The governments of Bahrain and Russia have signed a deal to cooperate on investments, at a time when US and European governments are imposing economic sanctions on Russia over the crisis in Ukraine.
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 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 Mahmood al-Kooheji will join the RDIF's international advisory board, helping to formulate its strategic direction, the statement added.
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 confirmed the deal between the funds, signed after a visit to Moscow by Crown Prince Salman Bin Hamad al-Khalifa.
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 andManama, the agency said.
Earlier on Tuesday, the European Union announced asset freezes and travel bans on 15 Russians and Ukrainians in response to Moscow's actions in Ukraine. On Monday, the United States imposed sanctions on seven Russians and 17 companies linked to Russian President Vladimir Putin.