Smuggling was a part-time occupation of the Persian Gulf traders till the 1970s when it became serious business. In 1968, the Government of India implemented the Gold Control Act barring citizens from owning gold bars and coins. The prohibition led to the rise of a huge black market for gold and $200 million worth of gold flowed into India every year – most of it via launches from Dubai. With an apprehension rate of 6 percent against a profit of 20 percent, it was good business. However in the 1980s as the Arab nations of the Gulf started developing a modern infrastructure, the dimensions of illicit trade widened. The financial institutions of Dubai became a repository of ill-gotten wealth and a channel for financing illicit operations and storing the profits. While there may have not been large-scale smuggling through their ports, deals were struck and money channelized for drugs, blood diamonds and – of course – guns.
Amongst the foremost users of this ‘facility’ before 9/11 were Al Qaeda and agents of the Taliban who established clandestine arms trading and money laundering operations through the hawala system within the Sheikhdoms. In Sharjah they linked up with Viktor Bout, who operated a fleet of Russian aircraft for charter that flew legitimate and clandestine cargo. Known by a number of aliases including Boris, Viktor Budd, Victor But, Viktor Bulakin, Vadim and Markovich Aminov, he was a short, stocky 35-year-old native of Tajikistan who graduated from Moscow’s Military Institute of Foreign Languages and was fluent in six. When his air force regiment was disbanded during the breakup of the former Soviet Union, he started his business in Afghanistan.
The end of the Cold War resulted in a massive amount of surplus weapons and spare parts being dumped at often very low prices onto the private market. Bout developed the capacity to source/acquire not only small arms, but also larger weapons and deliver them almost anywhere in the world. His associates – which included former US military personnel, Russian officials, African heads of state, organized crime figures – provided him a lengthy list of buyers and sellers with whom to do business. His indictment in a US court in New York in 2008 states that he was offering Russian Igla Surface-to-Air Missiles, Armour Piercing Rocket Launchers, aircraft and parachutes for clandestine drop of weapons, special helicopters with weapons to destroy other helicopters, etc.
According to a report by the Centre for Public Integrity, Bout ran a complex web of individuals and companies making it almost impossible to trace his activities. Amongst the 40-odd companies with suspected Bout connections at one time, the most prominent that he owned was Air Cess. It operated 40 to 60 aircraft, that included the largest private fleet of Antonov cargo planes in the world. Air Cess leased these aircraft to other individuals and companies so that Bout was not directly tied to illegal activities. To maintain a legitimate front, the aircraft were also leased for transporting commercial goods and some of his front companies also flew charter flights for Western private and government aid agencies. Although the aircraft were registered in Liberia, Central African Republic and Equatorial Guinea, they operated out of Sharjah which formed a central base for flights to and from Eastern Europe and Central Asia to the warzones in Africa. The two main sources of arms were Bulgaria and Ukraine. A Parliamentary Commission in Ukraine investigating arms transfers concluded that of the USD 89 billion stocks in 1992, a massive USD 57 billion had gone missing.
Sharjah had established a free trade zone in 1995 through which the Taliban regime was able to purchase arms and other items of ‘necessity’ for itself and Al Qaeda. A covert business relationship emerged and Bout’s Air Cess in Sharjah serviced planes flown by Ariana Afghan Airways as well as military transport aircraft that Bout sold to the Afghan regime. These aircraft flew tons of arms and materials into Afghanistan. Bout provided door-to-door service with an integrated operation involving sourcing the arms, arranging financing and delivering through Air Cess. Most of the financing for the illicit arms delivered to the conflict in the Democratic Republic of Congo and other conflict regions in Africa was with coltan (used in the manufacture of capacitors) and diamonds which were channelled through Dubai at an exponential pace. In 1998, $4.2 million worth of diamonds was being exported from Dubai to Antwerp. Within three years it had jumped to $150 million.
Known by a number of aliases including Boris, Viktor Budd, Victor But, Viktor Bulakin, Vadim and Markovich Aminov, he was a short, stocky 35-year-old native of Tajikistan who graduated from Moscow’s Military Institute of Foreign Languages and was fluent in six
Another charter airline Flying Dolphin, owned by a member of the Dubai ruling family who used to be the UAE ambassador to the United States, also collaborated with Air Cess. At the urging of the Americans, the Emirates finally halted the flights of almost all foreign registered aircraft in Sharjah but Bout relocated his operations to Ras al Khaimah and Ajman. It was probably no coincidence that the sister of the owner of Air Dolphin was married to the ruler of Ajman. Ultimately under international pressure Bout was forced to move out. He was an internationally well-known figure by now, said to be worth $6 billion and the 2005 movie Lord of War starring Nicolas Cage was reportedly inspired by him. His luck ran out in 2008, when he was apprehended in Bangkok on the request of the US where he was charged with conspiracy to deliver weapons to an armed group called the Revolutionary Armed Forces of Colombia (FARC). In 2012, he was sentenced to 25 years in prison and a fine of $15 million.
Meanwhile the UAE continued as a convenient meeting and staging point for arms related deals. Half of all applications to buy U.S. military equipment from Dubai were from bogus front companies In 2010 US Agencies broke a ring of companies that had been illegally exporting military components for fighter jets and attack helicopters from the US to Iran. One of the companies was registered in the UAE. In January 2010 Mahmoud al-Mabhouh a founder of Hamas’ military wing was assassinated in Dubai by Israeli agents. Israeli experts stated that he was a liaison between Hamas and Iran for weapons smuggling operations into Gaza. Mabhouh frequently travelled to Dubai where he may well have met and negotiated with the Iranians or middlemen. In March 2011 the police in Dubai intercepted a consignment of 16,000 pistols valued at USD 4.36 million, being smuggled from Turkey to Yemen via Dubai.
