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20 June, 2024
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Where have wealthy Russians disappeared to?

In recent years, Dubai has become a popular playground for wealthy Russian

Source: Money Review

It stretches into the Persian Gulf from Dubai. The man-made archipelago in the shape of a huge palm tree is full of luxury hotels, apartments and villas.

"Dubai is one of the main players in the biggest corruption or money laundering scandals of recent years," -Myra Martini

Among the owners of these homes are more than twenty close allies of Russian President Vladimir Putin. At least 38 businessmen and officials with ties to Putin own dozens of properties in Dubai, valued at more than 286 million euros, according to previously unknown figures from the MKO Center for Advanced Defense Studies. Six of the owners have been sanctioned by the US or the European Union, while another sanctioned oligarch owns a yacht parked there. For now, they are lucky.

After the invasion of Ukraine, most of the world has imposed sanctions on Russian financial institutions and the circle around Mr. Putin - even banking centers in Switzerland, Monaco and the Cayman Islands have begun to "freeze" assets and to seize villas and yachts.

But not Dubai. The rich kingdom has become in recent years a popular "playground" for wealthy Russians. Now the Emirates may reduce some of the sanctions in Russia, as they continue to welcome the targeted oligarchs.

"Sanctions are as strong as the weakest link.  Any financial center willing to do business while others do not can leak the embankment and undermine overall measures," said Adam M. Smith, a lawyer and former U.S. Treasury Secretary who has experience in managing such measures.

The United Arab Emirates abstained from the US resolution denouncing the invasion. And Emirati officials have reassured Russians that their authorities will not impose sanctions unless imposed by the United Nations - where Moscow's veto rules that out.

"If we do not violate international law, then no one can blame Dubai or the UAE or any other country that tries to welcome anyone who comes through legal means. What is the problem? I do not see any reason for the West to complain," said Abdulkhaleq Abdulla, a political analyst close to UAE leaders.

Russians in Dubai say they appreciate the hospitality. "It is toxic at the moment to have a Russian passport or Russian money - no one wants to accept you except places in Dubai. "There is no problem with being Russian in Dubai," said a Russian businessman who took refuge there, speaking on condition of anonymity.

Moscow has forged close ties with the UAE and other pro-Western Arab states for decades, trying to capitalize on US grievances. 

Dominant rulers in the region have been outraged by US support for the 2011 Arab uprisings. Arab monarchs in the Persian Gulf have called the Obama administration's nuclear deal with Iran a betrayal.

Now, people close to these leaders say their neutral stance on the invasion of Ukraine should teach the United States not to take them for granted.

"In Washington, they expect that automatically 'you Saudis should come with us and isolate Russia as we did'," said Ali Sihabi, a Saudi political analyst near the royal court. But the kingdom can not "burn" its relationship with Russia to please the White House.

"We have a relationship with the Americans, but it will not be a monogamous relationship because the Americans are unreliable," he added.

Rich people have other reasons, besides geopolitics, to buy real estate in Dubai.  Sheiks who have ruled the city-state for a long time have sought to attract businesses by allowing a high degree of secrecy about property ownership and sharing only limited information with other jurisdictions, said Myra Martini, a Transparency International researcher of corruption.

"Dubai is one of the main players in the biggest corruption or money laundering scandals of recent years," she said.

The Financial Action Task Force, a key watchdog for money laundering, blacklisted the United Arab Emirates on March 4.

Emirati officials, who want to be removed from the list, are now committed to new transparency measures. These steps could limit the ability of sanctioned oligarchs to hide their assets or move money to Dubai.

If the US threatens to restrict UAE access to the US financial system, then perhaps the UAE has an incentive to cooperate more.

However, America often weighs its military and espionage cooperation on other priorities, such as sanctions.

"The question is how hard the Biden government is pushing the UAE to get into the program," said David H. Laufman, a lawyer who previously worked as a senior official in the US Department of Justice.

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