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    UAE Diplomats Accused in International Gold Smuggling Syndicate

    The United Arab Emirates is one of the world’s major gold trading hubs. In 2019, it was the fifth-biggest importer and fourth-biggest exporter globally. During the COVID-19 pandemic, international demand has surged. But as Reuters reported in 2019, much of this gold is smuggled from West Africa and produced by artisanal and small-scale gold mining, a trade that funds armed conflict, costs producing countries in lost tax revenue and has significant consequences on public health and the environment.

    This is a story that has long been in the public domain: In 2020, the Financial Action Task Force published a report that stated: “The UAE’s understanding of the risks it faces from money laundering, terrorist financing and funding of weapons of mass destruction is still emerging … The risks are significant, and result from the UAE’s extensive financial, economic, corporate and trade activities, including as a global leader in oil, diamond and gold exports.”

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    In 2018, a UN report stated, “In every state [in the Economic Community of West African States region], it was reported that most of the gold exported from the region is destined for Dubai. Most of this gold is thought to be exported by plane; gold is thought to be smuggled, for the most part, out of the region through airports.”

    The UAE authorities have been facing increasingly strenuous calls to clean up their bullion trade. In 2019, an International Crisis Group report called on them to ensure income from the gold trade is not used to finance terrorism. In December 2020, the UK Home Office national risk assessment stated: “These deficiencies expose the UAE, and other countries, to abuse by international controller networks which continue to launder the proceeds of crime to and from countries including the UK. These criminal networks exploit features of the UAE’s laws and systems, in order to move cash and gold easily into and out of the country, as well as engage in money laundering through the UAE property market, international trade, and newer areas such as crypto assets.”

    Last year, the London Bullion Market Association (LBMA), the world’s most influential gold market authority, threatened to stop UAE bullion from entering the mainstream market if it failed to meet regulatory standards. Since gold was the UAE’s largest export after oil in 2019, a trend that in a post-oil age looks only set to grow, the authorities responded by quickly pledging support for an LBMA initiative in December 2020 to crack down on illegal gold trading and improve regulation around issues like money laundering and unethical sourcing.

    Gold Discovered in India

    But recent developments in a court case in India are once again calling into question the UAE’s commitment to clean up its bullion trade. In June 2020, Indian customs discovered over 30 kilograms of gold worth — at the official market rate — more than $2.1 million. The gold was found in diplomatic baggage addressed to the UAE Consulate-General Office in Thiruvananthapuram, the capital of the southern Indian state of Kerala; it had been listed as bathroom fittings, noodles, biscuits and dates. The subsequent investigation has opened a Pandora’s Box of organized crime that has already led to around 30 arrests, including a host of alleged facilitators, financiers, gold traders, former employees of the UAE Consulate and a principal secretary to the Kerala chief minister.

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    The National Investigation Agency (NIA), which is India’s counterterrorism task force, and at least four other central government agencies are now conducting separate but related investigations into a US dollar smuggling operation from Thiruvananthapuram airport to Cairo via Muscat. The operation was allegedly run by the former UAE Consulate Finance Department head, Khaled Ali Shoukry, an Egyptian national. The other investigations involve corrupt schemes related to various local government projects in Kerala, including the Wadakanchery LIFE Mission housing project, which is funded by the UAE Red Crescent, and the Kerala Infrastructure Investment Fund Board.

    This is the first time UAE diplomats have ever been publicly implicated in gold smuggling. Emirati authorities have promised to cooperate, claiming they were duped by their Indian and Egyptian staff. But the former UAE consul general, Jamal Hussain al-Zaab, and Admin Attaché Rashed Khamis Ali Musaiqri both fled home last year before they could be questioned and are now claiming diplomatic immunity.

    However, a steady stream of information has been coming to light through disclosures in Kerala High Court. The NIA said 150 kilograms of gold was smuggled through Thiruvananthapuram airport in the last six months in a similar fashion, and most of the money was used for funding terrorism. According to sources quoted in Indian media, over 20 such consignments allegedly came to India from Dubai since September 2019, around 19 of which were addressed to the UAE consul general and one was in the name of the admin attaché. At the same time, senior Indian politicians linked to the case were enjoying five-star trips to the UAE.

