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Dubai and Iran Sanctions


20-03-2013
English | العربية

Angus Taverner

Director- Global Affairs


Tag: Dubai economy Iran UAE
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Recently the world learned what the intelligence community has known for many months, if not years: that Iran is building a second nuclear enrichment centre in the mountains near Qom.  Faced by the prospect of a dramatic Cuba moment when the US, supported by Britain and France, would reveal the truth of this hitherto undisclosed facility, the Tehran leadership pre-empted the embarrassment by writing to the IAEA to announce the existence of this secret facilityinsisting at the same time that it was entirely in support of Irans peaceful nuclear energy programme.
For once, the world seemed a little less forgiving of Irans attempts to obfuscate. The media rained questions on the revelation: why build it inside a mountain?  Why hide it for so long? Wasnt this similar to the forced revelation of Natanz back in 2002?  When would the IAEA inspectors be allowed to visit?  Would they face restrictions? 
Standing back from the immediate fray, it is possible to discern a carefully choreographed piece of diplomatic theatre unfolding, starting with President Obamas unilateral cancellation of plans to deploy anti-ballistic missile systems into the Czech Republic and Poland.  This announcement seems to have nudged Russia itself long-opposed to the prospect of a nuclear-armed Iran but still using its closeness to Iran to gain diplomatic leverage into accepting the prospect of tighter sanctions.   UAE diplomacy may have contributed as well.  A meeting of the UN General Assembly and President Obamas being the first US President to chair a meeting of the Security Council in person swiftly followed.  As President Mahmoud Ahmadinejad roamed New York trying to find a hotel to give him a bed for the night, he must have felt increasingly isolated.  Then came the news that the US and her allies were poised to reveal the new enrichment facility.  In New York, Iran looked a little less sure-footed than usual.
Taken together, this internationally co-ordinated diplomacy led to an expectation that the talks between the Permanent 5 members of the UN Security Council (The P5) together with Germany, and Iran would lead to further stalemate and probable tightening of UN-imposed sanctions.
However, international media looked further at the efficacy of the different types of sanctions that the system might impose and often commented in turn on Dubais relationship with Iran.  Journalists regularly suggest that Dubai, with its claimed 10,000 Iranian companies and estimated 400,000 Iranian expatriates, provides the primary means by which Iran continues to avoid the worst impact of existing UN sanctions and even the unilateral curbs imposed over the past 2 years by the USA.
A short walk along the lines of dhows docked in Dubai Creek reveals US equipment and material of all kinds destined for the 90 mile sail across the Gulf to Bandar Abbas.  But cutting off this conduit at US behest would not bring Iran to its economic knees.  Instead, Dubais main role seems to be more as banker. Sanctioned Iranian banks, such as the Bank Melli, continue residual operations in Dubai: Hence Dubais frequent casting as Irans tradesmans entrance. 
To date, no-one seems to have cared very much.  But developments in New York may have changed this and Dubai could now face much stronger pressures to sever its trading links with Iran, especially on the banking front.  US envoy with special responsibility for countering money-laundering and sanctioned trade, Stuart Levey, has visited Dubai frequently.  As the world finally starts to take the threat of a nuclear Iran seriously, Dubai looks likely to find itself in the eye of this coming storm.

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