Happy days are here again for Russian expats in the UAE

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A Russian investor conference in Dubai on the third anniversary of the invasion of Ukraine was the perfect place to get some answers to two burning questions posed by the historic volte-face in US foreign policy under President Trump.

First, will the prospect of a ceasefire and settlement in Ukraine lead to the removal of sanctions and Russia’s re-admission to the global financial community?

Second – and of direct relevance to the Arabian Gulf – will peace between Moscow and Kyiv persuade the thousands of Russians who have made the UAE their home these past three years to return to the motherland?

On the first, despite a series of caveats of the if, when and how variety, the general mood from the 60 or so Russian entrepreneurs, investors and experts in attendance was “happy days are here again”.

(In recognition of the sensitivity of some of the discussions, the event was held under the Chatham House rule of no identification or attributable quotation, which I have of course observed scrupulously.)

One expert warned that, in the event of a peace deal, sanctions will be eased “only in stages and slowly”, with a nod to Trump’s stated policy that if there is no deal, sanctions can be ratcheted up again.

But nobody really believed that would happen. Although the Russian economy has proved to be remarkably resilient in the face of unprecedented Western sanctions, there are enough dark clouds on President Putin’s horizon, mainly in the form of inflation and labour market pressures caused by astronomic military spending, to persuade him to do a deal now, according to delegates.

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Which sanctions may be lifted first was a matter of debate. Those in place against individual oligarchs are “incidental” and will not cause Putin any concern; commodity trading, for example in oil and uranium with the US, can be resumed easily and quickly; embargos on technology exchange between Russian and the West will probably stay in place for ever.

Financial sanctions are far more complicated. Some were imposed by President Biden as executive orders, and can be lifted on Trump’s whim, while others require Congressional approval.

There was the possibility of “sanctions divergence” between the US and Europe, and much will depend on the fate of the $300 billion or so of Russian funds frozen mainly in European banks.

Russia’s tilt towards Asia and the Brics was noted, but one expert from Moscow was adamant that the country wants to resume its westward investment orientation as soon as sanctions are ended.

Will Western companies who pulled out of Russia after the invasion of Ukraine want to go back, and will they be welcome?

Some never left, of course. It was reported that there are now more members of the German-Russian chamber of commerce than before the invasion, for example. But the overall attitude was that “everyone in the West wants to go back” – perhaps wishful thinking on the part of the Russian audience.

Many Russian expats have enjoyed good lives in the UAE, and will not be in any great hurry to return home, regardless of the geopolitics

It was also suggested that a mass return of Western corporates will be resisted by the new Russian owners of businesses which pulled out in 2022.

Will a “peace dividend” be enough to lure back the hundreds of thousands of Russians who have become UAE residents, and revive UAE-Russian investment put on hold by Western sanctions?

Many Russian expats have enjoyed good lives in the UAE, and will not be in any great hurry to return home, regardless of the geopolitics. It was noted approvingly that a bill to appropriate the assets of Russians resident abroad did not make it through the Duma.

One young family man who has built a business in the UAE said bluntly that he will not return, because he will be liable for military service.

The feeling was that many Russians will continue to live and work in the UAE as long as there are opportunities to do so. The higher cost of living in Dubai can be offset by the business opportunities that present themselves as UAE companies resume full-scale operations in Russia after sanctions are lifted.

There was a general consensus that Dubai is a better place of temporary exile than Georgia, Armenia, Turkey or even Cyprus.

Perhaps the most illuminating part of the event was when we came to discuss Russian attitudes to President Trump. Is he a shrewd geopolitical operator, or a “useful idiot”, in the phrase often used to describe Western sympathisers of the Soviet Union?

The US president is a disruptor and a catalyst for change who can break the Ukraine logjam, came the reply, so in that sense he is “useful”.

But his volatility and unpredictability make him untrustworthy, one Russian expert said.

“He could easily do a deal with China and leave us out.” Suspicious minds indeed.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He acts as a consultant to the Ministry of Energy of Saudi Arabia and is a media adviser to First Abu Dhabi Bank of the UAE