    The Claims

    In March, the political temperature rose significantly when two of the key accused, Indian nationals employed in the consular office, testified that the UAE consul general was personally involved in the criminal enterprise. Swapna Suresh, formerly the consul general’s Arabic-language translator, and another employee, Sarith P.S., stated in an affidavit that the consul general, as well as several senior Indian politicians, were aware of the gold and dollar smuggling activities and were coordinating illegal financial dealings under the cover of various projects run by the state government.

    “Swapna and Sarith [the accused] stated that it was a common practice among foreign nationals, including diplomats working at UAE Consulate, to carry currency notes above permitted limits. We suspect that they were engaged in hawala activities to fund smuggling of gold from Dubai to Kerala. Similarly, they also smuggled goods from abroad using diplomatic privileges and sold them in the Kerala market. Many Indian employees of the consulate were aware of such activities and they will be questioned soon” an Indian customs official reportedly said.

    The UAE consul general, Swapna alleged, split a 3-million UAE dirham ($817,000) commission for the Wadakkanchery project three ways between himself, Shoukry and her. Another accused claimed the consul general and Shoukry were carrying out illegal gold smuggling activities while working in the UAE Mission in Vietnam before coming to Thiruvananthapuram.

    The Indian Ministry of External Affairs recently issued permission to arraign the former consul general and admin attaché who served at the UAE Consulate in Thiruvananthapuram. “Both of them assisted Swapna Suresh and Sarith PS to clear the baggage containing gold that arrived from the UAE. They also were receiving remuneration as per the quantity of gold smuggling on 21 occasions. They are equally involved as other accused persons,” an Indian customs official reportedly said.

    *[This article was originally published by Arab Digest, a partner organization of Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    What the UAE-Turkey Rivalry Means for Europe’s Energy Security

    In recent months, the United Arab Emirates has adopted a number of stances inimical to Turkish ambitions in the Mediterranean. This has taken the form of closer relations between the UAE, Greece and Greek Cyprus, more joint military exercises, and increased energy collaboration with Israel via the Abraham Accords. But with President Joe Biden in the Oval Office, the UAE has toned down its overt military posturing and complemented its strategy with economic means. The shift relies on hydrocarbon pipeline proposals that exclude Turkey with the aim to diminish its geopolitical importance to Europe.

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    The UAE views Turkey as a threat for two reasons. First, Ankara supports the Muslim Brotherhood, which the Emiratis have designated as a terrorist organization. Second, Turkey has been active both militarily and economically in North Africa, Syria and the Horn of Africa. In 2019 and 2020, competition between Abu Dhabi and Ankara flared, with both powers directly funneling mercenaries and money to Libya, stepping up competition in Somalia and castigating each other in diplomatic statements. The UAE also aligned with Greek Cyprus, Greece, France and Egypt against Turkey while providing financial and possibly military support in the form of mercenaries to anti-Turkish actors in the region.

    Energy Games

    During Biden’s first months in office, however, the UAE has undertaken two major actions that indicate a softer approach toward Ankara. First, on January 29, Abu Dhabi declared that it was ready to work closely with the UN on Libya. Second, the UAE began dismantling its base in Assab, in Eritrea. Although this move comes largely in an attempt to extricate itself from the war in Yemen, it also means losing a critical power-projection site that has acted as a counterbalance to Turkey’s and Qatar’s presence in Suakin, in Sudan. This does not mean that Abu Dhabi considers Turkey to be any less of a threat. On the contrary, recent UAE actions portend a refocusing on investment in pipelines and infrastructure in the eastern Mediterranean to blunt Ankara’s energy ambitions, especially concerning Turkey’s role in Europe’s energy security.

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    Moscow’s influence on Europe’s energy markets has emerged as a concern for the European Union and the US, with Russian supplies accounting for 40% of European gas consumption. Turkey is commonly floated as a solution because it can connect alternative pipelines from the Caspian and Central Asia. Turkey becoming an important energy transportation hub would give it leverage over the EU and allow it to better play the US, Western Europe and Russia against each other.

