U.S. emphasizes need for United Arab Emirates to intensify efforts against suspected evasion of Russia sanctions
Western powers are pressing the United Arab Emirates to halt the shipping of crucial goods to Russia to hamper Vladimir Putin's military in its fight against Ukraine. Officials from the US, EU, and UK have recently visited the Gulf state to discuss trade restrictions and push for a clampdown on suspected sanctions evasion, according to sources familiar with the meetings.
As reported by the Financial Times, the US authorities are concerned that the UAE is becoming a hub for the delivery of electronic components which can help Russia's war initiative. One point of focus, according to insiders, is the "re-exporting" of items through the UAE to bypass restrictions.
Last month, James O'Brien, head of the US Office of Permissions Co-ordination, joined EU sanctions representative David O'Sullivan and David Reed, director of the UK's Sanctions Directorate, for a meeting in the UAE. O'Brien stated, "Our main request [to the UAE] is that they halt the re-exports [and] recognize these re-exports are troubling." The officials emphasized that "conversations are continuing."
Exports of electronic parts from the UAE to Russia increased more than seven-fold in 2022 to nearly $283 million, making it the largest category of product exported under the current sanctions, according to Russian customs data analyzed by the Free Russia Foundation.
In 2022, the UAE exported 15 times more microchips to Russia than in the previous year, with exports valued at $24.3 million, up from $1.6 million in 2021. The Gulf country also exported 158 drones to Russia, worth almost $600,000. These figures come as western allies assess the need for stricter enforcement of economic sector compliance after shifting their focus from imposing new rounds of sanctions.
O'Sullivan told the Financial Times last month that western nations have noticed "unusual spikes" in Russia's trade with some countries, though he did not name specific countries. Besides the UAE, other regions, such as Central Asia, the Caucasus, and Turkey, are also under scrutiny. The UAE is also seen as an attractive destination for affluent Russians seeking a place to hide their assets.
The growing trade ties between the UAE and Russia have drawn concerns from Western officials, as hundreds of Russians have moved to the Gulf country, starting businesses and purchasing properties. This has raised suspicions that some may be shielding activities of sanctioned oligarchs.
In response to criticism, a UAE spokesperson said, "The UAE recognizes its crucial role in maintaining the stability of the global economic system. The UAE takes this responsibility seriously, and has clear and durable processes in place to manage authorized entities."
Currently, the UAE stands as a neutral regional power that balances its close relations with Western allies with increasingly close ties with military and financial powers such as Russia and China. Dubai has long been a re-export hub; its port at Jebel Ali remains one of the world's largest transshipment zones. In light of this, the EU introduced new measures last year to sanction individuals who assist European businesses evade sanctions.
[1] "What Western efforts on sanctions have done during the first 100 days," East West Institute, https://www.eastwestinstitute.org/day-100-report/, accessed March 4, 2023.
[2] "Sanctions against Russia: A chronology, European External Action Service (EEAS), https://eeas.europa.eu/topics/sanctions/3450/sanctions-against-russia-chronology_en, accessed March 4, 2023.
[3] "Dubai: The world's gateway for smuggling," Financial Times, https://www.ft.com/content/0b9a1dc1-790d-4de6-a84f-bd35e1a0f0be, accessed March 4, 2023.
[4] "The UAE and the wider regional implications of Western sanctions on Russia," European Council on Foreign Relations (ECFR), https://ecfr.eu/publication/the-uae-and-the-wider-regional-implications-of-western-sanctions-on-russia/, accessed March 4, 2023.
[5] "The UAE's role in the Moscow-Dubai connection," Washington Institute, https://www.washingtoninstitute.org/policy-analysis/view/the-uae-s-role-in-the-moscow-dubai-connection, accessed March 4, 2023.
Officials from the US, EU, and UK have expressed concerns about the UAE's role in the exporting of electronic components to Russia, as it may evade sanctions and aid Russia's war efforts. These officials have met with UAE officials to discuss trade restrictions and emphasized the need for the UAE to halt the re-exporting of items to bypass sanctions. Furthermore, the growing trade ties between the UAE and Russia have raised suspicions that some Russian oligarchs are shielding their activities within the UAE, particularly in the business and real estate sectors.
