On the tarmac of Dubai airport, half way along its main runway, a small terminal has been doing brisk business this month. Daily flights have disgorged dozens of Russians – many among the wealthiest figures in Vladimir Putin’s inner circle.
A short VIP welcome and limousine ride later, and the oligarchs are into a world that cares little about Moscow’s invasion of Ukraine or the attempts to punish Putin, and has instead willingly embraced his enablers.
Perhaps more than anywhere else in the world, the oligarchs, and other cashed-up Russians are welcome in Dubai, along with their riches, which are flooding to the United Arab Emirates in unprecedented amounts – often via discreet means.
The UAE has not followed western governments in using sanctions as retaliation for the invasion of Ukraine. Bankers, real estate agents, car dealerships and marinas are reporting extraordinary demand for homes, sports cars and mooring space as the influx settles in to an oil-rich monarchy that has charted its own course on Putin’s Russia and is not afraid to expose glaring tensions with the US in doing so.
Transactions, from elite property sales to leases, are largely being conducted using cryptocurrencies, but some have been straight transfers from Russian financial entities linked to sanctioned tycoons, a regional intelligence source told the Observer. Such moves undermine sanctions imposed by the US and EU on the Russian leaders’ allies and are a potent lure for the next rung of Russian businessmen who fear the same fate.
Real estate agents in Dubai are reporting one of the biggest bull markets ever as Russian investors snap up apartments sight unseen, either buying them outright, or paying a year’s rent in advance. “It’s been unbelievable,” said Alan Pinto, a leasing consultant at Espace Real Estate in Dubai Marina.
“A radical amount of Russian investors are purchasing units. Even tenants; we’ve had a huge amount of calls. They transfer their funds via crypto. They have an intermediary who will do that for them and then the cash is passed to the landlords.”
Rumours are widespread among Dubai realtors that the billionaire and ex-owner of Chelsea Football Club, Roman Abramovich, is in the market for a luxury base on the city’s coveted foreshore. One of his jets has been a regular visitor to the airbase, and a yacht linked to him has been moored in nearby Gulf waters.
Abramovich’s property holdings are being scrutinised around the globe, including in the French territory of St Barts in the Caribbean, where he is a major holder of luxury homes in Gouverneur Bay, near compounds owned by other oligarchs.
He is believed to have financed substantial upgrades to public facilities, including roads and car parking, winning the favour of local authorities.
“It will be the same in Dubai,” said a real estate agent who has sold two luxury properties, valued up to $20m to Russian investors in the past three weeks. “They know how to deal with the local authorities and to make themselves good neighbours.
“A lot of the new investors are very hush-hush,” said Pinto. “They will never purchase directly, they get companies to do it for them.”
While oligarchs’ jets continue to shuttle between Moscow and Dubai, so do commercial flights. There is no sign of the money flow between the two cities slowing down and there has been little local reaction to a move earlier in March by the global financial crimes watchdog, the Financial Action Task Force, to put the UAE on its “grey” list, meaning the provenance of some money in the UAE could be considered opaque.
Among bankers, power brokers and global tycoons, the UAE has long been known as a receptive environment for investment that asks few questions. A residency permit and a bank account can be obtained in 30 days following the registration of a company. Permanent residency can be purchased for the price of a luxury villa – about $1.5m.
Employees of leading banks may soon be signing up.
Goldman Sachs was among the first US banks to announce the closure of its Russian business. It had about 80 employees in Moscow prior to the conflict, roughly half of whom are now moving to Dubai. A small number of JP Morgan’s 160-strong Moscow workforce are also relocating, although many employees are still in Russia, unwinding operations there. It is understood the easy availability of Dubai visas has played a role in the choice to relocate.
Private bank Rothschild, whose wealth management unit reportedly decided to stop accepting new Russian clients, is also said to be moving some of its Russia-based staff to the Emirates. The bank did not respond to a request for comment.
The UAE government has claimed to have taken significant measures to regulate the inflow of money. Its ready acceptance of Russian wealth at a time of global scrutiny on Putin’s financial tsars may put that claim to the test. But even more open to challenge is the relationship between the UAE and Washington, as Emirati leaders edge closer towards China, which as well as being a geopolitical rival is emerging as the potential hub of an alternative financial system.
The Chinese cross-border payment system, Cips, is being mooted as a replacement for Swift – a development that could change the nature of global finance and dilute the impact of sanctions on Russia. While such a move does not seem likely – at least in the short term, Emirati leaders have not been shy in showing their displeasure with US president Joe Biden, who they believe has shied away from a longstanding strategic partnership, at a time when Putin has been prepared to embrace them.
The war in Yemen has widened the rift. In January, Houthi forces claimed responsibility for an apparent drone attack in Abu Dhabi that killed three people and left flames billowing from an oil storage site.
“They have been particularly upset over Yemen, and the fact that they did not get a phone call from Biden after Abu Dhabi was hit by drones and rockets fitted by the Houthis,” said an expatriate in Dubai with knowledge of the government position.
Julien Barnes Dacey, the head of the Middle East and North Africa programme at the European Council for Foreign Relations, said: “At face value UAE seems they think they can navigate around US sanctions but it may just be too early for them to have internalised what this western anti-Russian sanctions drive really means.
“It’s hard to know how much it fits into the recent sense of Emirati hedging, and whether they are actively looking to send a message to Washington that they’re frustrated with the US position at large and are happy to go their own way moving forward.”
In Dubai, bling is back. Boulevards that were silent during the peak of the pandemic are bustling with the roar of sports cars, some driven by locals, others by young Russians.
Towering over them is the world’s tallest building, the Burj Khalifa, which sparkles like a giant Disney castle with all manner of light shows. A Russian family are taking photographs of the building at sunset. “It will be red, blue and white soon,” one of the visitors says to his Emirati host, a reference to Russia’s tricolour flag. “I’ll arrange it,” the host replies with laughter.