    However, the UAE’s attempts to lock Turkey out of the eastern Mediterranean energy pipelines threaten Ankara’s goals of becoming a larger player in the EU’s energy market. The UAE is attempting to do this by joining the Eastern Mediterranean Gas Forum (EMGF) — comprised of Cyprus, Egypt, Greece, Israel, Jordan and Palestine — as an observer. Although the EMGF claims to be open to anyone, its ostensible purpose is to lock Turkey out of the Mediterranean hydrocarbons market, especially with the EastMed pipeline project. This pipeline would transfer gas from Cyprus and Israel to Greece and then further on to Europe; it is a major reason for Turkey’s involvement in Libya. The EastMed faces certain financial and political struggles, and the UAE’s endorsement of the project could galvanize initiative and create a breakthrough in rallying a coalition to circumvent Turkey on the energy market.

    Moreover, Abu Dhabi’s improving relations with Israel provide it more alternatives in convening an anti-Turkish coalition. The Abraham Accords also augment the UAE’s ability to constrain Turkey by allowing Abu Dhabi to collaborate with Israel on joint pipeline projects. If the UAE manages to connect itself to the EastMed, or any other, pipeline, Turkey’s status as an energy alternative to Russia would diminish in the eyes of Europe and the US. It appears as if the UAE has already taken initiative in this regard: On October 22, 2020, Israeli state-owned Europe Asia Pipeline Company signed a binding memorandum of understanding with MED-RED Land Bridge, a company that has both Israeli and Emirati owners, to transport oil from the UAE to Europe.

    The joint venture would rely on the Eilat-Asheklon pipeline, built by Israel and Iran in the 1960s, that would send Emirati hydrocarbons from Eilat, on Israel’s Red Sea coast, to Ashkelon, on the Mediterranean. Though this is an oil pipeline, this portends future initiatives that could see Emirati gas transported through Israel to Greece, via a connection to the EastMed. Furthermore, Emirati oil tankers disembarking in Eilat would come with an increased security presence in the area. Though not a military base, the venture could make up for the power projection loss from the now defunct base at Assab.  

    Economic Foothold

    An Emirati bid to manage an Israeli port at Haifa represents another Emirati attempt to cement an economic foothold in the eastern Mediterranean. The port at Haifa is also close in proximity to Lebanon and Israel’s disputed oil blocs, some of whose drilling licenses have been awarded to France’s Total. As noted by Amos Hochstein, the former coordinator for international energy affairs at the US State Department, the UAE could adopt a larger role in resolving this dispute, which would free up more gas reserves that could be exported around Turkey. UAE mediation would also draw it economically closer to France, which has, for the most part, confronted Turkey in the eastern Mediterranean. If Total receives new oil blocs, a French economic dimension could also align against Turkey in the region, bolstering the UAE’s initiatives.

    The Emirati bid for Haifa’s port comes after DP World, Abu Dhabi’s shipping and operations company, completed the Port of Limassol in Cyprus in 2018. Both actions represent the UAE’s push to bolster its infrastructure in the region, which would complement future pipeline initiatives. The UAE then signed a military cooperation agreement with Cyprus on January 12, which signified a deepening of this relationship. It followed an Emirati-Greek military partnership and a trilateral meeting between the UAE, Greece and Greek Cyprus, evidencing that Abu Dhabi is trying to complement military measures with diplomatic coalitions.

    Cyprus proves critical to the UAE’s energy ambitions. Not only is the island a vital connecting point for the EastMed pipeline, but it also recently discovered gas, both of which provide Europe with an alternative to Turkey’s energy supply. This gas will flow to Cairo via a pipeline agreed upon in 2018, where it will be liquified and exported to Europe. These pipelines may not decisively change Turkey’s role in Europe’s energy security, but they nevertheless threaten Ankara’s energy ambitions and indicate that the UAE is undertaking a multifaceted strategy to undermine its rival.

    Though both Turkey and the UAE would prefer to see each other’s geopolitical significance diminished in the eyes of Western Europe and the US, it would be best for Europe if the two actors worked together. Europe would face a crisis if a jingoistic Russia cuts off the gas deliveries to the continent. Moscow has already threatened Ukraine’s energy supply. As many have argued, Emirati-Turkish competition erupted because of a power vacuum left by incremental US withdrawal from the region. However, if the US and other disinterested states could attempt to broker a détente following the lifting of the blockade on Qatar, collaboration between Ankara and Abu Dhabi could prove a viable supplement for Europe’s energy security.

