squeeze on gold and diamonds (which yield billions to the regime) – Corriere.it

It is not easy to financially strangle a country which until a year ago was the world’s leading exporter of gas, cereals and fertilizers, the second largest exporter of oil and the seventh largest exporter of gold and diamonds. Not easy and a slow process, but it doesn’t stop. After nine packages of European sanctions and thousands of names added to the lists of Russians and Belarusians whose assets are frozen, Brussels and especially Washington are preparing the next phase: close the gold and diamond routes, which bring in tens of billions of dollars a year to Vladimir Putin’s regime.

This is one of the duller areas. In 2021, Russia had exported 302 tons of gold with a turnover of $17.3 billion, according to customs data reported by the Moscow Ministry of Finance. Nearly 90% of foreign sales were to the United Kingdom, probably due to the role of the London Metal Exchange, while Switzerland imported 5.7 tonnes and Germany 3.7. Since last summer, first the United States, Great Britain, Canada and Japan and then also the European Union have banned purchases of gold from Russia. But the flows have not stopped. To reach world markets while hiding the origin of the metal, exporters close to the Kremlin have started working through triangulations through Turkey and the United Arab Emirates. And it is precisely on the platforms in Turkey or Dubai that Western governments want to step up the pressure in the coming weeks.

More complex, if possible, are the maneuvers to stifle the Russian diamond trade in the West, which continues almost a year after the aggression against Ukraine. For ten months the United States has sanctioned Alrosa, the world’s largest gemstone mining company, 33% controlled by the Moscow government and responsible for almost a third of world exports. But other Russian diamond companies are not banned by Washington while, surprisingly, in nine sanctions packages the European Union has never touched this industry so vital to the Kremlin. In 2021 from the export of diamonds, mostly rough, Russia made a turnover of four billion dollars, selling almost two thirds of them to Belgium: Antwerp has been the largest exchange for precious stones for centuries.

Now for the Americans they seem determined to impose a squeeze. Antwerp handles the contracts but many of Russia’s rough diamonds physically arrive in Mumbai, India, where they are processed and then re-exported often losing (legally) the mark of origin. So even the American sanctions are circumvented. At this point, however, even the Belgian government seems willing to accept a change, to close this channel of fresh money for Putin
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Alrosa partner of Rosatom, the state nuclear (also) military company in Moscow.

The financial strangulation of the Kremlin therefore continues. A year ago, Putin unleashed the war counting on sovereign reserves of 640 billion dollars and a surplus in foreign trade which probably amounted to around 220 billion, thanks above all to the export of oil and wheat. In 2023, the room for maneuver is shrinking. With three hundred billion in frozen reserves and even gold banned, Moscow this year must have liquid reserves equivalent to no more than 100 billion dollars. And with the ban and price cap on its oil, it is selling its main commodity at about half the price: Putin’s total export turnover is likely to more than halve this year. Locked up in his palace on Red Square, who knows if the dictator realizes that the passage of time no longer plays for him.