According to Hugh Miles (2021), the United Arab Emirates is one of the world’s major gold trading hubs. The UAE is consistently a net importer of gold[1].A criminal activity of growing significance in gold smuggling has been the use of Dubai as a secrecy jurisdiction and the tax haven for gold exports.
It has been estimated that 80% of ASGM production is illegal and in 2016, some 44.5 tonnes of gold entered the UAE from Africa[2]. Gold that arrived in Dubai from Africa frequently enters the Emirates in small volumes and comes in personal luggage[3]. Conflict gold arrives from Africa, Uganda, Rwanda, Burundi, Libya, Sudan and Kenya. without strict regulations and checks at various airports in Dubai. In 2019 the UAE was the second largest trading partner of Turkey and the trade has been based on gold, despite the fact that neither country is a gold producer[4]
The UAE`s dependence upon gold from African conflict and trade anomaly countries rose from 17.7% in 2012 to 31% in 2016[5] . Kaloti Precious Metals (Dubai based refinery) was responsible for $12 billion of trade and gold refining in 2106. Ernst & Young in 2013 indicated that there were numerous lapses in the governance of the gold value chain by Kaloti. The Dubai Multi Commodities Centre (DMCC) is responsible for sourcing of gold but it has not effectively stopped entering of gold into Dubai from conflict zones.
Dubai is still the number one place from where gold gets into India[6]. Karen Greeaway, Federal Bureau of Investigation (FBI) investigator commented that, “they have set themselves up to be in the middle of the gold trade, with lax laws and no enforcement”[7]. As one international gold expert told the Sentry, “Dubai does not like questioning the efficacy of their standards”[8].
India produces virtually no gold, round tripping between India and UAE is an act of malfeasance[9]. The principal point of export of Indian Jewelry is Dubai. In 2015-2016, India exported US$ 8.6 billion of gold jewelry. Half of this jewelry went to Dubai and much of it as round -tripping by Indian jewelry manufacturers[10].India`s economy is impacted negatively due to smuggling of gold from Dubai to India. According to the Ministry of Finance, department of Revenue, Government of India, in 2020-21, number of gold smuggling cases at various airport in India are 196, quantum of gold seized 103.16(in kg). and value of gold seized 4955.566(Rs. In Lakhs). From various media reports, the number of gold smuggling cases from Dubai to India has been on the rise despite tall claims by UAE authorities to stop smuggling of gold.
A report by Alan Martin (2019), the trade of illicit trade-both from Uganda to UAE and UAE to India is often financed through Hawala, Illicit gold enters the country, is absorbed into the legal market with ease, and re-exported to backout as Jewelry[11] . The UAE-India trade is routinely used by criminal syndicate to either hide gold import or to launder money earned from the proceeds of crime[12].
In last few years, the officials of Directorate of Revenue Intelligence (DRI), India government body caught several smugglers at Delhi and other airports. All these smugglers are reported mostly carry illicit gold from Dubai. In media report, investigations have revealed that syndicate smuggled approximately 70 kg of gold valued at Rs. 21 Crore into India from Dubai.[13]
Kerala gold scam in which UAE Consulate Attache Rashid Khamis Al Ashmiya, Emirati, was found to be involved, left the country under mysterious circumstances from Thiruvananthapuram. This case has dented the image of the local government of Kerala Chief Minister Pinarayi Vijayan. At the Political level, the Bharatiya Janata Yuva Morcha activists staged a protest on the roads, causing damage to the government property and held captive public for many hours. On this gold smuggling scam, Dr. S. Jai Shankar, External Affairs Minister of India, commented that, “the truth will come[14]”. It is still not clear that the truth which the External Affairs Minister is looking forward or expecting would come out for India or for the UAE.
It is unfortunate that the External Affairs Ministry did not bother much about Emirati diplomat, it did not even bother to find out how the Emirati diplomat left the country without trial or before the truth comes out. This raises an accusing finger on the functioning on the Indian External Affairs Ministry and its credentials. This case of gold scam has tarnished the image of India at the international arena. On the other hand, there is no stain on the murkier character of the UAE government.
