No taxes, no sanctions
Andrey Melnichenko and other Russian billionaires are turning Dubai into the new London
The new leader of the list of the richest Russians, it seems, has not lived in Russia for a long time. Andrey Melnichenko became famous as one of the first citizens of the Russian Federation who managed to get a UAE passport. He used to own a luxurious house next to Buckingham Palace in London. The sanctions forced the billionaire to make a personal turn to the East, however, like tens of thousands of other rich immigrants from Russia.
“Give passports only to Arabs” – until recently, the approach of the UAE authorities to the issuance of citizenship looked something like this.
To receive the coveted crusts, a foreigner was asked to live in the country for 30 years. A woman who marries a local can get a passport in three years, and then with the consent of her husband’s relatives and the prospect of losing citizenship after a divorce. Foreign men who marry Emirati citizens are not entitled to passports.
Recently, the country’s authorities have begun to provide citizenship by investment. True, this is done at the discretion of officials, the minimum amount of investment is not fixed anywhere. To get not a passport, but a residence permit for a period of 2 to 10 years, you need to invest in real estate or a company from 750 thousand dirhams (more than 200 thousand dollars). Surprisingly, even with such a strict approach, wealthy Russians are lining up for real estate in Dubai. From the sanctions run anywhere, just not home.
Nose to the wind
Telegram Founder Pavel Durov, also received UAE citizenship in 2021, asked reporters not to call him a Russian businessman. From the side Andrey Melnichenko no such request has yet been made. However, his hit on the first line of the Russian Forbes rating can be considered a technical moment. As of July last year, he retained Russian citizenship, but, as a business magazine source said, being under sanctions, Melnichenko and his family settled in the emirate of Ras al-Khaimah (translated from Arabic as “top of the tent”) in the north of the UAE.
In 2022, the businessman, at least from a legal point of view, ceased to be the beneficiary of the Eurochem and SUEK companies (see reference), whose financial performance brought him to first place in the ranking of the rich. He received the citizenship of the United Arab Emirates even before falling under the sanctions – literally immediately after this country began issuing passports to large investors. And although the conditions for obtaining this document are still very difficult, Dubai is rapidly becoming for the Russian elites something like London in the early 2000s.
In 2022, Russians bought a record number of real estate in Dubai – 86,000 transactions worth $56.6 billion. The desert city is experiencing a construction boom, which includes domestic companies. For example, the Pioneer group of companies, known for building apart-hotels in Moscow, has acquired a 0.6 hectare site between Dubai Marina and Palm Jumeirah. The developer intends to build a 45-storey high-rise complex there, its total area will be 100,000 square meters. It was also reported that the Samolet group of companies, co-owned by Maxim Vorobyov.
Following the businessmen, Moscow lawyers and financiers rushed there in search of a new highly paid job. During the New Year holidays, many officials and deputies showed up there. Unlike the deputy of the Vologda Legislative Assembly Denis Dolzhenko larger figures have avoided scandals by keeping themselves from posting joyful selfies on social networks. And, of course, since the spring of 2022, Dubai has become a place of pilgrimage for Russian show business stars. Exactly there hit into a scandalous situation with a pro-Ukrainian slogan, the singer Valeriy Meladze. According to media reports, the property in this new Babylon was purchased by Ksenia Sobchak And Ksenia Borodina, Stas Mikhailov, Alexander Revva and many, many others.
People are ready to invest hundreds of thousands and millions of dollars in the local economy, receiving in return a long-term visa, and in the best case, a residence permit. People go to Dubai not only to keep access to their money, but also so that the money itself has access to the global financial system. Emirates banks have such strong nerves that some of them agree to accept the capital of sanctioned persons. The price of the transaction is considerable – a few percent of the amount of an impressive fortune. They give guarantees. But the world is changing. Everything is temporary.
Carry your money
Against the backdrop of a growing flow of money from Russia and offshore companies that have become unreliable, the UAE authorities said they were negotiating with the United States about sanctions against new residents. Anwar GargashDiplomatic Adviser to the President of the United Arab Emirates Muhammad bin Zayed al-Nahyanmarked the position like this:
“Many Russians are interested in a safer haven for their capital, such Russians have nothing to do with the SVO, and therefore they cannot be combined with other individuals who have fallen under the restrictions of Western countries.”