While arms smugglers continued to channel their business though the Gulf countries, the Government of the UAE itself has emerged as a conduit for weapons. As the UAE started taking a more active role in regional conflicts, a number of cases emerged where it has diverted arms and ammunition to third countries. The re-export to Jordan of Swiss hand grenades sold originally to the UAE in 2003-04 is a case in point. The grenades were used in Syria, which led to new Swiss rules on export of war material. In 2010 UAE purchased approximately 30,000 assault rifles from Arsenal, a Bulgarian state owned manufacture of small arms and ammunition. According to Armament Research Services (ARES), an independent technical intelligence consultancy, these rifles were delivered onwards by the UAE to the armed forces of Yemen, Sudan and Libya.
In March 2011, the same month that the UAE joined the coalition to fight in Yemen, it made much about seizing a shipment of 16,000 pistols worth an estimated Dh16 million that was bound for the conflict zone. However, it had no qualms about being involved in supplying arms to Libya where a civil war is raging. The UN agency monitoring the embargo to Libya documented a series of cases of arms transfers to Libya co-organised by the UAE with arms dealers. In September 2011, 800,000 rounds of heavy machine gun ammunition of Chinese-origin held in Albanian surplus stocks were transported by plane from Tirana to Benghazi. The deal was brokered by an Armenian agent and Ukrainian state-owned UKRINMASH on behalf of the armed forces of the UAE. Flight permits were issued for Abu Dhabi International Airport, but the flight route was changed and three subsequent flights delivered the cargo to Benghazi. According to the UN report this was “part of a larger deal between UKRINMASH and the government of UAE (through the Armenian agent), including 2 million rounds of 12.7 mm and 1,000 AK-47 assault rifles.”
The UAE has emerged as one of the global leaders in establishing Free Trade Zones (FTZs) in which are located over 5,000 multinationals and thousands more individual trading companies. FTZs offer a variety of incentives to attract export businesses, foreign investment and employment but they have a darker side, too. Criminals see them as perfect places to manufacture and transport illicit goods, as controls and checks by authorities are often irregular or absent. The UAE with its 45 FTZs now has a reputation for being one of the most well-transited points for illicit trade in the world.
STRIET is one of the companies located in the FTZs. It is a Russian-Canadian-owned company that in 2012 inaugurated a factory in Ras al Khaima of 1.4 million sq feet at the cost of $21.8 million. It was the first phase of an ambitious three-phase project which eventually will be worth $54.4 million. STRIET is vying for being the unchallenged leader in customized security and civil armoured vehicles. In 2016, the STRIET Group was criticized in two separate United Nations reports which embarrassed the Canadian Government. The company shipped hundreds of armoured patrol vehicles into both South Sudan and Libya — trucks that were later outfitted with weapons and used by the South Sudanese military and Libyan militias. The practice in the arms trade – known as diversion, when equipment is allegedly sold for a benign purpose but ends up being used for fighting – is illegal under international law and a violation of the UN economic sanctions against South Sudan or the arms embargo against Libya. Global Affairs Canada (the Canadian Foreign Office) washed its hands off all responsibility by stating that STRIET’s deals fell outside of Canada’s arms export regime because most of the vehicles were shipped from the company’s branch in the United Arab Emirates. This then raises the question: is the UAE responsible for the violation of the UN sanctions / embargo?
According to a report by Amnesty International, the UAE is now a major conduit of weapons to the militias that it is backing. Alongside allowing the export of military hardware through its FTZ, it is also transferring arms that it has purchased. Since the time it became embroiled in the Yemen conflict, the UAE has purchased over $3.5 billion worth of heavy conventional weapons, small arms (SAs), light weapons, and associated parts and ammunition. Some of the same make and model of vehicles that were sold to UAE have been widely documented in use by UAE-backed militias in Yemen. A US State Department memo that was leaked in 2017 and seen by Al Jazeera revealed that a private UAE company purchased $100 million worth of weapons from North Korea in June 2015. The consignment included rockets, machine guns and rifles that appear to have been subsequently sent to Yemen to support groups loyal to the UAE in the conflict. In an article published in June 2016, the UK’s Guardian reported that between 2012 and 2013, UAE has nearly doubled and KSA has nearly tripled their purchases of SAs and its ammunition. Within a year their collective imports had risen from $125 million to $350 million and it is obvious that these purchases were being diverted to conflict zones.
In 2019, the New York Times reported that forces loyal to Libya’s unity government had discovered four US Javelin Antitank Guided Missiles at a base used by men under the command of Khalifa Haftar, who has waged a months-long offensive to take Tripoli. The marking on the missiles indicated they had been sold to the UAE in 2008. This was soon after the US president Congress to approve $8.1 billion in arms sales to Saudi Arabia and the United Arab Emirates. The Democratic senators and some Republicans voted to block the sale but did not have enough votes to override a veto by Trump. While major arms suppliers to the UAE like the US are not prepared to reduce their sales, Canada and some European countries like Germany, Spain, Belgium, Norway and Finland have placed a ban. The latest country added to this list is South Africa. In spite of endangering billions of dollars of business and thousands of jobs in its struggling defense sector, it insisted on inspection of stocks of its deliveries – which Saudi Arabia and the UAE declined.