The recent round of sanctions that have been placed on Russian oligarchs and government officials could have unintended consequences.
Some experts are concerned that the sanctions could end up benefiting these wealthy individuals, as they have become more adept at moving their money offshore.
This could lead to a flight of capital from Russia and further weaken the country’s economy.
A man-made archipelago in the shape of a massive palm tree extends into the Persian Gulf from the beaches and skyscrapers of Dubai, its branch-like rows of islands studded with opulent hotels, residences, and villas.
Two dozen of President Vladimir Putin’s close associates, including a former provincial governor and nuclear power plant manager, a construction magnate and former senator, and a tobacco billionaire from Belarus, are among the owners of those residences.
According to previously unreported statistics obtained by the nonprofit Center for Advanced Defense Studies, at least 38 businesses or officials connected to Mr. Putin possess dozens of properties in Dubai with a combined value of more than $314 million.
Six of their owners are subject to US or EU sanctions, and another oligarch who is subject to penalties has a yacht parked there. They can consider themselves fortunate for now.
Since the Russian invasion, the majority of the world has enacted harsh sanctions against Russian financial institutions and those close to Mr. Putin, and even notoriously secretive financial hubs like Monaco, Switzerland, and the Cayman Islands have started to cooperate with the freezing of accounts, the seizure of mansions, and the impounding of yachts.
The financial and cosmopolitan hub of the United Arab Emirates, however, is not Dubai. The oil-rich monarchy has recently evolved into a favorite hangout for the Russian wealthy, in part due to its reputation for asking few questions about the sources of foreign money, despite being a close partner of Washington on Middle Eastern security matters.
By accepting the targeted billionaires, the Emirates may now mitigate some of the sanctions imposed on Russia.
Adam M. Smith, a lawyer and former advisor to the division of the U.S. The Treasury Department in charge of enforcing sanctions, said: “Sanctions are only as strong as the weakest link.”
“Any financial center that is prepared to conduct business when others are unwilling could supply a leak in the dike and undermine the overall measures,” the author writes.
Due to their unwillingness to oppose the Russian incursion, the Emirati position is revealing tensions between the United States and several of its closest Arab friends.
The United Arab Emirates, Egypt, and Saudi Arabia were urged to stand together during a crisis but instead prioritized their ties with Moscow. The Emirates and Saudi Arabia did this by rejecting American requests for increased oil supplies to calm energy markets, and Egypt did this by stifling criticism of the invasion while moving forward with a $25 billion loan from Russia to finance a nuclear power plant.
According to Michael Hanna, U.S. program director for the non-profit International Crisis Group, “it should be a clarifying moment.” That must be pretty stubborn.
If only because it now holds a rotating seat on the United Nations Security Council, the United Arab Emirates may be the most noticeable in its position.
The Emiratis chose not to criticize Russia and chose to abstain from voting on the motion that was supported by the US. Russians have also been persuaded by Emirati officials that their government will not impose sanctions until the UN orders them, in which case Moscow’s veto will prevent it.
No one should be critical of Dubai, the U.A.E., or any other country for striving to accommodate anyone who arrives legally, according to Abdulla Abdulkhaleq, a political analyst close to the leaders of the U.A.E. So what exactly is the big deal? Why the West would object is beyond me.
Russians in Dubai express gratitude for their hospitality. Speaking on the condition of anonymity out of concern for upsetting Emirati authorities, a Russian businessman who sought safety in Dubai stated, “Having a Russian passport or Russian currency is highly poisonous right now; nobody wants to take you in outside of locations like Dubai.” There are no problems with Russians living in Dubai.
He circulated among the city’s Russian residents an electronic invitation to a rooftop cocktail party for cryptocurrency start-ups and venture capitalists.
Since the invasion, there has been “incredible demand” from Russians, according to an Arab businessman who rents out luxury furnished apartments in Dubai.
More than 50 additional individuals or families are hunting for homes, while one family has leased a three-bedroom seaside condo for $15,000 per month for an extended period of time.
Putin cronies owned roughly 76 homes in Dubai, perhaps directly or in the name of relatives, according to the Center for Advanced Defense Studies, a Washington-based nonprofit that analyzes data on international conflicts. There were likely many more who were not named.
Russian billionaire Aleksandr Borodai, a Duma member who served as acting prime minister of a Ukrainian province in 2014 when it was seized by separatists backed by Russia, Bekkhan Agaev, a Duma member and family owns a petroleum company, and Aleksin Aliaksey, who is in charge of the Belarusian tobacco industry, is among those on the center’s list of those subject to sanctions.
Some of the oligarchs on the list are the owners of properties that are worth more than $25 million each.
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