Will it succeed in limiting the flow of Russians seeking a second citizenship or spur demand? 

The growing Ukrainian crisis has led to the United States and the European Union toughening their position on Russia and enforcing a number of sanctions on the Russian state and economy. The sanctions directly target Russia’s banking, defence and energy sectors, a move designed to rattle its economy and force co-operation with international organisations hoping to resolve the violence that has lasted throughout the year.

Considering Russia’s energy strength and its close economic ties with several EU powerhouses, this is a bold move that is likely to send reverberations across the global economy. Russia’s response to the sanctions is likely to lead to an energy crisis, in which European states urgently look for alternative suppliers and global oil prices fluctuate. These changes are likely to be mirrored across the GCC, albeit to a lesser degree.

Russia’s economic relations with the UAE are largely centred on the banking and retail sector. The UAE’s Minister of Economy, Sultan bin Saeed Al Mansouri, says that “non-oil trade between the two countries soared by 7.5 per cent in 2013 and registered $897 million… Russian and Emirati businessmen partnered in more than 350 joint ventures in the UAE and more than 40 Russian companies opened representative offices in the country.”

When it comes to business in Russia, the country is controlled by a sector of billionaires who have a disproportionate share of the country’s wealth, controlling 55 per cent of the total riches. Russians are keen to ensure this wealth remains in the country but recent sanctions are driving it away. Last month Russian authorities passed a law requiring all Russians with dual citizenships to declare their documentation to the migration service. Russian media have reported Putin approved the idea but said “not to overdo it”, adding: “We must know and have the legitimate right to know who is living in Russia and what he or she does for a living.”

Despite this latest development, those who are eligible to obtain an alternative residence and citizenship outside Russia are unlikely to be deterred. There are many high profile examples of Russian billionaires moving abroad, with London a preferred destination. And this trend is only going to increase as the sanctions grip the Russian economy tighter.

According to a recent report by international immigrant investment firm Arton Capital together with Wealth-X, which surveys the world’s rich, Russians represent six per cent of the demand for second residence and citizenship. Arton Capital estimates the number will double next year. The reasons for exploring this avenue remain specific to the individual but it is likely the creation of robust Immigrant Investor Programs (IIPs) and Citizenship by Investment Programs (CIPs) is what attracts them to consider dual residence and citizenship.

The sanctions imposed on Russia are likely to see it expand its economic interests to emerging markets in a bid to develop deeper foreign and economic policy in the Middle East. However, in a juxtaposition of interests, wealthy Russians are now far more likely to look for a jurisdiction such as Cyprus, Hungary or Bulgaria, which are among the top destinations for Russians to seek second citizenship. Those countries welcome their investment and offer them stability that the Ukrainian crisis has taken away from their own economy.

This level of instability will remain for the foreseeable future and further sanctions seem inevitable. As a result, and despite heightened scrutiny from the Russian authorities, we will see greater mobility of Russia’s wealthiest individuals.