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Iran trade ties not easily broken

Iran trade ties not easily broken

Dubai is Tehran’s largest non-oil trading partner, with trade between the two hitting $12 billion last year. But with tougher US sanctions on the cards, could Iran’s “back door to the West” be forced to curtail exports?

February 21, 2010 11:13 by

But while the ties are strong they are not, of course, unbreakable – despite the history, and despite the rising levels of trade.  For in the midst of threats of stricter US sanctions against Tehran following Iran’s move to step up uranium enrichment, Dubai is acting like “Iran’s back door to the West”, according to a recent report by Bloomberg.

According to a report in The National, Iranian-run businesses in the UAE are already fearful of the impact of tougher sanctions.  “This could mean grave consequences for Iranian traders in the UAE,” Masoum Zadeh, the executive deputy president of the Iranian Business Council in Dubai, told the newspaper. “Traders are already complaining about the restrictions they are facing through banking channels and this could make it worse.”

“Dubai customs agents have shut down at least 30 local companies, according to the US Commerce Department. Last August, UAE customs investigators intercepted and seized a North Korean ship carrying weapons to Iran,” said the Bloomberg report.

But while the force of the US sanctions have already been felt by some financial institutions in Dubai, including branches of Bank Saderat and Bank Melli, the impetus to enforce further action could actually come from Dubai’s neighbor, Abu Dhabi.

Eckart Woertz, economics program manager at the Dubai-based Gulf Research Center, told Bloomberg that a tougher stance on Iran could be part of the payback for the UAE capital’s recent $20 billion financial bailout packages for Dubai. “A likely price for Abu Dhabi’s help will be a greater centralization of the UAE and less independence for Dubai… Abu Dhabi could end up with a firmer grip on implementation of sanctions policies against Iran, which would benefit the US,” he said.

Woertz added that one of the ways in which Abu Dhabi may do this is by pushing for UAE-wide control of air and sea shipping.

But while Abu Dhabi may have, as the Bloomberg report asserted, “always been suspicious of Iran’s political and nuclear ambitions”, it is uncertain whether the UAE capital will insist on Dubai curtailing trade with Iran. For Dubai’s history seems so inextricably entwined with Iran’s – and the boxes on the dhow boats are packed so, so high.

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