In almost all the cases of gold smuggling into India, the law enforcing agencies of Dubai can be held responsible for their corrupt functioning. As various media report confirms that the money earned out of illicit gold smuggling is being used by the terrorists’ groups to fund various anti -India groups to create social, political disharmony in the country. Union Minister of State for Home Nityanand Rai in a written reply in Lok Sabha said, “30 civilians and 31 security personnels were killed and 221 others injured in violence perpetrated by terrorists in Jammu & Kashmir in 2022[15]. India is at loss if it does not stop the UAE to assist Pakistan. India is losing civilians whereas the Emiratis are prospering economically in all respects by re-exporting goods from Pakistan to India and Vice-versa.
Here it is pertinent to mention that none of UAE ambassador to India residing in Delhi accompany the diplomatic delegation sponsored by the Government of India in 2021 to visit Jammu & Kashmir(J&K) to boost the Union Territory. It shows that the UAE rulers do not want to offend the government of Pakistan It also does not much matter to the UAE rulers even if the economy and security of India under peril. What kind of diplomacy India is practicing? A concerned citizen of India must ask a question to Dr. S. Jai Shankar. From this one can gauge that the UAE is not a true friend of India as it claims in tall rhetoric at the international level.
The UAE is re-exporting several goods from Pakistan to India and vice-versa. The signing of India- UAE Comprehensive Economic Partnership Agreement (CEPA) on 18th February 2022 and entered into force on 1st May, 2022 has further given opportunity to the UAE to brings goods from Pakistan to India and vice-versa. The Indian government has significantly liberalized norms for gold imports from the UAE under the CEPA. In one way, the UAE is trying to revive sluggish economy of Pakistan with heart and mind. On the other hand, the ISI of Pakistan leaves no stone unturned to destabilize India particularly Kashmir. What kind of diplomacy is this?
Given the facts and figures and burgeoning gold smuggling under the nose of the UAE authorities, India needs to rethink about India-UAE relations keeping in mind that gold smuggling erodes India`s image among the global community and also have a detrimental to the economy and security of the country. This is the need of the hour. The earlier the government of India act to clear this mess being created by the UAE authorities in India the better would be for the economy and security of the country.
Dr. Rahul Kumar, PhD in sociology from Jawaharlal Nehru University, Delhi (India). He is an independent journalist and researcher. His area of interest encompasses domestic and foreign policy, diplomacy and international relations. The views expressed in this article are personal.
[1] https://www.researchgate.net/publication/370020718_DUBAI_CONFLICT_GOLD_MONEY_LAUNDERING_AND_ILLICIT_GLOBAL_TRADE,p.16.
[2] https://www.researchgate.net/publication/370020718_DUBAI_CONFLICT_GOLD_MONEY_LAUNDERING_AND_ILLICIT_GLOBAL_TRADE,p.6.
[3] Ibid.p.11.
[4] Ibid.p.17.
[5] Ibid.p.12.
[6] https://www.iima.ac.in/sites/default/files/2023-06/Maria%20Immanuvel.pdf,p.4
[7] https://www.aljazeera.com/news/2023/4/6/what-draws-the-gold-mafia-to-dubai-dubai
[8]https://thesentry.org/wp-content/uploads/2021/02/ConflictGoldResponsibleGold-TheSentry-Feb2021.pdf/p.9.
[9] https://www.researchgate.net/publication/370020718_DUBAI_CONFLICT_GOLD_MONEY_LAUNDERING_AND_ILLICIT_GLOBAL_TRADE
[10] Ibid.p.22.
[11] ibid.p.6.
[12]https://impacttransform.org/wp-content/uploads/2019/11/IMPACT_A-Golden-Web_EN-Nov-2019_web.pdf,p.4.
[13] https://dri.nic.in/writereaddata/2094274_2019-02-08.pdf
[14] https://www.thehindu.com/news/national/kerala/truth-will-come-out-jaishankar-on-the-kerala-gold-smuggling-case/article65624768.ece.
[15] https://www.millenniumpost.in/nation/30-civilians-31-security-personnel-killed-by-terrorists-in-jk-in-2022-507937.
