French investigation revealed that the number of Russian companies increased 10 times in Dubai after the Ukraine war last February.
The investigation, published by Agence France-Presse, stated that Russian businessmen, lawyers, entrepreneurs, artists and other Russians flock to the UAE and find themselves welcome in the Emirate of Dubai after escaping the sanctions imposed on their country due to the war on Ukraine.
In the International Free Zone (AFZA), one of the emirate’s many free zones designated to attract foreign investment, CEO Jochen Knecht says, “The number of Russian entrepreneurs and start-ups has increased tenfold compared to last year.”
“It started with technology and software companies,” he explains. Now we find all kinds of companies, art galleries, vendors and suppliers of spare parts,” he said, adding that they “come with employees and rent offices and warehouses.”
Knecht believes that given the economic sanctions imposed on Moscow, Dubai is a magnet for Russian businessmen due to its business-friendly environment and tax policy and the UAE’s neutral stance on the conflict in Ukraine.
He stresses that “Russian investors are welcome” in the Emirate of Dubai.
The Emirates population is about ten million, about 90 per cent of whom are foreigners, and Dubai is seeking to attract foreign investors, especially in the phase of recovery from the effects of the Covid pandemic.
Wealthy Russian clients have always frequented Dubai, known for its skyscrapers, especially those interested in real estate.
“A lot of Russian celebrities, singers and actors already own real estate in Dubai, and today they want to live there,” says Valeria Zolotko of real estate agency X Capital.
For his part, Georges Hojeij, who is the CEO of Virtuzone, a business establishment company, confirms that “we see more small and medium-sized companies and emerging companies that have moved to be able to ensure the continuity of their work.”
Financial and trade sanctions pose significant challenges for Russian companies regarding suppliers, customers, personnel and logistics.
At the end of last April, the President of the Russian Central Bank, Elvira Nabiullina, confirmed to Parliament, saying: “We need to (create) new infrastructure. We have the resources, but this takes time.”
“The difficulties appear in all sectors, large and small companies,” Nabiullina explained.
Russian lawyer Daria Nefkaya from the Russian law firm FTL Advisers believes that “many of our clients face difficulties working abroad.”
This lawyer decided to leave Moscow and set up an office in Dubai, where she says: “I specialize in international law. But soon, there will be no international projects in Russia.”
For her, like other Russians, starting a new life is not easy, and with credit cards that do not work abroad and restrictions on cash flows abroad and tightening banks, moving to another country is not easy.
The lawyer notes that she has been trying for more than a month to recover the sum of 5,000 euros transferred from Moscow to Dubai, but it was frozen by the correspondent bank located in Europe.
“I don’t think that’s fair,” she explains. I’m not a sanctioned person, but my money is frozen, and I can’t access my money in Russia, and with the restrictions, I could only take $10,000 when I left.”
The lawyer believes that international sanctions affect the middle class, not the oligarchs, noting that this class does not have foreign passports or accounts abroad.
But she says Dubai offers “business opportunities,” noting that it is an “international city where there is no anti-Russian sentiment,” adding, “I don’t feel like a criminal here. I was treated like a normal person.”
For months, the UAE has placed itself in a suspicious role based on reaping the fruits of strict Western sanctions against Russia against the backdrop of its invasion of Ukraine.
As the hunt for the wealthy Russians intensifies in Western capitals and Europe tightens sanctions on Russia, businessmen and the rich of Russia are increasingly searching for safe havens to protect their money, luxury yachts and private planes from the grip of Western sanctions.