A few years ago, when the European Union approved a decision to toughen sanctions against Russia, a number of countries faced serious threats for not complying with the Western decisions. At that time, one of the Western independent news sites reported that about 20 Armenian companies were banned just because of crooking the West's sanction rule. However, over time, this issue was bypassed.
Recently, the hot discussion between high-ranking officials of Armenia and Russia about increasing trade turnover covered all the headlines. It is no secret that Armenia has been successfully continuing its trade with Russia, despite the heavy sanctions imposed by the West against the country since 2022.
Even reports say that Armenian companies are helping Russia bypass the Western embargo on the gold trade, according to the Insider and Hetq. Behind these companies are influential politicians and businessmen in the country. Since 2022, billions of dollars worth of gold have been imported to Armenia, but the metal does not remain in the country - its export volumes to the UAE are also unprecedented. At the same time, a flow of, presumably, cash and securities goes from the UAE to Armenia. It is profitable for Russian businesses to trade gold through Armenia, since the country does not levy export duties, and trade through private individuals allows them to evade sanctions.
Gold was one of the first Russian exports to be embargoed in the wake of the Russia-Ukraine crisis. In June 2022, the United States banned purchases of the precious metal from Russia, which it described as the country’s “largest non-energy export.” The embargo formally applies only to imports to the United States.
However, even if the tainted gold is purchased by another country, it remains unsaleable in the United States, meaning that banks will not buy it for investment or trading. Thus, unlike import restrictions on most other goods, the U.S. embargo on “bank gold” automatically becomes global.
In 2022–2023, the flow of Russian gold turned east: before the outbreak of the war, it was exported to the UK, but since 2022, the main recipients have been the UAE, Hong Kong, and several other countries. However, these flows have completely stopped by April 2023. Since then, not a single ounce of Russian gold has been exported outside the Eurasian Economic Union. Around the same time, Armenia became a major gold exporter, according to the publication. The Insider and Hetq found that almost all of this gold was imported from Russia.
The publication writes that the Yerevan Jewelry Factory was officially opened in 2022 in a new building on the territory of the Yerevan Market. It is associated with the Sukiasyan and Avagyan families, the latter of whom were involved in the jewellery business in Russia. The company re-exports large quantities of jewellery of Russian origin from Armenia, passing them off as made in Armenia. Apparently, the Yerevan Jewelry Factory served as a channel for “whitening” the Russian jewellery product. It purchased gold from about three dozen Russian companies.
After the introduction of sanctions, among the recipients of gold in 2022 and 2023 were not only jewellery factories and LLCs with signs of shell companies, but also banks such as Araratbank and Converse Bank. However, by 2024, Armenian bankers began to refrain from such risky steps.
It is possible to assume that Russian gold can be used in the jewellery industry, but this version raises significant doubts. In 2020, jewellery exports from Armenia amounted to $26 million, in 2021 - $75 million, in 2022 - $109 million, and in 2023 - $499 million, according to the source. It is obvious that the jewellery industry of Armenia has grown significantly in the early 2020s, increasing by 1.5-2 times annually, but to assume that it will grow by about two orders of magnitude from 2022 to 2024 (if we assume that gold imports in 2024 are intended exclusively for the jewellery industry) seems completely impossible.
Gold does not stay in Armenia, either in the form of jewellery or with banks. It is exported. According to data from the State Revenue Committee (SRC), in 2023, gold was mainly sent to the UAE. And according to Armenian customs, in the first half of 2024, the country exported a record volume of gold - about 59 tons ($4.1 billion). In addition to the United Arab Emirates, small volumes are also exported to Hong Kong and China.
How Armenia used as a transit state to bypass duties and trading
Billions of dollars in payments that would have to be made through Armenia if gold were sold for currency at banks would raise suspicions. Moreover, because of sanctions, Russia, as the final recipient of the payments, would face the obvious problem of using these currencies to buy other goods.
At the same time, there is a comparable flow of receipts to Armenia under the commodity item, which includes "cash" and "bonds", according to data from the Observatory of Economic Complexity (OEC). In 2022, such imports amounted to $1.45 billion, and all of it came from the UAE. This may mean, in particular, the import of cash from the Emirates to Armenia.
Economist Aghasi Tavadyan notes that Russian businessmen used Armenia as a transit country for gold exports because Russia imposed a customs duty on it. However, it did not apply to exports to the EAEU countries.
"Russian businessmen first brought this gold to Armenia and then exported it to the Emirates. This was profitable for them since no export duty is levied on gold from Armenia," the economist explains.
