Switzerland (Brussels Morning) Amidst the ongoing Russia-Ukraine conflict, the international community’s focus on transparency and international accountability has intensified. Concerns have surfaced regarding the United Arab Emirates (UAE) role in facilitating dual-use exports to Russia.
The Dual-Use Dilemma
Dual-use products are those with both civilian and military applications, making them a potential concern when they reach countries engaged in conflicts. Such products might include semiconductors and integrated circuits, which can be used in both civilian and military applications. These goods are a key focus due to the potential contribution they could make to Russia’s military capabilities.
The Wall Street Journal reported that U.S., UK, and European Union (EU) officials are taking action to pressure the UAE to halt exports of these dual-use products to Russia. Despite sanctions imposed on Russia that prohibit such goods from reaching Russian buyers, concerns persist about their transit through the UAE.
The UAE, a member of the OPEC+ oil alliance that includes Russia, has maintained diplomatic ties with both Russia and the West, despite Western pressure to isolate Moscow. The country has not imposed sanctions on Russia but has expressed its commitment to “the integrity of the global financial system.” UAE officials claim they strictly abide by UN sanctions and have robust processes in place to deal with sanctioned entities. The United Arab Emirates has maintained a stance of neutrality in the Russia-Ukraine conflict, refraining from taking sides in the ongoing crisis. This diplomatic approach aligns with the UAE’s mediation efforts and discreet neutrality, showcased through its thriving bilateral trade with Russia and open lines of communication with various regional players, including Iran and China. However, the UAE’s stance has raised concerns from the US about possible repercussions related to sanctions evasion
Western officials have become increasingly worried about the re-export of dual-use technologies from the West to Russia through the UAE. The issue has prompted Western nations to lobby Russia’s neighbors, including Armenia, to curb their own trade in these goods. At the same time, this concern has led to a series of diplomatic visits aimed at convincing the UAE government to take action.
The Economic Dimension
The UAE’s diplomatic position during the conflict has resulted in significant economic advantages. Dubai, in particular, has observed a surge in Russian immigrants, propelling the city’s real estate market to become one of the most vibrant luxury housing markets globally. Additionally, the UAE has become a central hub for Russian oil traders, expanding its economic clout even further.
In 2022, more than one million Russians traveled to the Emirates, marking a substantial 60 percent rise compared to the preceding year. Notably, these Russian visitors encompass not only tourists but also individuals who have chosen to relocate, bringing along their businesses and assets. Russians have transitioned from constituting a specialized demographic to becoming the predominant factor propelling the local real estate market, and they now represent the largest share of transactions among foreign investors. Furthermore, the UAE has ascended to one of the top five destinations for Russian companies seeking to establish franchises.
Even prior to the war, the trade relationship between the two countries had been rapidly expanding in recent years, primarily driven by the growth of Russian agricultural exports, which continue to constitute a substantial portion of Russian products destined for the UAE. The principal outcome of sanctions has been a substantial surge in the availability of precious metals, which Russia can no longer market in Western countries. Expert estimates indicate that gold and precious gemstones accounted for nearly 40 percent of Russian exports to the UAE in the previous year.
However, one should keep in mind that the United Arab Emirates (UAE) has been in the same position in the past. Two decades ago, UAE was a prominent financial hub for Iran, but when U.S. sanctions were imposed on Iran in 2010–2011, the UAE was urged to restrict its financial ties with Iranians, causing a significant drop in trade. Even though the UAE did not formally join Western sanctions against Iran, it adapted to Western policies.
Similarly, in the ongoing sanctions conflict between Russia and the West, the UAE may seek opportunities, but its reliance on the United States and other Western nations makes it likely that it will eventually need to find compromises in line with Western sanctions.
The importance of transparency and international accountability
However, the issue of dual-use exports to Russia via the UAE highlights a significant and pressing concern within the broader context of the ongoing Russia-Ukraine conflict and it underscores the indispensable requirement for transparency and international accountability to effectively address the complex dynamics at play in this crisis.
This diplomatic challenge is multifaceted and intricate. It necessitates a high degree of cooperation and unwavering vigilance on the part of all stakeholders involved. This collaboration extends beyond mere economic considerations; it is fundamentally about upholding the integrity of the global financial system and adhering to international laws and norms. Furthermore, it requires careful consideration of several key factors and a nuanced approach to ensure that both economic considerations and the objectives of the sanctions are adequately addressed. Maintaining vigilance and cooperation in monitoring the flow of dual-use products is essential in achieving these objectives.