Put on your seatbelts, here we goJune 23, 2015 9:00
Dubai traders fear sanctions on Iran business
Iran-Dubai export trade has thrived in recent years but the latest sanctions are making Dubai businessmen uneasy with more difficult trade financing and tougher customs inspections.
December 3, 2011 12:41 by Reuters
Iran shrugged off a fresh wave of international economic sanctions against it last week, saying they would have “no impact” on its trade with other countries. But in Dubai, one of Iran’s top trading partners, businessmen are starting to worry.
“The restrictions imposed on the Iranian traders here are getting so hard that they are virtually going to go out of business,” said Morteza Masoumzadeh, a member of the executive committee of the local Iranian Business Council and managing director of the Jumbo Line Shipping Agency.
“They are facing a hell of difficulties. Within a year or two, they will have to shut down. And these traders are dealing with basic commodities. There is no involvement with those banned items, or missile technology,” he said.
Over the last five years, the United States, the European Union and other countries have imposed an escalating series to sanctions over Iran’s controversial nuclear programme, which is suspected of seeking to make atomic weapons. Most US-Iran trade has been banned, and foreign banks are effectively deprived of access to the US financial system if they do business with Iranian banks.
But Iranian trade with Dubai, 150 kilometres (100 miles) across the Gulf, has thrived, with the emirate serving as a convenient conduit for other countries’ business with Iran. United Nations sanctions against Iran have focused on nuclear-related materials and weapons and targeted Iranian companies and people involved in those programmes, so the bulk of merchandise trade remains legal. Sanctions in other countries may have had the effect of pushing more trade throughDubai.
Around 8,000 Iranian traders and trading firms are registered in Dubai, Masoumzadeh said in his 14th floor office overlooking the sparkling waters of theDubai Creek, where wooden dhows dock to take on cargo for transport to Iran.
According to the latest data from the United Arab Emirates’ customs authority, re-export trade between Iran and the UAE — goods sent to the UAE for on-shipment to Iran, and Iranian goods sent to the UAE for on-shipment to other countries — totalled 19.5 billion dirhams ($5.32 billion) in the first six months of this year, up from 14.3 billion dirhams a year earlier.
That represents a significant proportion of Iran’s non-oil foreign trade; its total imports amounted to $92.4 billion in all of 2010 while exports, including oil, were $116.5 billion.
For Dubai’s community of traders, many of them like Masoumzadeh of Iranian descent, the business is also key; Iran accounts for about a quarter of the UAE’s re-export trade. But for the UAE as a whole, which is expected to see its exports, dominated by oil and gas, climb to nearly $300 billion this year, the trade is not nearly as important.
“There is still a lot of consumer demand in Iran. A lot of this is still being satisfied through the traditional route of re-exports via Dubai. And this is showing up on the customs statistics,” said David Butter, director for the Middle East and North Africaat the Economist Intelligence Unit in London.
Products delivered by dhows across the Gulf include household goods, rice, sugar, cooking oil, tubes, tires and timber. Bigger ships also operate, taking larger volumes, including higher-end goods.
Luxury sports car maker Maserati is interested in doing business with Iran, a company official said. “We are going to start in Iran now, it’s a very particular market. It’s all cash-based; we have an unbelievably high number of people who are considered millionaires compared to the overall population,” said Umberto Cini, managing director at Maserati Middle East and Africa in Dubai.
Now, however, the cumulative weight of the international sanctions, augmented by new measures announced by several countries last week, may be starting to have an effect on Dubai’s trade with Iran.
Last week, the United States named Iran as an area of “primary money laundering concern”, a step designed to dissuade non-US banks from dealing with it; blacklisted 11 entities suspected of…(CONTINUED TO NEXT PAGE)
Pages: 1 2