Sanctions on Russia ineffective, says Dubai trade-hub chief

Western restrictions do not halt business but merely redirect it, the chairman of UAE’s main free-trade zone says

Sanctions on Russia are having no impact outside the West and such efforts to hamper business simply redirect it elsewhere, the chair of Dubai’s main trading hub has said, in an interview with the Financial Times.

The Dubai Multi Commodities Centre (DMCC) is a leading free-trade zone in the United Arab Emirates that hosts more than 24,000 businesses.

DMCC chief Hamad Buamim told the FT on Wednesday that sanctions slow the economy, but never stop it.

“Trade continues flowing, it just flows in a different way,” Buamim stated.

According to the report, Dubai is seen as a beneficiary of US and EU attempts to isolate Russia’s economy. Global oil traders moved from Geneva to the UAE after Switzerland joined the campaign of sanctions introduced against Moscow.

Buamim, who is also president of Dubai’s chamber of commerce, said that energy is the most important sector for the DMCC, with some 3,000 energy companies registered in the zone.

In recent months, the West has ratcheted up pressure on the UAE and some other countries, to force them act against companies trading with Russia.

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“The fact that the economy is not purely controlled by one side of the world makes these sanctions less effective,” Buamim argued. “If we just take the Ukraine conflict, [sanctions] are effective when you look west, but they are not really effective beyond that.”

He added: “We don’t see them as a great tool to make any impact. They are just making trade more complex and impacting the whole world.”

The report indicated that the US has in particular targeted international banks that finance trade deals. The UK has also imposed sanctions on the Dubai-based oil trader Paramount Energy & Commodities DMCC, an entity established shortly before G7 members imposed a price cap on Russian oil.

The European parliament, meanwhile, has voted against removing the UAE from the EU’s “grey list” of high-risk countries, over allegedly helping Russia evade sanctions.

The EU is reportedly aiming to agree its new round of Russia sanctions before July. Brussels adopted its 13th package of such restrictions against Moscow ahead of the second anniversary of the beginning of the Ukraine conflict in February. The measures were mostly aimed at closing loopholes to prevent Moscow from circumventing existing restrictions via third countries.

High-ranking EU politicians and diplomats have acknowledged that the scope for further sanctions is narrowing.