Russia’s aggression against Ukraine which began on 24 February 2022 challenged international peace and security; producing new risks to global partnerships and testing the world’s resilience on political, economic, military and humanitarian levels. Sectoral and personal sanctions were imposed against Russian business and officials. It became one of the most immediate and reactive instruments in restraining Russia’s geopolitical ambitions.

Since it’s attempted annexation of Ukraine’s Crimean Peninsula (February 2014), international calls to cut Russia’s access to SWIFT were proposed, but not enforced[1]. The international economy’s interdependence on Russian resources, assets, imports and exports, joint ventures and, especially, energy supplies, made the SWIFT package of sanctions unrealistic and impossible then.

However, Russia’s invasion of Ukraine in 2022 solidified efforts of the European Commission, the UK, Canada and the US in ‘imposing severe measures on key Russian institutions and banks, and on the architects of this war, including Russian President Vladimir Putin’[2]. In Joint Statement on Further Restrictive Measures committed to ‘ensuring that selected Russian banks are removed from the SWIFT messaging system (…) these banks are disconnected from the international financial system and harm their ability to operate globally’[3]. Most importantly, the pledge to ‘engage other governments and work to detect and disrupt the movement of ill-gotten gains, and to deny these individuals the ability to hide their assets in jurisdictions across the world’[4] was made. Russia’s Foreign Minister Sergei Lavrov said ‘no one could have predicted Western sanctions would target the country’s central bank.’[5]

In 2014, following the attempted annexation of the Crimean Peninsula, Russia slowly prepared its back-up payment system in case international sanctions were introduced. National Payment Card Systems (NPCS) for Mir (which ironically means both “world” and “peace” in Russian) was launched in Russia. All government-related subsidies, payments, salaries and budget transfers were switched to the “Mir” payment system. The “Mironline” press release page notes that ‘more than 36 million transactions were carried [sic] in the Crimea.’[6] Additionally, their (Mir) cards are accepted all across the Russian Federation and in ‘8 countries of the world, including: Turkey, Vietnam, Armenia, Belarus, Kazakhstan, South Ossetia and Abkhazia’ [ Georgia’s territories occupied by Russia since 2008].[7]

No Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) countries are enlisted among those accepting Mir payments, however, this does not prevent trade and economic cooperation with Russia. For instance, in ‘contrast with 2016 data, Russia’s agricultural goods export to the GCC doubled in 2022.’[8] Saudi Arabia and the UAE are among Russia’s most active economic partners in the region with a ‘trade turnover increased by 68% in 2022 to $9 (USD) billion.’[9]

Trade policies like these give Russia a long-awaited feeling of ‘business with Moscow as usual’ where Kremlin is portrayed as a reliable partner with unlimited financial benefits to offer. Russia is highly interested in supporting these dynamics by strengthening its trade and economic ties with the GCC. Not only it keeps Russia afloat in turbulent times of international sanctions, but it significantly supports the domestic propaganda narratives.

GCC shrewdly understands reputational risks of becoming ‘hubs’ for Russia’s sanctions evasion. GCC is less keen to receive yet another negative record in the eyes of its US or EU partners, especially, remembering that Turkey’s attempts to accommodate Russian bank activities received the EU-US pressure ‘to crack down on Russia’s sanctions evasion’[10]. By distancing itself from active business with Russia, GCC protects its traditionally balanced foreign policy and preserves a role of potential mediator in humanitarian aspects of Russia’s invasion of Ukraine (i.e., Saudi Arabia and Turkey’s brokered prisoner swap in September 2022)[11].

The GCC’s Position in the War​

Since Russia’s 2014 invasion, sanctions have been in place and global attention has centered on the conflict—producing a set of contingencies in case of conflict contagion. However, the most comprehensive set of sectoral and personal sanctions have been imposed by: Australia, Canada, the EU, Japan, New Zealand, the UK, the US and Switzerland only in 2022. This chapter of the war (re: 2022) has led to the furthest international impacts and have, in this way, involved the GCC countries at certain levels from its beginning.

During the UN General Assembly Emergency Meeting following Russia’s invasion of Ukraine (February 2022), ‘Kuwait and Qatar cosponsored UN SC resolution condemning the invasion and demanding the immediate withdrawal of Russian troops. Bahrain, Oman, Saudi Arabia and UAE all voted in ‘favour’ of the resolution.[12] In this framework, the Gulf countries tend to align with the Global South in terms of not taking any clear sides in the current war. None of the GCC countries region imposed any sanctions against Russia, or officially settled Ukrainian citizens fleeing the war or Russians draft-dodging.

