Why does Dubai attract Russian money and companies?

The Wall Street Journal published a report compiled by Benoit Faucon and Worry Jones in which they discussed the reasons for the flow of Russian money and companies to Dubai.

The report said that the city of Dubai has become the preferred international center for Russian companies and wealthy people seeking refuge to run their businesses, protect their money and avoid the sanctions arising from the Russian invasion of Ukraine.

He added that the largest Russian oil tank company has opened a store in Dubai and rich Russians are investing in luxury apartments. Dubai also attracted merchant merchants, beginners and employees of Western companies that had left Russia.

Behind these moves is a decision by the United Arab Emirates and its main commercial center not to impose US and European sanctions on Russia, as the UAE and Dubai try to maintain a neutral position despite their long security partnership with the United State.

The Russians who decided to move to Dubai found a vibrant and vibrant community of Russians numbering about 100,000 Russian speakers, and other benefits such as easy immigration laws and no income tax. And the pace of Russian tourism to Dubai has increased as flights between Dubai and Moscow have not stopped. “Dubai has set appropriate conditions to attract Russians who want to find a safe haven for themselves, their families and their assets,” said Rasha Halawa, an economist at the Atlantic Council.

Western officials have called on the UAE to restrict trade with Russia and without a response, and while other countries such as Turkey and Kazakhstan welcome the Russians and India continue to buy Russian oil, Dubai’s center is emerging as a pillar of support for the flow of concerns the concerns of Western diplomats, specifically about the possibility of using the emirate as an escape from Criminal Punishment. “I do not ask them to be part of the sanctions,” German Economy Minister Robert Habeck said during a March visit to the UAE, “but I do ask them not to take advantage of European and US sanctions. “

Also read: Agency: Russians flock to Dubai to escape sanctions against their country

A spokesman for the UAE’s foreign ministry spokesman declined to comment on the newspaper’s questions, citing a government statement last week that “emphasized its commitment to working with the international community to tackle financial crime”. and to remind businessmen of their duties in relation to the international sanctions program, “although the statement did not specifically mention the imposition of the sanctions it imposed. Countries on Russia and Russian companies. The newspaper quoted political analyst Abdul Khaleq Abdullah as saying that the UAE’s openness to the Russians reflected the country’s neutral position, “when it comes to US and European sanctions, we are selective.”

Prior to the war in Ukraine, the state-owned Sofcomflot company operated its business from St. Petersburg and from there oversaw its fleet of oil tankers, while managing its European bank accounts from Cyprus, and its fleet of 120 tankers to companies around the world. rented. including the French company Total Energy and Saudi Aramco.

After the sanctions were imposed, the company could no longer work with insurance companies in Europe, as well as with banks and traders. Current and former employees said the company has decided to relocate part of its operations to Dubai, where executives are confident the government will not impose sanctions on its subsidiaries there.

Sofocomflot did not respond to a request for comment. With a base in Dubai, the company can access services that keep its tankers afloat, including oil loading, maintenance, crewing and banking, shipping industry officials and sanctions experts said.

The arrangement provided a lifeline to Russian oil exports, as oil companies such as state-owned Rosneft use the company’s tankers to ship crude oil, according to shipping data. Energy export sources make up 40% of Russia’s budget. The newspaper points out that most of the people and companies that set up branches for themselves in Dubai did not impose fines on them.

Sofia Kostunionina decided at the beginning of March to move her start-up company Speclab Limited from Petersburg to Dubai because sanctions against Russia would prevent her from paying money to partners abroad and not use video conferencing or email services to use her services from Western to promote companies.

Also read: The Independent: Russian and European “dirty” money flowing into Dubai real estate market

Her company relies on bringing people from all over the world to learn the language face-to-face or via the internet, and if it had stayed in Russia, it would have closed its doors. She only needed a few weeks to open a branch in Dubai. “Many companies are moving their employees to Dubai because it’s easy to move employees from Russia to Dubai,” and “we do not have many options,” she said.

The newspaper said job search sites were looking for Russian-speaking people to work in hotels, restaurants and salons across Dubai. Workers in the Dubai financial sector said they were receiving requests from businessmen to relocate their operations from Western Europe, where European banks had closed Russian accounts. Banks in Dubai are helping Russian businessmen build themselves, although they are asking questions about potential customers to avoid individuals being sanctioned.

A company working to help wealthy Russians move their assets to the United Arab Emirates has said it has not helped a single Russian customer since 2016 and after the invasion of Ukraine in February, it has about 15 Russians helped make up a third of its customers. The company said that the value of assets – companies, money and other forms of wealth it helps to transfer to Dubai in the amount of 4.5 billion dollars.

They moved their residence in Russia, company records and bank accounts from Luxembourg, Cyprus, London and Zurich to Dubai. VirtueZone, which helps build companies in the UAE, said its Russian customers, although they represent a small part of its operations, have doubled this year from last year.

Western companies like Google and JP Morgan Teese have also relocated their Russian employees to Dubai. The Russian wealth is also evident in Dubai. The ship, Madame Gu, owned by MP Andrei Sloch, was moored in the port of Dubai two months ago.

Dubai has turned into a busy runway for Russian planes, including that of Chelsea club owner Roman Ibrahimovic. The Russians’ interest in Dubai has led to an increase in the demand for real estate there.

At the beginning of the war, Russia prevented people from withdrawing only $ 10,000 in hard currency, an amount that increased to $ 50,000, but the Russians said they could send money to real estate developers’ accounts and meet their obligations to rent apartments and houses for sale in friendly countries.

Russian banks allow individuals to transfer hundreds of thousands of dollars to accounts with real estate developers in the UAE, but if they sell housing units, it will be delivered in the future. This has increased the demand for the purchase of real estate in buildings and skyscrapers under construction. In one of the skyscrapers built, 330 flats were sold, most of them to Russians.

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