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Dubai and Iran: Pressures Grow

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Angus Taverner

Director- Global Affairs

Tag: Iran United Arab Emirates
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Tourists taking a gentle stroll along the edge of the Dubai Creek can quickly notice the influences of Iran.  Bank Melli and Sedarat Bank loom large. Most of the myriad of dhows which give the Deira area its unique charm and character are bound for Iran, just 90 miles away, an overnight sail to Bandar Abbas.  And in Dubai International Airport a look at the flight boards showing more than 300 flights per week between Iranian airports and the emirate will be further impressive evidence of the relationship of these two entities.
Iranians have moved to Dubai in waves for more than 100 years.  The most recent wave, at the time of the 1979 revolution, fled the theocracy and conservatism of Ayatollah Khomeinis new regime.  One compounding outcome of these migrations is that, by some accountings, as many as 400,000 Iranian expats live in Dubai, substantially more than the number of native Dubaians.  Putting all this together, it is not surprising that the city state and its vast northern neighbor have a close relationship that includes a flow of trade estimated to be worth $12 billion per annum.  The weight of the status quo is compelling.
Because of the larger geopolitical environment and the movement of events outside the region but focused on it, commentators who watch the relationship have renewed their questioning of it.  They cite the emirate as one principal conduit by which Iran avoids the full impact of UN and US sanctions.  Some have gone further.  With the memory of A Q Khans use of Dubai as the hub of his nuclear smuggling organisation in the 1990s, they have suggested that Dubais authorities continue to turn a blind eye that enables Iran to get technology and equipment vital for its nuclear programme, in direct contravention of three UN Security Council (UNSC) resolutions meant to embargo trade with Iran in these areas.
A new strong impetus to commentators to challenge Dubai is the International Atomic Energy Agency (IAEA) finding in March.  The new IAEA Director General, Yukiya Amano, for the first time stated that intelligence suggests that Iran is pursuing a nuclear weapons programme in the margins of its nuclear energy developments.  This change, together with the US newly sophisticated strategy against an Iran that has refused to give any ground, seem to improve the fortunes of a fourth round of UNSC sanctions against Iran.  UN sanctions that bite Iran would affect Dubai because, though it drags its feet on some of the US unilateral sanctions, Dubai continually enforces UN sanctionsdespite frequent media treatments that conflate UN and US sanctions.
Already pressure is growing for the emirate to sever larger parts of its historic trading links than it has so far in complying with sanctions.  This would damage a vital economic lifeline and just as Dubai may be getting back on track from the economic difficulties of its past 18 months.  Moreover, it is a barely disguised secret that many in the West, most notably the US, rely on Dubais close links with Iran: for gathering information and intelligence, logging the movement of money to and from Iran, and maintaining back-channels of communication to Tehran that would not be possible otherwise.  Commentators who criticize Dubais refusal to break its ties to Iran may fail to understand the history and extent of this trade--that it is overwhelmingly legitimate, has more than economic implications for cosmopolitan Dubai, and that Dubai as entrepot is also a window into Iran. 

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