The diplomat stressed that the UAE economy is denominated in dollars, and therefore it is important for the country to conduct such consultations with Washington. At the beginning of 2014, London looked at the situation in much the same way.
“The UK does not want to lose the economic benefits it receives from Russian businessmen due to political differences,” – noted in a series of Financial Times articles against the backdrop of the first sanctions breeze during the “Crimean spring”. Local real estate agents assumed that the crisis in Ukraine would not have a significant impact on the local market.
Moreover, they noted that political factors only increased the demand of Russians for expensive housing in the British capital.
“From our interactions with clients, it seems that this is likely to be a short-term issue involving only a few individuals. There is no doubt that some civil servants will find themselves in a difficult situation in the coming months, but Russian interests in London go much deeper.”– told reporters Rory Scarisbrick from the Property Vion agency.
However, since 2016, the search for “dirty” Russian money has become almost the main trend of British domestic policy. Not only among the money that continued to flow into the City, but among all the capital that has flowed into the country in 20 years. What happened next, we remember. Even Roman Abramovich had to “sell” the Chelsea football club, so much so that he cannot use the proceeds. In March 2022, the co-owners of Alfa Group Mikhail Fridman And German Khan sat in their mansions and complained that the British court allowed them to withdraw amounts at the living wage level from their accounts – neither to hire a cleaning lady, nor a driver.
From the English Channel to the Persian Gulf
In 2011, Andrey Melnichenko joined the list of Russian immigrants who own luxury real estate in London.
The Bermuda offshore Valten Limited associated with him bought a semi-detached house on Tone Place for 5.5 million pounds. For a long time, the owner of the building remained unknown to the general public. However, in 2022, due to new anti-corruption rules, the oligarch was forced to declare his ownership of real estate. At that time, the cost of the house was estimated at 10 million pounds. Also in 2022, the authorities of the Isle of Man (the possession of the British crown) canceled the registration of two yachts of Andrey Melnichenko. Later, one of them – Sailing Yacht A, the largest sailing yacht in the world (142 meters) – was arrested by the Italian authorities under EU sanctions. The cost of the vessel is estimated at 530 million euros.
Could something similar happen in the UAE? Not likely in the short term. The money withdrawn from Russia is needed by the local economy. But after all, for decades everyone thought about London that the right to property and the rule of law were unshakable there, and in fact rich and influential people had to urgently “run across” to another jurisdiction. But why Dubai? They extract minerals in Russia, their workers also work here. But for some reason, agency structures, holding companies and trusts, as well as Andrey Melnichenko’s family, cannot sit still in our country. Maybe this is how it is for business – in order to continue trading fertilizers around the world, a businessman needs to be “above the fray”, to be a “citizen of the world”. That’s just all this regular change of passports, places of residence and tax residency, the alienation of assets into trusts, statements of non-involvement … For those who are in our country, all this looks more than doubtful. The arrest of another oligarch’s yacht abroad is perceived by the majority of Russians with an evil smirk: “Isn’t it time to go to Gelendzhik?”
In 2023, Andrey Melnichenko for the first time took the first line of the Russian Forbes list, last year he was only ninth. The magazine estimated his fortune at $ 25.2 billion – twice as much as in 2022. The sharp jump is explained by the growth in the value of EuroChem against the backdrop of a general increase in the profits of fertilizer producers after the start of the NWO. The day before the introduction of EU sanctions in March last year, Melnichenko left the trust that owns 100% of EuroChem and 92.2% of SUEK, and also left the management bodies of both companies. The shares in the trust were automatically transferred to his wife Alexandra Melnichenko. RBC’s source clarified that she is not a controlling person in EuroChem and SUEK, both companies are controlled by a trust.
Reference
In 2023, Andrey Melnichenko for the first time took the first line of the Russian Forbes list, last year he was only ninth. The magazine estimated his fortune at $ 25.2 billion – twice as much as in 2022. The sharp jump is explained by the growth in the value of EuroChem against the backdrop of a general increase in the profits of fertilizer producers after the start of the NWO. The day before the introduction of EU sanctions in March last year, Melnichenko left the trust that owns 100% of EuroChem and 92.2% of SUEK, and also left the management bodies of both companies. The shares in the trust were automatically transferred to his wife Alexandra Melnichenko. RBC’s source clarified that she is not a controlling person in EuroChem and SUEK, both companies are controlled by a trust.