Russian Prime Minister Dmitry Medvedev, left, meets with Bahrain's Deputy Prime Minister and Crown Prince Salman bin Hamad bin Isa Al-Khalifa in the Gorki residence outside Moscow, Tuesday. Image Credit: AP

Washington: The US disapproves of a decision by its Gulf ally Bahrain to sign an investment cooperation deal with Russia at a time when US and European governments are imposing economic sanctions on Moscow over the Ukraine crisis, an official said.

“With Russia continuing its efforts to destabilise Ukraine, this is not the time for any country to conduct business as usual with Russia,” a US State Department official said on Wednesday.

“We have raised these concerns with the Bahraini government.” In a statement on Tuesday, the Russian Direct Investment Fund (RDIF) said it had signed a memorandum of understanding with Bahraini sovereign wealth fund Mumtalakat to identify and work together on investment opportunities in their countries.

Mumtalakat chief executive Mahmoud Al Kooheji will join the RDIF’s international advisory board, helping to formulate its strategic direction, the statement said.

The Bahraini fund is one of the smaller sovereign funds in the Gulf, with $7.1 billion of assets as of last September. The RDIF is a $10 billion fund created by Russia’s government to make equity investments, mainly in the Russian economy.

The official Bahraini News Agency reported the deal between the funds, signed after a visit to Moscow by Crown Prince Salman Bin Hamad Al Khalifa.

Bahrain is a US diplomatic ally in the Gulf, and its decision suggests Western sanctions may not deter other countries from continuing to expand business ties with Russia.

In addition, Bahrain’s government has revised visa policies to make it easier for Russian citizens to travel to the kingdom on business, while Bahrain’s national carrier Gulf Air will open a direct route between Moscow and Manama, the agency said.

On Monday, the United States imposed sanctions on seven Russians and 17 companies linked to Russian President Vladimir Putin. On Tuesday, the European Union announced asset freezes and travel bans on 15 Russians and Ukrainians.