Russia’s invasion of Ukraine and the ensuing raft of Western sanctions have prompted an explosion of interest in the United Arab Emirates (UAE) among Russians. Bilateral trade is breaking all previous records, and Russians are buying up real estate and opening businesses there.
Yet for all the hope that the UAE could become an alternative to the West, the Emirates take sanctions far more seriously than Moscow would like to think. There is no doubt that the West will put pressure on the UAE to limit its cooperation with Russia. The only question is: how much, and how soon?
Over a million Russians visited the Emirates in 2022—a 60 percent increase from the previous year—and those visitors are not just tourists: many Russians have relocated there together with their businesses and assets. Russians have gone from being a niche group to the driving force behind the local real estate market, accounting for the biggest number of transactions among foreigners. The UAE is also now one of the top five places for Russian companies to open a franchise.
The surge in the popularity of the UAE is especially striking given that far from everyone wishing to leave Russia can afford to move there. Real estate prices and the cost of living are significantly higher than in Europe, so it tends to be the wealthier Russians who are moving there, such as senior managers, while rank and file employees from the same companies might instead go to Georgia, Armenia, Kazakhstan, or Turkey. There is also evidence that businessmen close to the Kremlin are moving their assets to the UAE.
Russia’s search for alternative trading partners to replace its severed ties with the West is reflected in bilateral trade with the UAE, which grew by 68 percent in 2022 to a record $9 billion, of which Russian exports made up $8.5 billion: a 71 percent increase. Even before the war, bilateral trade had been growing fast in recent years, mainly due to the expansion of Russian agricultural exports, which still account for a significant proportion of Russian goods headed for the UAE. The main consequence of sanctions is a drastic increase in the supply of precious metals, which Russia can no longer sell in the West. Gold and precious stones made up almost 40 percent of Russian exports to the UAE last year, according to expert calculations.
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