Investigation: The UAE is a safe economic haven for Russia amid threats of international sanctions

The UAE faces threats of more international sanctions, especially from the United States of America, for providing a safe economic haven to Russia.

The jump in cooperation between the UAE and Russia is facing an increasing danger in light of the United States’ tendency to extend the impact of sanctions to countries that provide economic havens to Moscow, led by the UAE.

For the first time, the UAE entered the list of Russia’s 20 largest foreign economic partners, according to Moscow’s official statistics for the year 2022, announced by Moscow.

Abu Dhabi recorded a record level of trade exchange with Moscow, amounting to $9 billion, as the volume of exports from Russia to the UAE increased by 71% to $8.5 billion and imports by 6%, to $500 million.

Thus, the UAE will be “the first Arab trading partner of Russia” when the record trade jump figures between the two countries came within the framework of the significant increase in the pace of economic cooperation between them during the past years.

The UAE markets host more than 4,000 Russian companies, while it owns 60 projects in Russia.

The UAE is Russia’s largest Gulf trading partner, accounting for 55% of Russian Gulf trade.

Abu Dhabi is also the first destination in the Arab world for Russian investments, accounting for 90% of Moscow’s total assets in Arab countries.

Last December, the UAE Minister of State for Foreign Trade, Thani bin Ahmed Al-Zeyoudi, stated that the proportion of non-oil trade between the UAE and Russia would increase by 57% in 2022.

The UAE’s adoption of a position of neutrality regarding the Russian invasion of Ukraine was the primary gateway to the trade leap, as Western sanctions strongly pressured Russia’s economy after the invasion of Ukraine.

Cooperation with the UAE came as a haven to mitigate the impact of sanctions, which had a significant effect on the Russian economy contracting over the past year only by 2.1% of GDP, which is far below international expectations, according to Bloomberg.

The Russian official expectations indicated that the economy would contract by 3%. In comparison, the expectations of many Western analysts revolved around a contraction of 10% at the beginning of the imposition of sanctions on Moscow about a year ago.

Given this, economist Anna Swanson considered, in an article published in the New York Times newspaper in early February, that “Russia’s economy may have already recovered to pre-war levels.”

Economic integration has achieved a set of gains for the benefit of the UAE and Russia, including the expansion of markets so that the companies of the two countries can develop their competitive capabilities, in addition to providing a haven for the capital of wealthy Russians, as it secures them from Western sanctions on the one hand, and pumps billions of dollars into the UAE economy on the other hand.

With the increase in Western sanctions against Russia, the interest of the wealthy Russians in the Emirate of Dubai, in particular, has increased, especially since buying real estate in the UAE enables investors to obtain a residence visa of up to 3 years if they invest 272 thousand dollars, and five years if they invest 1.36 million dollars.

Emirati real estate man Hussain Sanjwani expressed this exchange of interests between Russia and the UAE, saying: “Many Russian personalities tried to solve their problems related to the sanctions, and Dubai benefits from any crisis,” according to CNBC Arabia.

As a result, private air traffic from Moscow to Dubai increased, and investigators who participated in an open-source investigation monitored that many luxury yachts dock in Dubai, given that the UAE did not implement Western sanctions imposed on Russia, and that is why these luxury yachts enjoy freedom and safety while they dock there.

In 2021, Dubai was the preferred destination for 6% of tourists from Russia, with 600,000 visitors, according to the Russian Association of Tour Operators.

Likewise, Russia is considered a gateway to a big market, representing the countries of the Eurasian Union, an economic union between countries located in Central and North Asia and Eastern Europe, including Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.

Therefore, the benefits of the trade jump between the UAE and Russia go beyond the direct exchange of gifts to integration in the Eurasian Union arena and other areas of economic influence of the two countries.

In this context, the UAE Central Bank granted a banking license to the Russian MTC Bank, according to information published on its website on February 22.

The bank’s license is particularly significant, as it is the first foreign bank in years to obtain a permit in the UAE.

However, the jump in cooperation between the UAE and Russia faces an increasing danger in light of the United States’ tendency to extend the impact of sanctions to countries that provide economic havens for Russia after Russian President Vladimir Putin celebrated the Russian economy’s numbers, which came above the expected contraction expectations.

This extension was explicitly threatened by US Deputy Secretary of the Treasury, Wali Adeyo, by saying that “the United States will warn companies directly against evading US sanctions imposed on Russia because of the war in Ukraine.”

Addressing officials of countries and companies cooperating with Russia, Adimo added, “You can continue to do things that benefit Moscow and provide it with material support, but after that, you bear the risk of losing access to the European, American and British economy. This is your choice.”

The US threat comes at a sensitive time for the UAE, which last year was placed under enhanced oversight by the Financial Action Task Force (FATF), a global anti-money laundering watchdog.