The Western nations await measures from the United Arab Emirates to stop Russia’s sanctions evasion. The UAE is on the global watchdog’s (Financial Action Task Force) grey list of countries that don’t do enough to uncover illicit trade.
In new sanctions packages, the EU, the US, and the UK have sanctioned several companies registered in the UAE, accusing them of directly supplying Russia with items used by its war machine.
In December, the US Treasury and State Departments sanctioned more than 250 entities and individuals in China, Turkey, and the UAE for their continuing support for Russia’s war efforts. Washington made another attempt to crack down on Russia and its evasion of sanctions previously imposed by Ukraine’s Western allies.
UAE-based companies controlled by the US
- LASERCHIPS FZCO, a UAE-based company that has supplied Russian companies with common high-priority items critical for Russia’s war. Products supplied by LASERCHIPS include common high-priority items such as electronic integrated circuits.
- RESOLUTE MACHINERY TRADING LLC, a UAE-based company that has supplied sanctioned STAUT COMPANY LIMITED with common high-priority electronic components.
- GLOBAL CENTRAL LOGISTICS FZCO, a UAE-based company that has supplied Russian companies with electronic components.
- L D S COMPUTER SYSTEMS TRADING, a UAE-based company that has supplied electronic components to sanctioned OOO VNESHEKOSTIL.
New sanctions target companies that help Russia in previous sanctions evasion
New sanctions will “continue to tighten the vise on willing third-country suppliers and networks providing Russia the inputs it desperately needs to ramp up and sustain its military-industrial base,” according to US Treasury Secretary Janet Yellen.
“The measures take aim at what the US agencies call Russia’s procurement network, a loose coalition of companies that help keep it supplied with cutting-edge technology and weapons in violation of American sanctions and export controls. Despite penalties levied on Russia after its invasion, the US and its allies have struggled to keep these goods from entering the Russian market, the statement said.
The EU states in the 12th anti-Russia sanctions package attempted to hinder Russian firms from obtaining dual-use products like semiconductors, microchips, and drone parts, which could enhance Putin’s war machine.
Advanced electronics from UAE to Russia surged in 2022
The exports of advanced electronics, semi-conductors, and microchips from the UAE to Russia surged to $1,5 billion (225% vs. 2021 and almost a 20 percent increase vs. 2020), according to the TradeMap.org data.
The US and EU officials demanded that the UAE stop acting as a gateway for Russia to get around the sanctions. The restrictions aim at stopping Moscow’s ability to produce weapons that it uses to bombard Ukrainian cities.
UAE-based companies are also on the new UK sanctions list, adopted in December. Furthermore, the “shadow fleet list” now includes four ship operators from the UAE, who use these ships to transport Moscow’s oil, bypassing sanctions and the oil price cap.
UAE, a global trade hub, and a gateway for Russia to get around sanctions
The UAE is a well-known global logistics and trade hub. Since Russia started its war against Ukraine, the UAE has seen a surge in imports of technology such as semi-conductors and advanced electronics from the US and the EU.
Putin’s troops use these parts in Russian missiles and drones to bombard Ukraine. The UAE has also become a popular destination for Russian oligarchs seeking to bypass sanctions.
Last autumn, envoys from the US, UK, and EU paid visits to the UAE to discuss their concerns about Russia’s sanctions evasion schemes via the UAE.
Western allies aim at preventing Russia from acquiring components for weapons
Ukraine’s allies want to prevent Russia from using countries such as Kazakhstan, Turkey, and the UAE to import high-end electronics and high-precision components that Russia’s is using for weapons production and cannot develop domestically.
The new sanctions package targeted Turkish, Chinese, and Emirati companies over the shipment of technology, electronics, roller bearings, drone parts, and X-ray systems.
Russia has been able to evade Western sanctions by redirecting banned goods via third countries such as the UAE, Turkey, Kazakhstan, Uzbekistan, and some other nations that have not introduced sanctions themselves.
UAE wants to obtain exemption from the “grey list”
To obtain exemption from the “grey list,” the UAE should consider introducing export licenses for items and components that are sanctioned by the US and EU and used by Russia’s army, according to media reports. If implemented, the system can reduce Russia’s ability to acquire dual-use goods by bypassing sanctions.
The UAE is keen to be removed from the Financial Action Task Force’s gray list. But the time is ticking for Abu-Dhabi. Delegates from at least three nations of the Paris-based global watchdog, which backed in 2023 the inclusion of the UAE on the grey list of countries that require oversight, will make their decision soon.
Delegates from at least three nations of the Paris-based global watchdog, which backed the inclusion of the UAE on the grey list of countries that require oversight in 2023, will make their decision in February 2024, based on the UAE’s steps against sanctions evasion.
Leaked reports on collaboration between Russia’s and UAE security services
The leak of information about the cooperation of Emirati intelligence with Russian special services during a time of geopolitical confrontation between Moscow, China, and the West fuels the tension between the US and the UAE.
The US Justice Department opened an inquiry into the possible release of Pentagon documents posted on social media platforms. They appear to detail US and NATO aid to Ukraine and US intelligence reports.
According to AP, the document says: “In mid-January, FSB officials claimed UAE security service officials and Russia had agreed to work together against US and UK intelligence agencies.” The intelligence information reported is based on intercepted communications.
The US has already defined the UAE as a country of focus for halting sanctions circumvention by Russia and stopping Putin’s war machine from obtaining advanced electronics and parts used in modern weaponry, regardless of whether this fact will worsen bilateral relations or not.