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Sanctions squeeze Dubai’s trade with Iran
It’s bad news for businessmen, as a fourth round of UN sanction seems to mean trade relations between the UAE and Iran are coming to a standstill.
November 25, 2010 1:41 by Reuters
Dhows laden with goods bound for Iran line Dubai’s creek. Workmen lift boxes of cheap wares, made in China, onto the creaking wooden vessels ready to make the short journey across the Gulf to the Islamic Republic.
The buzz of activity belies growing evidence that this traditional trade between Dubai and Iran is suffocating under the ever-tightening grip of sanctions, and businesses fear it could soon become a thing of the past.
The United Arab Emirates has signalled it will rein back its role as a trading and financial lifeline for Iran after the U.N. Security Council imposed a fourth round of sanctions on Iran in June, over accusations it is developing a nuclear bomb.
The measures could spell disaster for many of the Iranian banks and thousands of Iranian businesses who deal with Dubai, which built its reputation on its role as the re-export hub for the Gulf.
“There is a severe impact on trade between the UAE and Iran due to the current sanctions, particularly on the banking sector,” said Morteza Masoumzadeh, vice president of the Iranian Business Council and managing director of Jumbo Line shipping agency.
“Due to the recent sanctions, the Iranian banks’ operations have come almost to a standstill. They have lost their businesses,” he told Reuters in his office on the 14th floor of a building that overlooks Dubai’s busy saltwater creek.
In June, the UAE central bank told financial institutions to freeze accounts belonging to dozens of firms targeted by U.N. sanctions, also blacklisting 40 entities and one individual.
In November, businessmen and traders met the deputy ruler of Dubai to complain of obstacles they face doing business with Iran due to the banking restrictions.
Masoumzadeh said around 8,000 Iranian-owned businesses remained in Dubai after some 400 were forced to close because of the sanctions and the financial crisis.