UAE-Russia trade grows as Putin arrives in Gulf

Sputnik/Andrey Gordeev/Pool via Reuters

• Saudi Arabia also on itinerary
• Russian exports up 71% since 2017
• 700 Russian companies in UAE

President Vladimir Putin will be hoping to build on Russia’s $9 billion of trade with the UAE as he visits the Gulf this week.

Putin arrived in Abu Dhabi on Wednesday and is also expected to travel to Saudi Arabia for talks with Crown Prince Mohammed bin Salman.

Trade between Russia and the UAE increased by 63 percent between January and September, compared to the same period last year, the president’s aide Yury Ushakov said earlier this week.

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Since the outbreak of the Ukraine war in February 2022, Russia’s trade pivot from the West to Asia has benefited the UAE. 

However, Russia-UAE ties were growing steadily well before the conflict. The Emirates is Moscow’s largest trading partner in the GCC, accounting for 55 percent of its total trade with the region.

Analysts at Russia Briefing, an intelligence platform of pan-Asia foreign investment practice Dezan Shira & Associates, said trade had grown almost six-fold between 2017 and 2022. 

Exports from Russia to the UAE increased by 71 percent and make up $8.5 billion of the $9 billion total, making the UAE the country’s 12th most important trading partner.

Analysts said Russian exports to the UAE are dominated by diamonds and gold, which made up 40 percent of the total. 

Re-exporting from the UAE to Russia has also risen sharply, according to Russian Briefing. Re-exports of electronic goods grew 15-fold to reach $283 million in 2022, making up more than half of the 500 products that the UAE exported to Russia.

As of 2022, 700 Russian companies were established in the UAE while the number of real estate investors grew – as did the number of real estate agencies set up by Russians.

Russians purchased real estate in the UAE worth $500 million last year while tourist numbers also surged 60 percent to 1.2 million visits. 

In October, Air Arabia launched its fifth Russian route to Samara, operating three weekly flights from Sharjah airport.

Dr Marat Terterov, principal representative of the Brussels Energy Club, told AGBI that Putin’s visit to the UAE and Saudi is “unlikely to have any major value from a trade and investment perspective” and predominantly has political significance.

“The Kremlin will use the visit as evidence that Russia is not isolated internationally following its invasion of Ukraine, but has important friends in key centres of global political influence and financial power,” he said.

Ushakov told the Moscow-based Oreanda News Agency that energy would be a priority for Putin during the visit.

Although the UAE is a large oil producer, it imported some 3.2 million barrels of Russian oil destined for re-export to other countries last year. 

Russia, which is part of Opec+, said it would honour commitments on the voluntary reduction of oil and fuel supplies by 500,000 barrels per day starting January 2024.

Russia’s oil and gas revenues declined in November to $10.5 billion, finance ministry data showed on Tuesday. Russia’s energy revenues have been squeezed by Western sanctions that include price caps and an embargo on seaborne oil exports.

Aditya Saraswat, vice president of Middle East analysis at Rystad Energy, said the agenda for Putin’s visit may include discussions on further Opec+ cuts and potential methods for trading and exporting Russian oil.

He said the visit would “send a message” to the West as Putin will also be visiting Iran after the UAE and Saudi Arabia.

“This visit is not only a meeting to reaffirm the solidity of the Opec+ alliance… but also one of the founding member of BRICS meeting the newly invited members.”

Saudi plays it safe

Putin is also reported to be visiting Saudi Arabia, where he will be hoping to boost a trade relationship which shrank to $1.6 billion last year from $2.2 billion the previous year.

The figures are insignificant in terms of each other’s trade volumes, with the share of Saudi exports just 2 percent of the total of Russian imports. 

The Russian ambassador to Saudi Arabia, Sergey Kozlov, said earlier this year there was “plenty of room” for growth in bilateral trade and set a target of $5 billion.

Russia mostly exports agricultural and food products, with cereals making up 70 percent of the total last year. Beef and poultry exports have also increased significantly as the kingdom intensifies its food security efforts.

Russia Briefing said in a research paper: “Looking ahead, investment and trade ties between Saudi Arabia and Russia will remain relatively limited – making it an exception among most of the Asian and Middle East countries which have benefited from Russia’s trade shift from the West. 

“The Western sanctions imposed on Russia will serve as a major disincentive for Saudi companies. Nor will Saudi Arabia fully endanger its ties with the US and risk incurring secondary sanctions.”

Last week, Putin signed a decree putting St Petersburg’s Pulkovo airport under the temporary management of a Russian company, taking control from investors from Germany, Qatar and the UAE.

The decree stated that a Russian holding company had been set up to manage the asset, with the rights of German airport operator Fraport and investors including the Gulf wealth funds Qatar Investment Authority and Mubadala to be transferred to Russian hands.

In 2024 the seventh joint ministerial meeting between the GCC and Russia will be held in Qatar, reviewing progress on trade and investment and committing to developing energy supply chains.