US efforts to scuttle Iran-UAE ties
fail By Kimia Sanati
TEHRAN - Iran and the United Arab Emirates
(UAE)have begun top-level talks to boost economic
relations, despite efforts by the United States to
disrupt trade ties and an unresolved territorial
dispute over the three strategic islands of Abu
Mousa, the Lesser and the Greater Tunb in the
Strait of Hormuz.
The UAE is already
Iran's top trade partner with bilateral trade
reaching US$14 billion, according to official
sources.
The US, concerned about Iran's
plans to develop nuclear know-how, "has tried to
hurt the Iranian economy through unilateral
sanctions," an observer in Tehran told Inter Press
Service (IPS).
"They consider UN sanctions
too mild to achieve enough pressure
on
Iran to halt its nuclear program. To bring the
Iranian economy to its knees [the US] has been
encouraging and even putting pressure on all
Iran's trade partners, including the UAE, to stop
dealing with Iran. This can and has hurt much more
than the UN sanctions."
At the forefront
of efforts by the US to curb local trade with Iran
are foreign banks with branches in the UAE. These
continue to deal with firms that have Iranian
partners, "but they are more cautious - they
scrutinize them more when extending facilities",
Nasser Hashempour, executive deputy president of
the Dubai-based Iranian Business Council, said
this month, according to a report on the
MiddleEast Online website.
UAE-based
branches of international banks have "asked most
Iranian individuals who have personal accounts
with them to close their accounts", Hashempour
said.
Many international banks, including
British-Asian bank HSBC, Deutsche Bank and Swiss
giants UBS and Credit Suisse, have stopped dealing
with Iran in line with sanctions imposed by the US
to pressure Tehran into halting its program of
uranium enrichment, the report said.
Yet
"stopping trade with Iran is in no way in the best
interests of the UAE, which has the greater share
of the lucrative trade relations, and hence their
big dilemma is whether to relent to the US
pressure and keep Americans happy or serve their
own national interests and economy", the observer
said.
Bilateral trade between the UAE and
the US fell 25% to $2.67 billion during the first
quarter of last year compared with the same period
of the previous year, according to the
BusinessIntelligence Middle East website, citing
US Department of Commerce data. UAE imports from
the US fell 26% to $2.36 billion in the period
compared with a year earlier, while UAE exports to
the US fell by 7% to $307.6 million, cutting by
29% the UAE balance of trade deficit with the US,
the website reported.
Trade between the US
and the UAE declined 16% to $5.43 billion during
the first half of 2007, ArabianBusiness.com
reported, citing the US Bureau of Statistics.
Last May, Iran's President Mahmud
Ahmadinejad became the first Iranian president
since the Islamic Revolution of 1979 to visit the
UAE. This was reciprocated last week by Sheikh
Mohammad bin Rashid, prime minister of the UAE and
ruler of Dubai, in a rare, top-level visit. He
reiterated his country's stance, expressed earlier
at a joint press conference with Germany's
Chancellor Angela Merkel, that Iran had a right to
peaceful nuclear technology.
Importantly,
the sheikh also said Iran was no threat to
regional states. "Allegations by aliens [the US]
that Iran is a threat to the region are vague, as
regional states share a lot of historic and
contemporary common grounds," the UAE premier was
quoted by reporters as saying.
"The UAE
prime minister's visit is proof that US policies
will not have any impact in the region,"
Ahmadinejad said during his meeting with Sheikh
Mohammad.
Ahmadinejad has offered to
provide regional Arab countries that have their
own nuclear ambitions with Iranian nuclear
know-how. Referring to Iran's nuclear technology,
he told the visiting UAE prime minister that Iran
was fully prepared to "put its valuable
achievements" at the UAE's disposal.
The
visit, a little more than a month after one to the
UAE by US President George Bush, sparked
speculation about a nuclear message being relayed
by the UAE prime minister to Tehran.
Iran's ambassador in the UAE, Hamid-Reza
Assefi, rejected the speculation. Sheikh Mohammad
"just informed us of his country's stance
regarding Iran's nuclear issue and said Iran had a
right to have access to peaceful nuclear
technology", the Iranian ambassador was quoted as
saying by semi-official Fars News Agency.
The Gulf Cooperation Council (GCC), of
which the UAE is a member, acknowledges all
nations' right to peaceful nuclear energy but has
concerns about a nuclear Iran. Other members are
Oman, Qatar, Saudi Arabia, Kuwait and Bahrain.
