Banks in the United Arab Emirates (UAE) have been rejecting transactions from Russian companies for electronic components and consumer electronics from China since early August, the pro-Kremlin outlet Kommersant reported on Aug. 28.
The reason is the risk of secondary actions, the outlet claimed.
This comes as another case of mounting obstacles in Russian-Chinese economic relations amid the growing pressure of U.S. sanctions imposed over Moscow's full-scale invasion of Ukraine.
According to Kommersant's undisclosed sources, Russian firms used UAE-based entities to transfer money to China to ship goods directly to Russia.
Now, transactions for those products that do not arrive directly to the Gulf country are blocked, the outlet said. According to its sources, the restrictions came at China's initiative.
The Kyiv Independent could not verify the claims.
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The U.S. unveiled a new set of sanctions against Chinese and Russian companies over their support for Moscow's aggression last week. Despite efforts to avoid or mitigate the impact of the trade restrictions, Chinese institutions have begun scaling back their business dealings with Russia.
Specifically, a number of major Chinese banks have begun blocking transactions for electronics out of fear of secondary sanctions.
Most recently, in June, the Russian subsidiary of the Chinese state-run Bank of China stopped accepting payments from Russian banks.
China has become Russia's key economic lifeline during the full-scale war, as the trade between the two countries surged by 121% since 2021. A functioning payment system is necessary for maintaining trade relations, and Russia was cut off from the international SWIFT system in 2022.
Western countries have also reportedly ramped up pressure on the UAE to stop allowing Russian entities to dodge sanctions. The Gulf country is believed to be one of the main pipelines for sanctioned dual-use goods like electronics being shipped to Russia.
Throughout Russia's full-scale war, the UAE has maintained economic and cultural ties with Russia but has also signed new trade agreements with Ukraine.
Martin Fornusek
(Updated: )
