In a bid to tighten screws on Putin, G7 to ban import of Russian gold

The United States said on Sunday that the G7 group of nations will ban imports of Russian gold with the aim of tightening sanctions screws on Moscow and crippling its war effort in Ukraine.

“Together, the G7 will announce that we will ban the import of Russian gold, a major export that rakes in tens of billions of dollars for Russia,” President Joe Biden said on Twitter.

The measure was initially flagged by Britain as joint action being taken along with fellow G7 members Canada, Japan and the United States. However, the rest of the G7, which is holding a summit in Germany, will also join in with a formal unveiling of the sanction on Tuesday, a senior US official said, reports Mint.

Significant impact

With its economy already under huge pressure from Western sanctions, the choking off of the gold market will have a significant impact, according to G7 officials. Given London’s central role in the international gold trade, “this measure will have global reach, shutting the commodity out of formal international markets,” Britain said.

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“Gold, after energy, is the second largest export for Russia and a source of significant revenue for (President Vladimir) Putin and Russia,” the US official said, adding that the blocking of Moscow’s gold sector “will further isolate Russia from the global economy.”

According to the White House, Russia accounted for about five per cent of all gold exports in 2020 and 90 per cent of Russia’s output went to G7 countries — mostly to Britain.

The attempt to clamp down on Russian gold is likely to be the most meaningful economic measure against Moscow announced at the G7’s three-day meeting.

Sanctions hitting Russia

Officials say that cumulatively all the sanctions are slowly but surely starting to eat deep into Russia’s economy and Putin’s long-term ability to continue the invasion of Ukraine, which is now in its fifth month.

While so far there have been few outward signs of the Kremlin feeling the pressure, the Western campaign is dealing something closer to death by a thousand cuts than any one dramatic blow, the senior US official said.

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Worth 12.6 billion pounds ($15.5 billion) to the Russian economy in 2021, gold is also a refuge commodity in times of turmoil. Russian oligarchs are believed to have rushed to hide their assets from Western sanctions enforcers by converting to the precious metal.

The London Bullion Market had already suspended six Russian refineries in action announced on March 7.