Russian-Jewish Oligarchs Haven-Hop in the Middle East

Russian-Jewish Oligarchs Haven-Hop in the Middle East

After Russia’s invasion of Ukraine in February, the West retaliated by sanctioning Russia’s economic and commercial assets, especially owned by Russia’s oligarchy: the billionaire confidants of Putin. Some oligarchs scrambled to bypass these sanctions, many of whom own assets in Western states and maintain an internationally based market. Many of these oligarchs moved their financial holdings to Türkiye, which has yet to sanction the Russian Federation—an ever-closer partner. However, a niche group of Russian-Jewish oligarchs is manipulating their ethnic identity and the recent geopolitical innovations between Israel and the Arab world to safeguard their wealth and security. Thus, a new development of Russian Jewish oligarchs has begun “haven-hopping” in the Middle East: moving from financial haven to haven until sanctions cease.

The Russian-Jewish oligarchy began a swift migration to Israel amid the war and sanctions, especially in March and May. For example, at least seven private jets carrying Russian oligarchs traveled and were docked in Israel in March to escape commercial sanctions.[1] There are two oligarchs of serious interest: Mikhail Fridman and Petr Aven. Both of whom used their Jewish ancestry to secure Israeli citizenship under the “Law of Return”. They also benefit from a law exempting them from declaring or paying taxes for ten years, a loophole historically used to host international money laundering in Israel.[2] Fridman and Aven, who accrued their wealth in banking and are founders of Alfa-Bank, are also the cofounders of the Genesis Philanthropy Group.[3] The GPG is a well-known Israel-based philanthropic organization that is strong in the international Jewish community, which also hosts the annual Genesis Prize ceremony in Jerusalem.[4] Still, many suspect their philanthropy is “not from the bottom of their heart, but for protection worldwide.”[5]

Fridman, Aven, and other Russian-Jewish billionaires use their philanthropy to quell suspicions of bypassing sanctions and purveying corrupt money, but this tactic does not suffice. Certainly, the Israeli government has yet to issue sanctions on Russia since Putin’s government allows Israel to strike on Russian-supervised Syrian territory. However, the US government publicly called on Israel not to harbor Russian oligarchs from sanctions,[6] and current Israeli PM Yair Lapid stated “Israel will not be a route to bypass sanctions imposed on Russia by… Western Countries”. [7] Tel-Aviv has gone so far as to discretely monitor the entry of jets and yachts owned by Russian billionaires; now Fridman and Aven fear fiscal consequences. The oligarchs are slowly fading from the heat: from fighting the EU sanctions in court to stepping down from Alfa-Bank and Genesis Philanthropy leadership.[8] Evidently, the Russian-Jewish oligarchy no longer feels financially safe in the Jewish homeland.

Adding to the precarity, Russia-Iran relations are strengthening to bypass economic sanctions which will harm Russia-Israel relations. US President Biden’s visit to Israel and Saudi Arabia is being followed by Putin’s visit to Tehran, meeting President Raisi and Turkish President Erdogan. Putin’s trilateral meeting is set to increase Iranian drone sales to Russia and develop the prospect of grain deliveries from Russia to Iran. Since starting its “Pivot to East” [9] policy, Iran has increased economic relations with Russia. As a result, the Putin-Raisi-Erdogan meeting is showing promises of a new free trade zone between Russia and Iran[10] as well as the ditching of the US dollar as a medium of exchange between the two countries.[11] Clearly, Russia-Iran relations warm while Russia-Israel relations stay tepid. Nevertheless, Putin must ensure relations are not too close to Iran, to appease Sunni countries, such as Saudi Arabia, in addition to Israel.[12]

In the background of this meeting, the Russian-Jewish oligarchs are again fleeing to a country devoid of sanctions, the UAE. Although some stay in Israel, many have used Israel’s new diplomatic relations with the UAE as a new outlet from possible sanctions. As Israel realizes these oligarchs need to “pay for their crimes”, many in June/July have started docking their yachts and jets in Dubai, such as Roman Abramovich and Andrei Skoch.[13] Dubai has “emerged as a refuge for Russian wealth” so much of the Russian-Jewish ultra-rich are flocking there. Unlike Israel, which is increasingly against their presence, the emirate maintains a neutral yet negligent attitude. For instance, the foreign policy adviser to President Sheikh Mohammed bin Zayed, Anwar Gargash, stated the Russian oligarchs in Dubai had nothing to do with the sanctions and therefore should not be “lumped into” the conflict.[14] Such comments come in opposition to Western accusations of war-profiteering by the Russian oligarchy. Besides, the new migration of oligarchs to Dubai is commercially beneficial.[15] According to UAE authorities, properties bought by Russians in Dubai rose by 67% since the beginning of the war, thus benefiting the Dubai real estate market. Some of these buyers are clearly the Russian-Jewish oligarchs, but according to the BBC, the Russians buying are not just looking for “investment”, but a “second home”.[16] Thus, proving again, that this chain migration of Russian-Jewish oligarchs from Israel to the UAE is based on financial and security threats.

At present, it is based upon Abu-Dhabi’s reaction to Russia’s growing entanglement with Iran and Türkiye if Russia’s former ultra-rich will stay secure in the UAE. Saudi Arabia and UAE’s alliance may affect the Emirates’ response, but as Gargash noted, the oligarchy’s presence is not entwined with the conflict, but with the massive financial capital driven into the country. Unlike Israel, which had both government and international qualms with their presence, Abu-Dhabi's government is happy to host them. However, like Israel, the US’s interest in this conflict may prompt a future condemnation of Dubai’s laxity—whether the critique is cogent is based upon a buildup of the new US-Saudi-Israel alliance. As President Biden mentioned in his meeting with Saudi Arabia’s MBS, America “…will not walk away and leave a vacuum to be filled by China, Russia, or Iran.” [17] so, the president is fervent about controlling the Russian presence from Tel Aviv to Dubai. Such a statement may also include EU leadership in their future treatment of the Gulf States.

Beyond the bloc-making, the Jewish oligarchy’s hegira is a clear sign of wealth expelling from Russia. Numerous oligarchs have already cited the financial failures they have to succumb, and this suggests disloyalty to Putin that may ultimately stop these oligarchs from ever returning to Russia. When asked about their opinions on the conflict, many oligarchs temporized their answers by simply hoping the “bloodshed” would end, showing ever-present fear for Putin. Therefore, it is difficult to say whether these oligarchs will act against Putin, or possibly help wage a coup against their former overlord. Evidently, these oligarchs know how to play with geopolitics, so if it is to their benefit—or if they see his regime crumbling—a swift betrayal against Putin is inevitable.