New exports of Russian gold will no longer be allowed to enter the UK, US, Canada and Japan after tough new measures agreed at the G7 Summit in Germany on Sunday, designed to exert pressure on Russian President Vladimir Putin over the conflict with Ukraine.
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Gold is a major Russian export, worth 12.6 billion pounds to the Russian economy in 2021. Its value to the Russian elite has also increased in recent months with oligarchs rushing to buy gold bullion in an attempt to avoid the financial impact of western sanctions. "The measures we have announced today will directly hit Russian oligarchs and strike at the heart of Putin's war machine, said UK Prime Minister Boris Johnson," who is attending the summit in Bavaria.
"Putin is squandering his dwindling resources on this pointless and barbaric war. He is bankrolling his ego at the expense of both the Ukrainian and Russian people. We need to starve the Putin regime of its funding. The UK and our allies are doing just that," he said. London is a major global gold trading hub and UK sanctions, which will be the first of their kind to be implemented against Russia anywhere in the world, will have a huge impact on Putin's ability to raise funds.
"With this import ban on new Russian-origin gold, over 13.5 billion pounds of our imports from Russia will be covered by restrictions. Given London's role at the heart of the global gold trade, this shows the UK will take tough steps to stop the Russian war machine," said UK Chancellor Rishi Sunak. "I am pleased that following discussions with others in the G7 Finance Track, the US, Canada and Japan will be joining us in imposing this measure, shutting down avenues for Russian gold sales and maximising the impact that we can have on Putin and his cronies," he said.
At the G7, the UK's message has been to further isolate Russia from the international financial system. The UK claims to have already sanctioned more than 1,000 individuals and more than 100 entities since the Russia-Ukraine conflict began in February.
The measures announced this week build on the action taken by the London Bullion Market in March to suspend six Russian refineries. The gold import ban, which will come into force shortly, will apply to newly mined or refined gold. It does not impact Russian-origin gold previously exported from Russia. The UK government has said that there are no plans to extend restrictions to Russian gold purchased legitimately before the import ban was put in place.
Legislation will be tabled in the UK Parliament to implement this latest ban as the UK pledges further GBP 429 million in guarantees for World Bank lending to Ukraine.