In the News
February 22, 2023

Ukraine war at year 1: Has Gulf's neutrality on Russia invasion paid off?

"Ryan Bohl, a senior Middle East and North Africa analyst at the Risk Assistance Network + Exchange, said that this policy shift is not new.

It first occurred around 2014 with the shale oil wars, he said. As the United States started importing less from Saudi Arabia, the kingdom began redirecting its exports to other countries.

'This is who the US has been dealing with for a while, but now it's blatantly obvious. Saudi Arabia and the other Gulf Arab producers will be making choices that make sense for their economies, and that might not always work out in the West's favor,' said Bohl, but it does not mean that the GCC is leaving the United States to work more closely with the East, as some have characterized recent events.

'We’re really entering a multipolar world, which resembles the 19th century more than the Cold War blocks. This means that Saudi Arabia will deal with China as long as it’s an advantage. If geopolitical conditions change, they’ll move away from China and shift to India, back to the West or sub-Saharan Africa,” he told Al-Monitor, with an “every person for themselves' approach.

This international policy has extended to other markets, including finance and real estate, as a high influx of Russian investment poured into a welcoming Gulf region.

Rents hit historic highs in Dubai this year, and the Russia war is the driving force that’s fueling it, contributing to the country’s recent economic gains during a global downturn, reported The Associated Press last week.

Gulf countries, mainly the UAE and then Qatar, have been major recipients of Russian real estate investment along with Turkey, said Bohl, in addition to direct financial injections.

Last week, the UAE authorized a license for Russia’s MTS Bank, which is not beholden to Western sanctions and serves as an example of how the country has become a financial haven for Moscow, the Financial Times reported, and it’s raising concern amongst Western nations enacting these restrictions.

'It's legal, but it’s risky. It's part of the reason that I think that the Financial Action Task Force is grey-listing the UAE, because they are in this space where they're willing to skirt the line of sanctions without quite crossing it,' Bohl said, adding that the Gulf hub is seeing money transferred through buying gold, diamonds, cryptocurrency and real estate.

'The UAE is very clear about its neutrality — that it is politically tolerant of dissidents all over the world,' he added. But, he said, if there were a secondary set of sanctions enacted forcing countries like Turkey and the UAE to pick a side, that’s when you could see a flight of Russians out of these countries.

Read the full AL-Monitor article by Salim A. Essaid here.