Striking Developments: Why Did Washington and Berlin Decide to Defend Money Laundering Tycoons in Abu Dhabi?

In recent years, the United Arab Emirates has garnered notoriety for its involvement in money laundering, tax evasion, and serving as a safe haven for corrupt businessmen worldwide.

Thus, the UAE has been facing mounting obstacles and was added to the “gray list” for money laundering by the Financial Action Task Force (FATF), based in Paris, on March 5, 2022.

This list indicates a significant deficiency in the country’s systems for combating money laundering, terrorist financing, and the proliferation of internationally prohibited weapons.

The implications of this classification are grave as Abu Dhabi is one step closer to being placed on the dreaded “blacklist” of the FATF, a move that would severely damage the reputation of the region’s major financial hub and could potentially weaken the country’s long-term credit rating, although that has not happened yet.

 

Mauritius Meeting

The UAE’s crisis was further complicated when, on October 29, 2022, Brussels proposed to the European Parliament and the European Council to add the UAE to the “high-risk” third-country list, meaning it would be subject to international sanctions.

However, there have been remarkable shifts in the stance of certain Western capitals, notably Washington and Berlin, which have recently fully defended the UAE and fervently sought to remove it from the gray list, as if nothing had ever happened.

On June 21, 2023, Politico published a report detailing how Western capitals, specifically Washington, Berlin, Rome, and Athens, have employed strong defensive mechanisms to assist the UAE in being removed from the gray list for money laundering.

The magazine pointed out that with changing geopolitical winds, American and European governments have turned a blind eye to the issue of money laundering in the UAE.

It further stated that these countries, led by the United States and Germany, are exerting pressure on the international oversight body based in Paris to give the UAE a passing grade in its efforts to combat money laundering, despite continuous signals that the country remains a significant haven for illicit financial activities.

Critics within the international cooperation unit expressed their astonishment at the representatives of the United States, Germany, Italy, and Greece for disregarding their concerns and overlooking all the accusations and negatives directed at the UAE government.

The Mauritius meeting of the International Cooperation Review Unit in May 2023 revealed the extent of disparities and disagreements among international partners.

Belgium’s representative, Michiel Vervloet, emerged as the champion of the meeting, leading a campaign against removing the UAE from the gray list due to the lack of tangible progress in combating money laundering.

However, the Belgian representative faced resistance from Germany, whose delegation declared to the Mauritius meeting that the unit should base its decision on the information provided by the UAE, even if there were doubts about its accuracy.

The most controversial aspect of the meeting was the silence of the German Finance Minister, Christian Lindner, who did not respond to journalists’ questions, including one from Politico magazine’s correspondent, regarding the alleged manipulation of data presented to the Financial Action Task Force (FATF) for assessment by the accused state, the UAE.

Following the German lead, the U.S. Treasury too declined to comment on the idea of pushing for the removal of the UAE from the gray list and remained reserved.

The turn then came to the representative of the Bank of Italy (Banca d’Italia), Roberto Angeletti, who serves as the co-chair of the International Cooperation Unit. He announced that he would recommend a field visit to the UAE, marking the final step in the review process that could lead to the country’s removal from the gray list.

These Western defenses of the UAE come despite the country’s failure to adhere to the standards required by the Financial Action Task Force in combating money laundering and terrorist financing. This has raised questions about the reasons behind this defense and the efforts of Western countries to save Abu Dhabi from its crisis.

 

German Motivation

Undoubtedly, the Russian invasion of Ukraine had significant repercussions on Europe, especially for Germany, being a leader of the Union and one of the continent’s largest economies.

This situation prompted Germany to search for energy alternatives from Gulf countries.

On September 25, 2022, German Chancellor Olaf Scholz traveled to Abu Dhabi and signed a gas deal that would help Berlin navigate the winter season with minimal losses.

During the visit, a comprehensive agreement was announced to enhance energy and industrial security between Germany and the UAE.

This also involved urgent implementation of strategic flagship projects with a focus on renewable energy, hydrogen, natural gas, and climate change initiatives.

As part of this agreement, the UAE’s petroleum giant, Abu Dhabi National Oil Company (ADNOC), signed a contract to supply liquefied natural gas to the German company RWE.