    *[Fair Observer is a media partner of Gulf State Analytics.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    The UAE’s Deal With Israel Is a Sham

    Gary Grappo, the chairman of Fair Observer, has commented in these columns on the deal between Israel and the UAE that has shocked many in the Arab and Muslim world. As a former US diplomat, Grappo expresses his satisfaction, or perhaps simply his relief, at the idea “that Arab states will no longer hold their interests hostage to the long-dormant Israeli–Palestinian peace negotiations.”

    That formulation of the dynamics of a complex multilateral relationship reveals what may appear to be a less than diplomatic bias. Accusing one party of holding a hostage sounds like taking sides rather than playing the honest broker. Moreover, Grappo’s judgment may be premature when he evokes “Arab states” using the plural. The United Arab Emirates is only one state. The most influential nation in the region, Saudi Arabia, has remained prudently silent on the UAE’s initiative.

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    Echoing the US claims that the deal to normalize relations between Israel and the UAE was a major step toward peace, Grappo asserts: “The UAE extracted one apparent concession from Jerusalem: [Israeli Prime Minister Benjamin] Netanyahu will suspend annexation plans for the West Bank.”

    Here is today’s 3D definition:

    Concession:

    In diplomatic language, anything that can be presented as an impressive, painful sacrifice from one side that will be made highlighted even more emphatically if it entails no actual sacrifice
    Example: “We tend to equate progress with concessions. We can no longer make that mistake.”
    — H. Rap Brown, Oakland, 1968

    Contextual Note

    In an article for Haaretz, Anshel Pfeffer underscores the one major problem with calling this a concession. “Netanyahu never had a real plan for annexing parts of the West Bank,” he writes. “There was no timetable, no map, no draft resolution to be brought to the government or the Knesset.”

    Grappo does call the concession “apparent” while admiring Netanyahu’s “remarkable ability to advance Israel’s interests.” This translates as his ability to marginalize Palestinian interests. Grappo understands that the postponement of the annexation of Palestinian territory in the West Bank “is a mere short-term sop” and that “annexation will be a fact of life.”

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    In other words, the deal was shamefully one-sided and, as a negotiation, thoroughly meaningless. To consider it a negotiation would require believing that the UAE was bargaining in favor of the Palestinians’ interests. But its rulers care no more about the Palestinians than they do about the Yemenis, whose civilian populations they have been bombing for the past five years in partnership with Saudi Arabia.

    Grappo gives an indication of his personal attitude to this complex question in a paragraph that contains a series of what might be called “attitude tropes.” He tells us Ramallah should “get on with it … while there’s still some chance for an independent Palestinian state.” Americans are prone to judge even moral issues in terms of the cost of wasted time. The rhetoric continues with the complaint that “previous Arab conditions to the normalization of ties with Israel have exceeded their shelf life.” What could be more insulting to Palestinians than seeing comparing what is for them an existential question to the presentation of perishable consumer products?

    Grappo then offers this unfounded assertion: “Arab states are moving on.” This is only marginally different and slightly more diplomatic than Elon Musk’s recent tweet defending US foreign policy: “We will coup whoever we want. Deal with it.” Grappo continues by offering this avuncular advice to the Palestinians: “[President Mahmoud] Abbas and the Palestinians need to do the same.” He menacingly warns that even a Joe Biden victory in the US presidential election “won’t change this.”

    Marwan Bishara, Al Jazeera’s senior political analyst, sees things differently. He explains the UAE’s initiative in these terms: “The agreement rewards US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu for their protracted assault on the Palestinians over the past four years.” Trita Parsi, a Middle East specialist at the Quincy Institute for Responsible Statecraft, quotes a knowledgeable Arab official: “This was something that the UAE did in order to be able to help Trump with re-election.”

    Bishara makes an important point that Grappo prefers to ignore or dismiss. “Once signed, and implemented, [the deal] is likely to embolden Netanyahu‘s coalition, deepen Israel‘s occupation [of Palestinian territory] and strengthen Israel‘s alliance with Arab autocrats,” Bishara writes. If true, that can hardly be a recipe for future peace.

