From the parade ground to Dubai: Wealthy Russians move their money to the Gulf state Orban: Do not participate in the refugee deal

2022 was not a happy year for the international financial sector, but business was booming in the United Arab Emirates. The Gulf state, with the economically most important emirates of Dubai and Abu Dhabi, registered the highest percentage of capital inflows of all international financial centers worldwide (10.5 percent) last year. The figure comes from the global wealth report, which the Boston Consulting Group distils annually from the national balance of payments and national accounts of the countries surveyed.

According to the report, the inflow of assets of Russian origin accelerated particularly in the Gulf state. Mounir Khouzami, president and co-founder of the “Swiss Arab Network” in Zurich, agrees that many wealthy Russians have moved their foreign assets from London, Paris or Zurich to Dubai or Abu Dhabi as part of Europe’s sanctions policy against Russia .

Every seventh real estate buyer is Russian

The association is committed to initiating and deepening economic and cultural relations between Switzerland and the Arab world, and Khouzami regularly travels to the Gulf countries. That the Russians in Dubai now represent a larger population group is clear to every visitor on the street and in the restaurants.

According to statistics published by the international real estate agency Betterhomes, published by the British Daily Telegraph, Russians are also responsible for most property purchases in Dubai. More than every seventh buyer is currently a Russian. The property market in Dubai is booming like no other housing market in the world with expected average price increases of around 15 percent in the current year.

This all seems strange considering that many Western countries, led by the US, EU and UK, are still hunting the assets of Russian oligarchs and confiscating them is still seen as a way to end the post-war reconstruction of Ukraine.

evasion of sanctions

Last Friday, the EU launched its eleventh package of sanctions against Russia. It contains a passage that allows EU states to take action against third countries if they facilitate circumvention transactions with Russia in certain sensitive goods. In the EU, increasing demand for EU goods in the United Arab Emirates, Turkey, China and other countries neighboring Russia has long been perceived with concern, the Reuters news agency reports. Shifts in Russian financial assets are not addressed in the EU sanctions package.

The United Arab Emirates, along with many other countries such as India, China and Turkey, are among the countries that do not support international sanctions against Russia. Even neutral Switzerland takes great care not to be criticized for being an encircling state. Just a few days ago, Seco proudly issued a press release stating that Switzerland had been recognized by the EU as an “equal” partner in implementing sanctions against Russia.

The Swiss also worked accurately and thoroughly in accordance with the specifications from Brussels when crediting Russian credits to Swiss bank accounts. As of November 2022, a total of CHF 46 billion in unapproved assets was recorded and a total of CHF 7.5 billion in assets owned by sanctioned individuals. “People not covered by the sanctions are free to move their assets,” a Seco spokesperson stressed when asked.

Luxury jet parked in Dubai?

The Swiss Bankers Association did not answer the question of whether and to what extent Russians moved their money from Switzerland to Dubai. However, the assumption is obvious that this has happened in many cases. Doing business with their banks in Switzerland has not been made easy for wealthy Russians. Assets of 100,000 francs or more must be reported and banks are prohibited from accepting deposits from Russian customers that exceed this amount.

Meanwhile, suspicions remain among international oligarch hunters that Roman Abramovich has housed his Boeing 787 Dreamliner, which has been converted into an ultra-luxury private jet and is estimated to be worth more than $400 million, in a secure hangar in Dubai. The Financial Action Task Force, the international standard-setter in combating money laundering and terrorist financing, placed the Gulf state on the gray list of countries under “enhanced surveillance” last spring.

There was also a call for an even stricter classification (black list), which would have led to heavy sanctions. But Mounir Khouzami sees the boom in Dubai not only as an indirect consequence of the conflict in Ukraine.

Dubai has long been a favorite holiday destination for wealthy Russians and the country has also experienced strong immigration from Western European countries during the corona pandemic. “Dubai has successfully positioned itself as a place where people can live more freely than in many Western democracies,” says Khouzami.

“Dubai is a lifestyle location for the wealthy from around the world, who can live up to their ‘work hard, play hard’ motto better than in the metropolises of the West.” Khouzami knows that the Dubai model is now also being copied by Saudi Arabia. Whether it will prevail in the long term depends primarily on the international political consensus. In the longer term, however, the model could also meet strong resistance from the long-established residents of the Gulf states. Some have moved to more conservative countries like Indonesia or Malaysia in recent years, says Khouzami. (aargauerzeitung.ch)