UAE becomes Russia's largest Arab world trading partner

.Russia's trade with the United Arab Emirates has tripled  over the past three years. The UAE has become the largest trading partner of Russia in the Arab world. What factors have contributed to this sharp increase in trade, and how have sanctions affected this growth? What role has Abu Dhabi played in this?
At a meeting with UAE President Mohammed bin Zayed Al Nahyan, Russian President Vladimir Putin revealed that the trade turnover between Russia and the United Arab Emirates (UAE) has tripled over the past three years. If we go back further Since 2018, it has been a fivefold increase in trade, from $2.5 billion to nearly $12 billion. The UAE is now Russia's most significant trading partner in the Arab world.
It is worth noting that these trade figures do not take into account the billions of dollars worth of Russian gold that is imported then exported by the Dubai Gold and Commodities Exchange. After the London Bullion Markets Association took away Russia's 'good delivery' status and suspended the Russian miner's membership of the organisation and their export of gold to London. The Russians started to use the Dubai and Shanghai Exchanges for the facilitation of the export of their gold. Its worth bering in mind that Russia exports gold worth around $ 25 billion per year as the world's second largest gold producer. Yet another miss step by the idiots in the UK.

Mr. Putin also noted that mutual investments between Russia and the UAE have reached $7 billion, with approximately 60 projects valued at $2 billion currently underway through sovereign funds. The UAE leader indicated his willingness to take further steps to expand trade with Russia.

"In fact, the level of cooperation between the two countries is relatively modest in comparison to what it could be. There is currently limited activity in the energy sector, with few projects being implemented. UAE companies have not made significant investments in Russian share packages. For instance, Rosneft has a share held by the sovereign fund of Qatar, while Novatek has a package owned by Total Energy. There has been no collaboration with the UAE on the shelf either.

• Igor Yushkov, Expert, National Energy Security Fund and the Russian  Financial University
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  One of the first significant projects in the energy sector was the construction of a gas pipeline to supply natural gas from Qatar to the UAE and Oman. The project was completed in 2010 by Stroytransgaz in collaboration with Dolphin Energy, an Emirati company. While the Arab world is strong in the oil sector, there is a clear need for assistance in the gas sector.

In 2015, Rosatom commenced fuel supply to the Barakah NPP in the UAE under a 15-year agreement. This was the inaugural contract for the supply of nuclear fuel to the Gulf states.
In 2018, the Emirati company acquired a 44% stake in Gazpromneft-Vostok, investing in several oil fields in the Tomsk and Omsk regions.

In 2021, a memorandum of understanding was signed at the ministerial level in the field of hydrogen technologies, including the production of equipment for its production.

Furthermore, the two parties collaborate in the aerospace sector, with the UAE having already launched its satellite from the Russian Vostochny Cosmodrome. Russia currently exports more to the UAE than it imports. Russia supplies a wide range of intermediate products, including rare metals, wood, grain (wheat), steel, glass and many more. This also includes the export of vegetables, various food products, chemical products and plastic. There is a growing trend in the export of machinery and tools to the UAE, although the volumes remain relatively insignificant. It is evident that the UAE is becoming a popular destination for Russian tourists," states Ekaterina Novikova, associate professor of the  Economic Theory at the Plekhanov  School  of Economics.
However, since 2022, there has been a notable increase in trade due to the emergence of Russian oil products on the global market. Russia's primary export to the UAE is fuel oil, rather than diesel. It should be noted that the UAE and Saudi Arabia still utilise fuel oil and, on occasion, even crude oil as a source of electricity.

Abu Dhabi still utilises power plants that run on liquid fuel, despite the global shift away from this technology due to its high cost. However, the UAE is in a position to do so given the low cost of production of its oil. This has prompted a surge in purchases of Russian oil products, which has the effect of releasing the UAE's own oil resources. "They purchase our oil products at a discounted rate and sell their oil at market prices, thereby generating a profit," states Igor Yushkov.
Since 2022, a new point of contact between Russia and the UAE has emerged. Many companies in the United Arab Emirates are engaged in parallel imports and other operations, including trading. The UAE is also a hub for companies involved in managing or owning oil tankers in the shadow fleet. The same is true of the gas shadow fleet currently being formed, which also chooses the UAE as a place to register its companies, according to an expert from the FNEB.
He states that traders not only trade oil and oil products, but also provide a range of intermediary financial services to our exporters and importers. Russia also utilises the dirham, the currency of the United Arab Emirates, for both domestic and international transactions. This is beneficial as not only does our oil reach the global market via the United Arab Emirates, but other goods are also exported to us. Consequently, the dirhams received for the oil sold can be spent in a way that benefits the economy. "Exporters and importers have established a point of contact through the use of the UAE currency," states Igor Yushkov.

Regarding future collaboration, it is likely to focus on the field of "green energy." Many Arab countries currently part of OPEC+ have long-term plans to diversify their energy sources, suggesting the potential for joint projects in solar and hydrogen energy. Natalia Milchakova, a leading analyst at Freedom Finance Global, believes this is a possibility.
Mr. Yushkov does not anticipate any significant construction projects in the hydrogen sector at this time. Instead, he foresees a focus on scientific collaboration, research initiatives, and technological advancements. While there may be potential for mutual supply arrangements, he notes that neither Russia nor the UAE has a clear immediate need to establish a hydrogen industry or hydrogen engines.
Despite the European Union's ambition to establish hydrogen as a global energy storage system, the industry remains relatively modest in scale. It is closely linked to related industries, such as metallurgy, according to Igor Yushkov.

In conclusion, the primary conduit for interaction between Russia and the UAE is the OPEC+ agreement, which oversees the volume of oil production and the fulfilment of quotas.

"The United Arab Emirates has fulfilled its quota obligations in a satisfactory manner. "We have periodically exceeded quotas this year, but we have acknowledged this and taken steps to reduce production volumes even further than required to compensate for the excess extraction," Yushkov concludes.