    Parsi and others have noted of the deal that “the Arab street sees it as a betrayal of the Palestinians.” This may be the best explanation for Saudi Arabia’s silence. Mohammed bin Salman, the crown prince of Saudi Arabia and its de facto ruler, can’t afford to provoke his own people any more than his outrageously autocratic behavior has already done. As with any population — Belarus, for example — there is a point at which even an authoritarian rule begins to crack.

    Moreover, as The Indian Express points out, though Mohammed bin Salman is almost certainly on board with the US-Israel–UAE alliance, “as the leader of the Arab world, and the custodian of Islam’s holiest shrines, [Saudi Arabia] might have preferred someone else to take the revolutionary first step on this.” And most commentators seem not to have noticed another factor. This new alliance reinforces the already growing role of Mohammed bin Zayed, the crown prince of Abu Dhabi, as the top strategic leader of the Gulf Cooperation Council (GCC). It propels the UAE into a stronger geopolitical position within the Arabian Peninsula that could eclipse troubled Saudi Arabia.

    This is occurring at the same time as when Mohammed bin Salman’s image has taken a new hit. The crown prince is being sued in the US by former Saudi intelligence officer Saad al-Jabri for an attempt on his life, similar to the assassination of Saudi journalist Jamal Khashoggi in Istanbul in 2018.

    Historical Note

    Marwan Bishara reminds his readers of the UAE’s recent role in Middle Eastern history. He calls the UAE “the most pro-war in the region, rivalled only by Israel.” Created in 1971, this young nation’s political actions over the past decade have been marked by its government’s increasingly aggressive bellicosity. “The UAE and Saudi Arabia’s opposition to the Arab Spring [in 2011] and to any form of democracy in the region, and their deep hostility towards all popular, progressive, liberal or Islamist movements, put them at the helm of counter revolutionary forces throughout the Middle East and North Africa,” Bishara reminds us.

    So, if the UAE’s interest isn’t the furthering of the prospects of peace in the eastern Mediterranean, what is its goal? Bishara describes it as an act of “‘bandwagoning’ with Israel and the United States, in the hope of establishing a trilateral US-Israeli–Arab strategic alliance to contain Turkey’s influence and tame or destroy the Iranian regime.”

    Trita Parsi adds that the GCC is counting on the continued presence of the US military in the region, which Saudi Arabia’s best friend, Donald Trump, has in the past promised to reduce. The UAE, Saudi Arabia and their allies see it as their security umbrella. They know that an increasingly disunited and despotically-managed GCC cannot handle it on its own. Israel is part of that umbrella. The region is thus divided between countries and peoples that either actively seek the maintenance of a US military presence or that, on the contrary, wish to see it removed from their lands after decades of strife. On this issue, the governments and their own populations are often at odds.

    Bishara offers a challenge to those who, like Gary Grappo, celebrate the touted “breakthrough” announced by Trump. “Those celebrating the ‘historical peace agreement’ may soon discover it is nothing more than a drive towards another regional conflict or worse, war,” Bishara writes. This difference of appreciation merits a debate, and it’s a debate that goes beyond the relationship between two Middle Eastern nations, with wide-ranging geopolitical significance. Fair Observer is an open platform to continue the debate.

    For decades, US diplomacy has adopted a model that seeks primarily to get the economic and political elites of a range of willing nations to agree strategically on their common interests and form the kind of loose alliance that promises to maintain some kind of general order in the world. Grappo’s analysis conforms perfectly to that model. The model works on one of two conditions: that the government and its people agree on the direction of that policy, or that the government wields the authoritarian power that can stifle opposition by the people.

    The first case is rare and, when it exists, requires careful management. The second represents the norm, particularly in the Middle East. The careful management it requires focuses on the needs of the elite and, in most cases, leaves in the background the expectations of the people. That is how the new Israeli-UAE alliance came into being and why it merits the positive appreciations of Western media outlets that are willing to see it as an overture to peace.

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Indonesia-UAE Relations Strengthen Amid COVID-19

    On April 28, the United Arab Emirates sent 20 tons of medical aids for the prevention and control of the novel coronavirus in Indonesia. This equipment is expected to help around 20,000 medical personnel in dealing with COVID-19, the disease caused by the coronavirus. While the assistance was just the latest in a series of such […] More