US struggles to convince Middle East ally to break with Russia

The US is trying to convince the UAE, a close ally in the Middle East, to join the effort to isolate Russia economically, but this is not an easy task.

Brian E. Nelson, undersecretary for Counterterrorism and Financial Intelligence at the US Treasury Department, earlier this week traveled to the United Arab Emirates (UAE) to discuss “maximizing measures” sanctions, especially against Russia and Iran”.

Nelson also sent a tough message to the UAE, saying the US would “take additional action against those who evade or facilitate sanctions evasion”.

President Joe Biden in the East Room of the White House, Washington, US, in May 2022.  Photo: AFP.

President Joe Biden in the East Room of the White House, Washington, US, in May 2022. Image: AFP.

The US Treasury Department previously warned “individuals and entities operating in lax jurisdictions”, including the UAE and Turkey, at risk of losing access to the G7 market due to still do business with sanctioned entities or fail to take appropriate measures to deal with “illegal financial activity”.

According to observers, the US has repeatedly called on its Middle Eastern allies to join efforts to sanction and isolate the Russian economy, but the UAE has managed to balance its relations with both Washington and Moscow since the conflict. The Ukraine conflict broke out in February last year.

The UAE’s centrist policy displeased the US, but Washington refrained from taking a too tough stance towards such a close ally in the Middle East.

“We are seeing the US gradually becoming more focused in its efforts to get the message across to the Middle East and show the severity of the sanctions,” said Justine Walker of the Association of Anti-Money Laundering Professionals (ACMS). . “The US is trying to say, ‘If you choose to do business with Russia, you won’t be able to do business with us’.”

Since the outbreak of the Ukraine crisis, the UAE has become a leading destination for Russian investors in the Arab world. The Gulf country’s real estate market has become surprisingly vibrant with Russians flocking to Dubai and Abu Dhabi to invest.

The US has imposed sanctions on a number of organizations and individuals in the UAE for not complying with sanctions. More recently, it sanctioned two air transport companies based in the UAE for collaborating with an Iranian company to transport unmanned aerial vehicles (UAVs) and related equipment to Russia.

Russia is currently subject to an unprecedented series of sanctions from the West, but most of them are primary measures, applied only on the territory of the participating country. If a Russian bank is subject to primary sanctions from the US, it cannot operate in the US market, but can still work with a UAE or Turkish bank.

Sanctioned countries often try to circumvent the law by finding loopholes to do business outside of the US. Washington has closed that loophole by imposing secondary sanctions, punishing parties for conducting commerce with the sanctioned entity, even if that activity takes place outside of the United States.

Such secondary sanctions force countries and entities to choose whether to do business with Russia or with the United States, unable to do business with both at the same time.

A senior US official said Washington “will continue to use its powers and all the tools at our disposal to crack down on sanctions evasion” against Moscow.

However, when asked if secondary sanctions would be enforced in the Middle East, his answer was “no”.

According to Walker, the US has long noticed that Russia is deliberately evading sanctions by shifting trade activities through the Middle East as well as dealing directly with the region.

Because the United States has a leading role in the global economy, secondary sanctions are often effective in causing economic damage to the sanctioned country. But Walker believes that imposing them to prevent Russian activities in the Middle East is unlikely to succeed, because the US does not want to risk “serious escalation” in relations with the UAE.

The UAE has invested tens of billions of dollars in the US economy, mainly through sovereign wealth funds. In 2020, investors from the UAE contributed about $45 billion in investment flows to the US, up 65% from the previous year, according to the report. Nationalbased in Abu Dhabi.

Bilateral trade between the US and the UAE will exceed $23.03 billion in 2021. The UAE has the world’s sixth largest trade surplus with the United States, and the close economic partnership between the two nations has supported supports more than 120,000 jobs for Americans, according to the UAE Embassy in Washington.

“We are doing a lot of service to the Americans. They should be grateful to us rather than using such language,” said Abdulkhaleq Abdulla, a UAE political science professor, referring to the US warning. about the UAE may not have access to the G7 market if doing business with Russia.

According to Abdulla, US sanctions are unilateral measures, not issued by the United Nations, so countries have the choice to enforce them or not. “We deal with 190 different countries and Russia is one of them,” the professor said.

He said the US Treasury Department’s concerns were not new and Washington knew “very well that we (UAE) maintain healthy, ongoing conversations on all issues, including the sanctions”. According to him, the UAE should not be “recognized by the US” because there is an open financial market.

Karen Young, a senior research scholar at Columbia University’s Center for Global Energy Policy, said it was unlikely that the United States would openly sanction the UAE because the two countries still cooperate closely on many other issues, such as relations with Israel and energy. “However, the economic benefits that the UAE has gained from increasing business with Russia is so significant that the US will not be able to ignore it,” she noted.

Vu Hoang (Theo CNN)

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