Putin has his 'back against the wall' says Lord Robathan
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On Thursday, a number of Western countries announced another wave of sanctions against the Russian president. This included banning financial transactions to do with the Russian central bank’s international gold reserves.
The West hopes to stop Russia from dodging the impact of global sanctions by turning to its gold reserves.
Russia holds the world’s fifth-largest supply of gold, with an estimated 2,300 tonnes of the metal held in vaults across the country.
Vladimir Putin cultivated the country’s gold stash after the 2014 annexation of Crimea, hoping to curb the impact of international sanctions.
Dr Fergal O’Connor, a business lecturer at the University of Cork, told Bloomberg: “This is why they bought their gold, it was for a situation just like this.”
He added: “But if no one will trade it with you, it doesn’t matter.”
Analysts have predicted Russia may then have to turn to selling the gold to the central banks of China or India at a knock-down price.
The hit could be even more painful for Russia if “secondary sanctions” are pursued by the West, which would then block these markets from Russian access.
The US Treasury confirmed on Thursday that gold trading related to Russia’s central bank did fall under sanctions against the country.
This means no Americans can do any kind of trade in gold with Russia, whether they be dealers, wholesalers, or distributors of the metal.
The Treasury outlined: “US persons are prohibited from engaging in any transaction – including gold-related transactions – involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation or the Ministry of Finance of the Russian Federation.”
Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security told the Associated Press: “It is another way to close sanctions loopholes, and increase economic pressure on Russian entities.”
Prime Minister Boris Johnson added that the West should also attempt to prevent Russian gold reserves from holding the rouble steady.
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He said the world needed to “tighten the economic vice” on Vladimir Putin as the invasion rumbles on.
Speaking to LBC, he said: “We’ve got to tighten the economic vice around Putin, sanctioning more people today, as we are, sanctioning the Wagner Group, looking at what we can do to stop Putin using his gold reserves.”
He continued: “We need to do more economically.
“Can we do more to stop him [Putin] using his gold reserves, for instance, in addition to his cash reserves?
“The more pressure we apply now, particularly on things like gold, I believe the more we can shorten the war.
“And then we need to do more to give the Ukrainians military support.”
The London Bullion Market Association, based in the City, has already banned all gold bars from Russia from its marketplace.
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