Middle East Investors Step Back From Russia Amid Ukraine Conflict

A number of major Middle East investors have announced plans to halt investments in Russia amid the ongoing Ukraine war and concerns about the wider economic impact.

Senior figures from the Qatari government and UAE-based Mubadala Investment Company have in recent days said they have put their investment activity on hold in the country. Although this does not represent the sort of mass exodus seen with western companies leaving Russia, it will add to the economic pain for Moscow and could yet encourage other big investors to reconsider their approach.

“Obviously, in this environment, we have to pause investment in this market in Russia,” Mubadala chief executive Khaldoon Al-Mubarak told an investment conference in Dubai this week, according to Bloomberg. “Pause and wait to see how the situation settles.”

“What is happening in this crisis between Russia and Ukraine is a travesty, with catastrophic consequences, in terms of human life and in terms of the impact it’s having on economies all over the world,” he added.

Meanwhile, speaking in Doha, Qatar’s minister of foreign affairs Sheikh Mohammed bin Abdulrahman Al-Thani has said his country is not planning on making any new investments in Russia until there is a “better environment and more political stability.”

“Right now, with the current situation, we are not thinking about any new investments there,” he told CNN on the sidelines of the Doha Forum. The pause on investment activity has been extended to other parts of Europe where Qatar feels there may be heightened political risk, although Sheikh Mohammed did not specify how many other countries he had in mind.

The Qatari state’s principle investment vehicle is the Qatar Investment Authority (QIA), which has an estimated $450 billion in assets, making it among the ten largest sovereign wealth funds in the world, according to the SWF Institute. Mubadala is one of several similar funds in the UAE and has an estimated $243 billion in assets.

Both Mubadala and the QIA have invested alongside Russia’s own sovereign wealth fund, the Russian Direct Investment Fund (RDIF). Gulf States Newsletter has reported that Mubadala’s joint investments with the RDIF were worth $2.3bn as of October 2019, with interests that included a stake in oil and gas company Gazpromneft-Vostok. The QIA has a stake of around 19% in another Russian energy company Rosneft.

While investment activity may be on hold, there is no sign that Middle East investors are considering selling off their interests and pulling out of Russia, in the way that many western companies have done.

Other wealthy Gulf countries have also invested in Russia via their state-owned funds, including the Abu Dhabi Investment Authority (ADIA), the Kuwait Investment Authority (KIA) and Saudi Arabia’s Public Investment Fund (PIF).

In a worrying sign for Moscow, some major Chinese investors also appear to be getting cold feet. Reuters has reported that China’s state-run Sinopec Group has suspended talks on a major petrochemical project and a gas marketing venture in Russia.