The United Arab Emirates has emerged as a haven for Russians fleeing the impact of western sanctions. But how long will it last?
Starting from the beginning of the conflict in Ukraine and the resulting monstrous Western assents against the Kremlin, there are relatively few puts left on Earth for Russians and authorized Russian organizations to go that would permit them to escape or facilitate the weight of the prohibitive measures set up. The United Arab Emirates is one such "place of refuge".
This state, while being disparaging of the Kremlin, keeps a warm relationship with it and doesn't straightforwardly uphold the Western world in its endeavors to limit the Russian economy and subsequently debilitate Moscow's capacity to proceed with its tactical mission. The Emirates is likewise very faithful to the inflow of Russian cash.
The great relations among Moscow and Abu Dhabi are proven by the way that at the culmination of the Eurasian Economic Union (an association that joins Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan in a typical monetary region) held in Bishkek, Russian pioneer Vladimir Putin named the UAE as one of Russia's new key financial accomplices. Additionally, he said that Russia is taking a gander at the chance of consenting to a monetary mix arrangement with the United Arab Emirates.
Dubai, along with Istanbul, has already become one of the main world centers to which wealthy Russians are flocking and where they are willing to spend millions of euros for expensive real estate. These countries were also chosen as a refuge because they are among the few that maintain direct flights with Russia, as well as provide the opportunity to obtain a residence permit for those who are willing to invest at least 250 thousand euros in real estate.
According to real estate market analysts in Dubai, in the first quarter of this year, the share of Russian buyers of real estate in Dubai has grown by 67%. This change is attributed to Western sanctions, which have deprived wealthy Russians of doing business in many other countries.
According to Betterhomes CEO Ryan Mahoney, clients from Russia choose to buy property in elite residential complexes located in the most prestigious areas of Dubai, typically overlooking the Persian Gulf.
Sources in Dubai say that among those who have made recent acquisitions, there are a number of well-known Russian names, including businessman Roman Abramovich. A yacht belonging to another Russian oligarch, Andrey Melnichenko, has also "escaped" there. His Motor Yacht A, estimated to be worth $300 million, was found docked in the port of Ras Al Khaimah. It was last seen on March 10 in the Maldives, and then it disappeared from all radars. The Financial Times now reports that on April 18, it was found in a UAE port, where it remains still. Journalists believe that this is how the businessman was able to protect the ship from Western sanctions.
Russian billionaires are not the only ones moving to the Emirates–companies are going too. According to Russian Forbes, many technology companies and startups for which Western sanctions have made it practically impossible to work in Russia by restricting access to modern technology, are moving their head offices or management structures to the Persian Gulf coast.
Oliver Hughes and Pavel Fedorov, top managers of one of Russia's largest banks, Tinkoff, moved to the UAE just a month after the Russian invasion of Ukraine. An official announcement on the London Stock Exchange said it was part of a broader reorganization process within the group, which includes the bank. The founder of the business, Oleg Tinkov, criticized the military action in Ukraine almost immediately when it began, after which he decided to sell his business and leave Russia.
Another famous Russian banker, Tim Dimchenko, the head of the direct investment department of VTB Capital, has also been spotted in Dubai. This is a strategic unit of the Russian state bank, VTB.This bank was one of the first to fall under the harshest of sanctions by the U.S., which, coupled with it being disconnected from SWIFT, effectively paralyzed its work outside the Russian Federation. In the Emirates, Dimchenko sits on the board of Micropolis Robotics, a small company founded in 2014 that has positioned itself as a strartup to develop drones for city services. In its 8 years of existence, they have created one prototype "police robot," which has been presented to the Dubai police. In addition to Dimchenko, Russians Egor Romanyuk and Alexander Rugaev are also on the team. There is no information on the Internet indicating that they are affiliated with government agencies. However, it is known that Romaniuk has specialized in activist stock operations. He is also the owner of two Cypriot companies–Barna Capital Group and Axima Funds Ltd–the latter of which had its license revoked by the Cyprus Securities Commission in 2019. Rugaev has also long worked in Cyprus, the main offshore haven for many wealthy Russians, through which they withdraw funds from Russia.
This is not the first time in its history that Russia has faced Western sanctions, and it definitely has some experience in dealing with them. In the Soviet Union, which was also limited by the West in its ability to freely buy the latest technology, bans were circumvented by creating a complex chain of intermediary firms around the world. These "streams" made it possible to at least somehow compensate for the technological lag and buy small amounts of products, primarily electronics, including dual-use items. But now it will be much more difficult for Russia to conduct such operations, although it certainly expects to solve this problem with the help of companies that can be indirectly controlled by the Kremlin through its proxies, including those outside the Russian Federation. Moreover, there are signs that Russia has already begun to work in this direction.
For instance, Switzerland has recorded an abnormal increase in gold imports from the United Arab Emirates, which began immediately after the introduction of sanctions against Russia. Since late February, Swiss factories, which are responsible for refining about 70% of all gold in the world, stopped direct imports of gold from Russia. In March of this year, the Swiss Federal Customs and Border Guard Office (Bundesamt für Zoll und Grenzsicherheit BAZG) recorded imports into the country from the UAE of 36 tons of gold worth 2.1 billion Swiss francs. This amount is equivalent to the total gold imports from the Emirates over the past six years. Swiss NGO Swissaid calls for "more transparency" in this area and demands that it be determined whether this gold originates specifically from Russia.
In mid-May it became known that after the disclosure of the way that lawbreakers, endorsed Russian oligarchs and degenerate authorities, are significant financial backers in Dubai land, individuals from the European Parliament proposed putting the United Arab Emirates on a boycott, like North Korea, Burkina Faso and Iran. It appears to be crazy and unimaginable, yet who might have thought a half year prior that we could wind up on the planet we live in at this point? Furthermore, in the event that it doesn't come to such brutal authorizations, Brussels might in any case convey an immediate message and cautioning to Abu Dhabi, encouraging the Middle Eastern state to rethink its strategy of entryways for Russian money.
Photo by Paasikivi, Wikimedia commons.