A report, the National Intelligence
Estimate (NIE), by the US intelligence bodies in
December 2007 seems to have put the minds of
Iran's Arab neighbors at greater ease as to the
nature of its nuclear program. The report said
that Iran's nuclear program had not been of a
military nature since 2003.
The NIE report
has done little to alter Bush's policy towards
Iran. In January during an official visit to the
UAE, he accused Iran once again of sponsoring
terrorism. The US president said Iran's actions
threatened the security of nations everywhere and
promised that the US was rallying friends to
confront the Iranian danger before it was too
late.
Bush's customary rhetoric against
Iran was not well received in the UAE and in other
countries in the region. "Unfortunately, the focus
of this epoch-making visit to Abu Dhabi and Dubai
has been on the US preoccupation with Iran, rather
than America's strong and healthy relations with
the UAE and other Gulf allies," UAE's
pro-government Khaleej Times wrote.
"Just
as the Gulf countries have healthy relations with
the West, including the US, they also have
historical, cultural and economic ties with Iran,"
the newspaper wrote. "The UAE happens to be Iran's
biggest trading partner. This is why the UAE and
other Gulf countries wouldn't want any more
confrontation and conflict between the US and
Iran. The Middle East and Gulf region, already
suffering from two conflicts, cannot afford any
more tensions. Peace and only peace is the way
forward."
The US has been trying to paint
Iran as a scarecrow to the Arab nations,
particularly to the Persian Gulf states, an
observer in Tehran told IPS. "But Arab nations
seem to be increasingly disillusioned with US
policies. The GCC countries say they will not
allow any attacks on Iran from their soil. They
seem to be more worried by a nuclear Israel that
is continuing its aggressive policies without any
hindrance," the observer said.
"Before the
UN began to impose sanctions on Iran to stop its
nuclear program and the US stepped up its
unilateral sanctions, the thriving economy of the
UAE, and Dubai in particular, was seen as a
serious threat to Iranian economy here," he said.
"Capital flowed, and still flows, from
Iran to Dubai in huge sums in search of safety and
profits. Iranian investors are now holding
somewhere around $300 billion in capital in the
UAE. The trade volume between the two countries
was up by 25% last year. The Emirates are
profiting in terms of money while Iran benefits by
the trade between the two countries that enables
its economy to meet the domestic demand for
imports," he added.
The greater part of
Iranian imports from the UAE consists of
re-exports from the country. This enables Iran to
lay its hands on things the unilateral US
sanctions have made difficult or impossible to
acquire from other sources. The fact is reflected
in the figures for the trade volume in the Iranian
fiscal year that ended in March 2007, during which
the UAE's share of the $11.7 billion non-oil
exports between the two countries was $9.2
billion.
The US lobbying has made things
harder for Iranians and their trade partners in
the rest of the world but they have found ways of
circumvention. Many Iranian companies have
registered in the UAE to continue their business
and unofficial money transfer channels have taken
the place of banks.
"For quite a few years
my firm has been importing machinery parts,
re-exports from Europe and elsewhere in fact, from
Dubai," the chief executive of an importing
company told IPS in Tehran. "Things went rather
smoothly in the past, but recently one main
Canadian supplier said they couldn't deal with us
directly or they'd be boycotted by the Americans.
They suggested that we register a company in
Dubai. We had to find a local partner to hold 51%
of the shares according to local regulations."
At the same time, "international banks
where we had our accounts asked us to close them
and said they would no longer accept letters of
credit from [Iran's] Saderat and Melli banks,
which have several branches in the UAE. This has
made us deal in cash and use unofficial money
transfer systems, which raises the end price of
the imported goods for us," he said.
Besides economic factors, the issue of the
disputed islands was brought up during the UAE
premier's visit. Iran is prepared for talks with
the UAE to "remove misunderstanding over the
Persian Gulf Island of Abu Mousa", Foreign
Ministry spokesman Mohammad Ali Hosseini was
quoted by Islamic Republic News Agency as saying
following the UAE premier's visit.
The
territorial dispute between the two countries over
the three islands dates to 1971 when the seven
states comprising the UAE gained independence from
Britain.
While insisting on its
non-negotiable sovereignty over the disputed
islands, Iran says it favors talks to resolve the
issue. The UAE has in the past sought to settle
the issue of the islands that it calls "occupied"
through the International Court of Justice in The
Hague.
In May 2005, the UAE officially
appealed to the UN to arbitrate on the issue of
the disputed islands. The UAE's claim has
repeatedly been backed by the GCC members and
other Arab states.
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