 tons of gold in 2021, an increase of 1.8% compared to 2020. However, since 2022, data on gold production, export, and processing in Russia has been classified. As a result, there is no precise information on how much gold Russia produces or to which countries it exports. Conclusions can only be drawn based on approximate calculations.
According to Forbes, analyst estimates and limited official statistics suggest that gold production in Russia by the end of 2023 nearly returned to 2021 levels. The World Gold Council (WGC) estimated Russian gold production at 324.7 tons in 2021. However, assessing production levels for 2023 is even more challenging. The WGC’s latest report assumes a 2% increase in gold production in 2023, equivalent to approximately 6 tons, though the report does not provide absolute figures.
As a result of sanctions, Russian gold exports were significantly restricted. It is reported that about half of the gold produced in 2022 and 2023 was sold domestically, including purchases by the Central Bank of Russia.
According to Forbes sources, the other half of Russia’s gold production was likely exported, albeit through indirect routes. In mid-2023, Reuters identified several potential destinations for redirected Russian gold exports, including the UAE, Turkey, and China. Interestingly, Armenia went unnoticed in these assessments. Bloomberg, citing ImportGenius, confirmed these export paths.
In 2022, shortly after multiple bans on gold purchases were introduced, a top executive from a major Russian gold mining company mentioned the UAE as one of the export routes for Russian gold during a conversation with Forbes.
According to Reuters, between February 2022 and March 2023, approximately 75.7 tons of Russian gold may have been imported into the UAE. China and Turkey followed as the next largest destinations, each importing around 20 tons.
Collectively, the UAE, China, and Turkey accounted for 99.8% of Russia’s gold exports during this period, according to Reuters.
According to data from Armenia’s Statistical Committee, the majority of Russian gold exported to the UAE passes through Yerevan. In other words, Armenia has become a critical link in bypassing sanctions imposed on Russian gold. It is through Armenia that Russia continues to earn billions of dollars from gold exports. Naturally, Yerevan also benefits significantly from this arrangement. Under sanctions, Russian gold is sold to Armenian companies at below-market prices, allowing for additional profits from trading operations.
Armenia is not only engaged in the export of Russian gold but also re-exports sanctioned goods back to Russia.
This process has been a key driver of the rapid economic growth recorded in Armenia in 2022 and 2023. However, in 2024, growth slowed, and forecasts suggest it will continue to decelerate in the future.
It is noteworthy that the West does not hinder the export of Russian gold and diamonds through Armenia to the UAE and China. While the U.S. Department of the Treasury has formally imposed sanctions on some Armenian companies involved in violating anti-Russian sanctions, the list does not include companies exporting tens of tons of Russian gold to the UAE.
Everyone profits, lining their pockets at the expense of the blood-soaked suffering of Ukraine.
Farhad Mammadov
Translated from haqqin.az
