It started with Saudi Arabia. President Biden was met with cool, if not cold, greetings during his visit to Riyadh last July. Then the Saudis picked China to mediate their rapprochement with Iran. Nobody from Washington or Brussels was in the room to get the two old enemies shaking hands.
Next up is the United Arab Emirates. Around the world and within the Gulf, it is best known for Dubai and Etihad Airlines. The country, like the Saudis, used to take its cues from the U.S. in many ways. Today, however, Abu Dhabi will act on the Emirates’ collective interests, and if that means it must disagree or break away with the U.S. on matters of geopolitical significance, then so be it.
Biden invited UAE President Mohammed bin Zayed (MBZ) to come to Washington last summer. The fact that the visit still has not happened is indicative of difficulties in the relationship between UAE and the Biden Administration.
“It is highly unlikely for the UAE president to visit DC because of the political tensions between them, especially with the growing and evolving relationships with China and Russia, long in the making,” says Dr. Theodore Karasik, senior advisor at Gulf State Analytics in Washington, D.C. “The Emirates have a particular Khaleeji outlook (meaning ‘from the Gulf’) that models their world view and is close in vision to countries in the East as opposed to countries of the West. The UAE sees policy issues differently, where patience is key instead of immediate gratification,” he says. “They’re going to wait and see what happens because politics are constantly changing (in the U.S. and Europe). But the West is no longer the exemplar.”
America’s Clout Gets Tested
America’s clout with its regional partners is being put to the test. Developing world watchers only need to look at the U.S.’s lack of success at enforcing its sanctions against Russia as a key indicator. The UAE serves up yet another example of a general “pulling away” from Western leadership.
Over the past several months, a parade of senior U.S., U.K., and European Union officials have traveled to the Emirati capital city of Abu Dhabi to plug one of the biggest holes in the sanctions regime against Russia. Exports of electronic parts from the UAE to Russia increased sevenfold in the past year. Microchip exports from the UAE to Russia were 15 times higher in 2022 compared to 2021, and last year the UAE sold 158 drones to Russia. Washington sanctions restricted all of these items.
Washington has made it clear that sanctions enforcement is a policy imperative. “Those who attempt to prop up Putin’s war machine by evading our export controls and sanctions will be held accountable,” said Assistant Secretary of Commerce for Export Enforcement Matthew Axelrod in a press release dated March 2.
The Assistant Attorney General for National Security, Matt Olsen, said in that March 2 release: “Ever since Russia’s unprovoked invasion of Ukraine, the Department of Justice’s priority has been the robust enforcement of U.S. export and sanctions laws and cracking down on efforts to evade those laws.”
Officials in the UAE are cognizant of the potential pressure they could come under to abide by U.S. or other sanctions, and “would likely seek to reach out separately to concerned parties to try and ensure there was no coordination on sanctions arm-twisting,” says Kristian Coates Ulrichsen, a Middle East fellow at Rice University’s Baker Institute.
“There is frustration in D.C. over the UAE’s role in enabling Russian business and capital to find a home from sanctions, although there is some acknowledgment that neither the Emiratis nor the Saudis will bow to pressure to take sides,” he says. “Everyone is adapting to the new normal in which the relationship is more non-aligned than ever before.”
The UAE is not alone in helping Russia to evade sanctions. The United States has already complained about Turkey, China, and some Central Asian states as upping the ante on commercial and other ties since Russian tanks rolled into the Donbas last year. Saudi Arabia was buying Russian oil to use at home and exporting more of its own oil to Europe, which had restrictions on Russian imports. And India has remained as non-aligned as it ever. But outside of the Saudis, whose relationship waned the second Biden won the election, the UAE is Washington’s favorite. They are huge buyers of American defense products and were seen as major partners in the now-failed Afghanistan War. This, too, turned Abu Dhabi off to Washington, many Capitol Hill insiders have told me.
Sanctioning Abu Dhabi: With Friends Like These…
Water cooler chatter with ex-diplomats and government officials on Capitol Hill and in the State Department tells me that sanctioning countries, including UAE, is a topic up for discussion. But no one thinks they will follow through from Washington. And if they did impose some form of restriction, the UAE would happily ignore it.
The Treasury Department’s Undersecretary for Terrorism and Financial Intelligence has already singled out the UAE for “poor sanctions compliance.” And over the past six months, the U.S. government has sanctioned at least three Emirati entities for their illicit trade with Russia. These include two UAE-based air transportation firms (logistics operators, not commercial airliners) that collaborated with a sanctioned Iranian firm to transport Iranian drones, personnel, and related equipment from Iran to Russia, and a Russian bank – MTS Bank — operating in Abu Dhabi under license from the Emirati central bank.
“The UAE is aware of and sensitive to the risk of evading sanctions, as underscored most recently by its decision to rescind the license for MTS Bank,” says Matthew Levitt, director of the Reinhard Program on Counterterrorism & Intelligence at The Washington Institute for Near East Policy. MTS was sanctioned by the U.S. and U.K. and was added to the Financial Action Task Force’s grey list, which provided the impetus to go along with the MTS sanctions in the UAE. Levitt doubts the UAE will breach those sanctions against MTS Bank.
“That said, the UAE and other Gulf states are committed to adjusting to the reality of what they see as a now permanently multi-polar world,” Levitt says. “They see the U.S. as their preferred security partner but want close ties to China and Russia and refuse to see these in binary terms.”
The UAE occupies an entirely different position in the pecking order of U.S. allies.
As the first Gulf Arab state to normalize relations with Israel, it has secured a place of privilege with those advocating broader acceptance of Israel, something they accomplish through the Abraham Accords. For the UAE, their strategy is that the three Abrahamic religions of Islam, Christianity, and Judaism, all have a common core and should get along as one family.
More importantly to the U.S. both commercially and in terms of political power, the UAE is the fourth largest recipient of U.S. arms transfers after Saudi Arabia, Australia and South Korea.
Since 2009, the UAE has been the number one export market for U.S. goods in the Middle East. And the U.S. trade surplus with the UAE is America’s sixth largest globally, which is impressive given the U.S. runs a deficit with nearly every country.
In 2020, UAE capital accounted for about $45 billion of investment flows to the U.S.
Upsetting this apple cart of bonhomie and prosperity carries downside risks. One retired diplomat who did not want to be quoted on the record told me: “if the United States is serious about making Russia sanctions work, then it cannot go easy on the UAE.”
But can it make an example of them?
If President Biden and his team really mean what they say about being tough on Russia, then it seems they have to be prepared to engage in difficult diplomacy with the UAE over its relationship with Russia. That’s the hawk view.
But the realist view suggests that any public moves to punish UAE must be considered reasonable to Abu Dhabi. Otherwise, the U.S. will be seen as bullying, not only in the eyes of Abu Dhabi but also in Doha and Lagos, Sao Paulo, and Mexico City. None of that should be discounted.
“The U.S. retains soft power appeal as a place to live and study, and far more Emiratis travel to the U.S. for education than to China, although that gap is slowly closing,” says Baker Institute’s Ulrichsen. “Leaders in the UAE see three successive U.S. presidencies as different from each other as Trump was from Obama and Biden is from Trump. And they have made decisions that the Emiratis and Saudis do not support. That has them wondering about the future of a relationship that seemed fairly settled until a decade ago.”
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