As per the agreement, ADNOC exported the first shipment of liquefied natural gas to Germany to be used in the trial operation of the floating natural gas import station in the city of Brunsbuettel. This station would have relied on Russian gas if not for the Ukrainian war, according to Deutsche Welle.

ADNOC allocated additional shipments of liquefied natural gas for many other customers in Germany, as per the terms of the agreement.

Several agreements were also signed with companies to export experimental shipments of low-carbon ammonia, which serves as a hydrogen carrier playing a crucial role in reducing emissions in challenging sectors.

This matter is of utmost importance for Germany’s vast industrial sector, heavily reliant on such materials and shipments, which now the UAE has become a primary supplier.

At the time, the UAE’s President, Mohamed bin Zayed, expressed on Twitter on September 25, 2022, saying: “We share a close friendship and a distinguished strategic partnership with the Federal Republic of Germany.

“I am pleased with Chancellor Scholz’s visit to propel these relations forward and enable joint and sustainable economic growth by enhancing cooperation in priority areas, including energy security, emission reduction, and climate action.”

According to a report published by Alhurra website on June 22, 2023, this development was a direct reason for Berlin’s billion-dollar deal in the case concerning the “gray list” of money laundering.

 

The U.S. Motivation

Alhurra also reported that Washington has a unique vision to support and back the UAE in its crisis, as it wants to demonstrate to Saudi Arabia that the UAE, with strong allies in the Gulf, is a crucial partner in facing China, Iran, and Russia, which have proven to be challenging adversaries.

On February 15, 2023, UAE Foreign Minister Abdullah bin Zayed Al Nahyan met with his American counterpart, Antony Blinken, in Washington to discuss ways to enhance bilateral cooperation in security, climate, trade, and investment.

During that visit, he also met with several members of the Senate to explore enhancing economic ties and promoting investments and trade between the two countries.

At that time, the UAE news agency WAM mentioned that the UAE is the largest market for American exports in the Middle East. The economic partnerships also contribute to job creation, innovation opportunities, and economic growth in both nations.

However, it is essential to acknowledge that the convergence and cooperation between the U.S. and the UAE are based on a foundation of contrasts and differences that cannot be ignored. These complexities indicate that in its recent actions concerning the gray list, Washington might have sought to assist Abu Dhabi in its crisis while considering this underlying reality.

On May 17, 2023, The Wall Street Journal published a report about the estrangement with the UAE, stating that the UAE’s President aligns with Russia and China, testing American relations by bringing his country closer to the Eastern axis.

The newspaper quoted a senior U.S. official saying that Washington had warned Sheikh Mohammed bin Zayed against extremely close cooperation with Moscow and Beijing.

The White House has been closely monitoring the UAE President’s efforts to strengthen relations with that axis in recent years.

The official pointed out that Washington made it clear to the UAE that cooperation with Russia and China, especially in the military and intelligence fields, would harm “our relations.”

As a result, Sheikh Mohammed bin Zayed halted the construction of a secret Chinese military base near Abu Dhabi in 2021 under pressure from the U.S. government.

The newspaper also reported that the enhancement of relations between Abu Dhabi and Beijing was the reason for the U.S.’s hesitation in approving the sale of modern F-35 fighter jets to the UAE.

Additionally, Washington opposed the UAE’s use of the Chinese company Huawei to build communication networks.

On the other hand, The Wall Street Journal wrote that Emirati officials expressed doubts about Washington’s commitment to its promises since the attacks on Saudi oil facilities and oil tankers in the Gulf in 2019.

UAE officials complained about Washington’s handling of the Houthi militia’s attacks on Abu Dhabi using drones and missiles in January 2022, which they regarded as an existential threat.

The newspaper emphasized that during a conversation with President Joe Biden in July 2022, Sheikh Mohammed bin Zayed expressed his disappointment with what he considered Washington’s abandonment of its security guarantees.

He reminded Biden that Emirati forces had been fighting alongside the Americans for 30 years.

Observers believe that the U.S.’s supportive stance toward the UAE to remove it from the gray list might transcend these disagreements and crises and seek a new phase where Washington attracts the UAE away from its adversarial axis, whether Moscow or Beijing.