Capital flight to UAE undermines human rights

For nearly a decade and a half, I have been involved in human rights and justice issues in the Gulf States and broader region, and I have long cautioned that the UAE in particular has become increasingly defiant of the international community in conjunction with its rise in economic power and strategic importance.

Suffice it to say, when Abu Dhabi refused to take calls from US President Joe Biden, I was not surprised. Nor was I surprised when the Emirates, along with Saudi Arabia, shrugged off the imminent energy crisis in Europe in the wake of the Russian invasion of Ukraine, as not their problem; rebuffing British Prime Minister Boris Johnson when he visited recently to ask the countries to increase oil exports. I have been calling for years for Western nations to reassess their relationship with the UAE, and to re-evaluate its status as an ally. The Ukraine war appears to have finally tipped the scales in Washington, London, and Brussels, towards such a reassessment; but it might just be too late.

The raft of retaliatory sanctions against Russia, and the seizure of oligarchs’ assets in the US and Europe have turned Dubai into a magnet for Russian capital. We can expect that the same will be true for rich Chinese investors in the West, and potentially others from India, Pakistan, and from any country that is either siding with Russia in the Ukraine conflict, or is otherwise maintaining neutrality. What global billionaires have learned from America and the EU’s response to the invasion is that their capital is not secure in the West, so it is predictable that they will be redirecting it towards Dubai.

There are already reports of private jets from Moscow landing in quick succession at Dubai International Airport, and Russian investors flooding the UAE real estate market; tycoons from Hong Kong are shedding assets in the UK and Europe, and while we do not have real-time numbers, it is safe to assume that Dubai is going to welcome a significant influx of foreign capital. Added to this is the fact that the UAE is poised to elevate its position as a global energy producer with Abu Dhabi National Oil Company (Adnoc) gearing up to tap an estimated 22 billion barrels of unconventional oil resources that could potentially out-produce America’s shale revolution.

These dynamics matter from a human rights perspective because there is a clear correlation between the UAE’s economic strength or vulnerability and its behaviour; most importantly, its responsiveness to international pressure over human rights and due process violations. For example, when Dubai ordered an assault in international waters against the American-registered yacht Nostromo to capture the fleeing daughter of Sheikh Mohammed bin Rashid Al Maktoum in 2017, the UAE was enjoying a rebounding oil price and a 71% increase in Foreign Direct Investment from the previous year. When the UAE is prospering, it becomes more belligerent, more defiant, and more ambitious. Not only are foreign nationals more unsafe in the country, but Emirati officials become even less concerned about global backlash and intervention by foreign governments.

Since the Nostromo attack, FDI into the Emirates has more than doubled, even as the country has dropped in the rankings of the Global Economic Freedom Index and been slapped with a grey listing by the Financial Action Task Force (FATF) over concerns about money laundering and terrorism financing. The UAE has skilfully used its increased economic power to buy impunity; pouring money from its gargantuan Sovereign Wealth Funds into projects in Europe, and boosting the post-Brexit UK to the tune of £10 billion. The Emirates has also intensified its spending on political lobbying in the West, even becoming embroiled in an election-meddling scandal involving illegal funds for the presidential campaign of Hillary Clinton.

As the UAE’s economic power and reach have grown, the country has behaved less and less like a Western ally. Abu Dhabi has pursued closer ties with China, reportedly even hosting black sites in the country for the detention and torture of Chinese dissidents, and colluding with Beijing to convert Chinese port installations in the UAE into military outposts.

The UAE has carried out large-scale hacking operations against journalists, dissidents, and governments worldwide, so-called black PR campaigns to smear critics online, allegedly bribed politicians and judges in Georgia and India, and has become one of the leading abusers of the Interpol Red Notice system to intimidate and extort foreign nationals who have run afoul of Emirati banks and business partners.

Meanwhile, British citizens like Albert Douglas, Billy Hood, Steve Long, and Ryan Cornelius, remain unjustly imprisoned in the UAE, subjected to grave human rights violations including torture, and the Emiratis continue to defy calls for their release – because they can.

It seems that nearly every recent policy decision by the West has worked to embolden the UAE and increase its advantage, and the Emirates has not missed the opportunity to use that advantage against us. The sanctions against Russia, and the anticipated foreign capital transfers from the US, UK, and EU to Dubai, will likely result in a record surge of FDI into the UAE, thereby almost guaranteeing greater hostility to Western interests, and even more predatory investing by the UAE in Western countries to increase the Emiratis influence and impunity.

There is a glaring paradox, however, in the expected foreign capital flight to the UAE, and that is that the UAE is one of the least secure countries in the world in which to invest. The overwhelming majority of cases my organisation deals with involve foreign investors who have been defrauded, betrayed, and framed by Emirati business partners, sponsors, and banks, all for the purpose of stealing their capital and assets. Russians escaping to the supposed safe haven of the UAE will undoubtedly discover that they have fled into a trap. Given the global climate at the moment, any investor from Russia will be viewed by the Emiratis the same way a lion views a wounded gazelle. Their money is low-hanging fruit, and they will have even less recourse than other nationalities for resolving the inevitable contract breaches, embezzlement, and asset seizures that will occur.

If we have learned anything over the past 10 years about the UAE, it is that they do not respect allies, and they will pounce upon any real or perceived weakness for their own enrichment and empowerment. They have distinguished themselves as skilled and pragmatic strategists, and their ambitions extend well beyond the region. While the UAE may never be a global power, they aim to insulate themselves from the influence of the global powers, as well as amplify their own influence within them; and the more successful they become in this pursuit, the more dangerous they become.

Radha Stirling founded Detained in Dubai and Due Process International in 2008 and has since helped and advised more than 15,000 foreign nationals facing trouble in the UAE. Stirling is an expert witness, civil and criminal justice specialist, legislative, investment risk, business and policy advisor to the public and private sectors, speaker and host of the Gulf in Justice Podcast, covering regional issues in depth.