The economy today
Why the United Arab Emirates has become the refuge of Russia's rich
Audio 04:05
General view of Abu Dhabi, the capital of the United Arab Emirates, January 3, 2019. (Illustrative image) REUTERS/ Hamad I Mohammed
By: Dominique Baillard Follow
3 mins
The UAE is increasingly attracting wealthier Russian nationals.
The friendly ties between the two countries have been strengthened with the war in Ukraine.
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There was already a strong Russian community in the Emirates: around 60,000 residents, mostly owners of a beautiful villa.
In this petro-monarchy, an investment in stone of 750,000 dirhams, or approximately 200,000 euros, automatically gives access to a residence permit.
Its duration varies according to the amount invested.
Real estate agents in Dubai saw this influx of customers as soon as Russian troops began massing on Ukraine's borders.
Since the beginning of the offensive, demand has exploded, it has been multiplied by three in some agencies, by ten in others.
Dubai has become the refuge of the oligarchs?
The great Russian fortunes, but also the less great ones, appreciate the Emirates very much.
A good part of the employees of Western investment banks present in Moscow such as Goldman Sachs, JP Morgann or Rothschild have joined the Emirates since the closure of the Moscow offices.
Newcomers benefit in this small Gulf state from an environment very favorable to the interests of their country.
The sovereign wealth fund of the Emirates, Mubadala, has cross-shareholdings in the Russian economy, with another Russian fund, up to 3 billion dollars.
And for the moment, unlike the Norwegian sovereign wealth fund, he has no intention of giving it up.
Ties are also very strong between governments outside their borders.
The United Arab Emirates financed the intervention in Libya of mercenaries from the Russian Wagner agency.
In addition to the golden visa, other very basic reasons motivate their installation in the petro-monarchy: it is one of the rare countries which maintains its flights to Russia.
It is also a country that does not feel bound by Western sanctions.
Russians are no longer welcome in European countries, so they now come to the Gulf for shelter.
And a safe to preserve their capital.
How do they manage to transfer their assets?
Some arrive with suitcases filled with greenbacks, so they pay cash for their villa or apartment.
They also make extensive use of crypto currencies.
Dubai has just put in place legislation favorable to virtual means of payment and in December the emirate signed an agreement with Binance, the world's leading bitcoin exchange platform.
Finally, if all these payment alternatives fail, there remains hawala, an ancient money transfer system common in Middle Eastern countries.
Abu Dhabi has a reputation for facilitating money laundering and tax evasion.
This financial center is very accommodating with sophisticated fixtures.
Its legislation lends itself to this.
On this confetti of 7 emirates, there are 39 company registers and as many free zones.
This sulphurous reputation and the influx of these newcomers has earned it increased surveillance from the Gafi.
In early March, the international anti-money laundering body placed it on its gray list of suspect states.
►IN BRIEF
The barrel of oil is down sharply this morning in the first electronic exchanges.
-5%, a decline triggered by information from the Bloomberg agency: Joe Biden is preparing to release one million barrels per day from strategic reserves for 6 months.
It would be the strongest intervention ever decided for 50 years.
The United States holds 589 million barrels, they would be ready to put about a third of it on the market.
Both Russia and Ukraine will endure a severe recession warns the EBRD
According to the European Bank for Reconstruction and Development, Ukraine's GDP could decline by 20% this year, Russia's by 10%.
Forecasts based on the assumption of a war lasting several months.
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