At the same time, GCC countries provide humanitarian assistance to Ukraine and underline that human suffering should have no place in wars and civilians need protection. For instance, Saudi Arabia announced the ‘provision of $400 (USD) million in humanitarian aid to Ukraine’,[13] and Riyadh’s cooperation with Turkey to mediate prisoners swap between Russia and Ukraine received the highest praise in September 2022 as they bore fruit.[14]

What is termed the ‘Russian-Ukrainian conflict or the Ukraine war’[15] among the GCC countries is, of course, geographically distant. Proximate conflicts in Sudan, Syria, Yemen, Libya and the Palestine-Israel conflict are much closer with a more direct impact. This helps explain why the GCC countries are keen to distance themselves from direct political or economic actions and limit themselves to humanitarian assistance to people and countries in need. They leave the scope for action to Brussels and Washington believing that this is their primary responsibility: to mitigate Russia’s actions in Europe and it is in GCC interest’s to refrain from direct action in the Euro-Atlantic space.

Avoiding Sanctions: Natural Resources

Russia tops the world list of sanctions imposed against entities and individuals. In general, sanctions are targeted restrictive measures and are imposed against Russian legal and national entities within personal, economic and visa fields. Yet they are not without their discontent: from Russian President Putin’s view, sanctions strengthen the country’s economic and financial sovereignty and act as a stimulus for economic growth, improving areas in the country such as artificial intelligence, new technologies and data research.[16]

Russia is improving its resilience to sanctions or other restrictions of its economic activities both national and/or internationally. It is considered not only a matter of a national survival, but rather a martial mission in Russia’s global war with the West.

Russia does not hide behind its schemes to avoid sanctions. On the contrary, it openly supports countries that work with their autocratic systems, trade rules and culture. Russia is aware of its partners’ vulnerabilities in terms of inflation, political insecurity and social instability and the Kremlin takes these as pretexts to enter foreign markets with cheap investments and mutual benefits.

From this perspective, the Gulf countries are seen as potentially stronger partners in redirecting and restructuring Russia’s export activities. The Kremlin has already given positive signs of manoeuvring its sanctioned goods through Chinese, Indian, Kazakh, Turkish and Georgian routes.

The Russian decision-making apparatus clearly understands the risks and benefits it must take to stay afloat in turbulent times of sanctions. It also knows that economic diversification is a goal, but reality is to tie partners to Russia’s cheap crude oil and natural gas.

The level of dependence on Russian natural resources has been fully exposed with EU members pledging to limit imports of Russian oil and gas. These sanction instruments are considered to be effective in a short- and long-term perspective. The situation strongly differs when it comes to Russia’s oil and gas cooperation with the GCC countries. Russia is prepared to take risks and continues to export its natural resources despite the sanctions regime. For instance, Russia is a non-OPEC (Organization of Petroleum Exporting Countries) country, but it exports crude oil and thus has been granted OPEC+ status. Squeezed by sanctions against Russia’s crude oil imports, OPEC+ opted for a strategy of ‘selling more for less’[17], in 2022. Russia ‘Praised OPEC+ for agreeing to sharply cut oil production and fight mayhem sown by the US.’[18] All this developed against a backdrop of a steadily expanding shadow fleet of Russian oil tankers that troll the world’s seas, transporting crude oil to consumers in China, India, Turkey among others. According to CNN Business data, the shadow fleet enlists around 600 vessels, which is some 10% of the world’s oil tankers.[19]

Russia busts sanctions by all means possible. So how is it possible to prevent an internationally sanctioned state from moving freely and how to ensure that it does not act as a lesson for other states, that violate international rule, to bust sanctions in a similar manner? These are important questions especially because Russia operates like a so-called ‘mirror’ example: the tougher the sanctions regime, the more innovative the sanctioned state becomes.

While many commentators suggest the GCC countries, Turkey and Israel (from the Middle East) have helped facilitate Russian sanction-busting, that would be a simplification. Despite the lack of strong condemnation of Russia’s aggression against Ukraine, and that the twofold increase in trade with some Gulf economies signals a deepening of economic cooperation between some GCC countries and Russia—risks abound and collaborating with an ever-isolated Russia leaves less room for the Gulf countries to develop their business models and attract Europeans and Americans. The lesson of Turkey rings out. Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E.Nelson, was clear when underlining that the US retained a ‘commitment to take additional actions against those evading or facilitating the evasion of sanctions.’[20] The GCC gleaned important insights into US decision making from this experience and it is highly unlikely that they would jeopardise the string of recent regional rapprochements and fragile peace over the murky waters of immediate financial gains with sanctioned Russia. There is too much to lose and very little to gain.