Ratcheting up of sanctions is promoting a migration of Russian businesses to Dubai as it becomes tougher to do business in Switzerland.
Traders of Russian commodities are rushing to set up businesses in Dubai as Switzerland makes it increasingly challenging for them to deal with Moscow.
Switzerland has for decades been home to middlemen helping to match Russian producers with buyers all over the world. Now, a ratcheting up of sanctions is prompting a migration to the emirate in the Persian Gulf.
Russia’s three largest oil producers are in the process of evaluating Dubai for trading operations, and several other firms have already relocated there. For Switzerland, some kind of exodus appears inevitable after the country followed European Union bans targeting exports from Russia.
“The trade will go on,” said Wouter Jacobs, director of the Erasmus Commodity & Trade Center at Erasmus University in Rotterdam. “Middle Eastern and Eastern jurisdictions will gain in importance relative to the rather euro-centric situation of the commodities business up to now.”
Progressively restrictive sanctions have made trading difficult for Russia’s state-owned firms, including those transporting the country’s commodities. Unofficial self-sanctioning has also been an issue — banks have pulled credit lines crucial for financing deals, while shipping companies and insurers are also cutting off their services.
That’s created an opening for Dubai, which has steered clear of imposing sanctions on Russian individuals and entities — intensifying the competition Switzerland already faces as a nerve center of global commodities trading.