The conflict between Washington and Teheran highlights Dubai's role as a haven for Iran.
By CLAUDIA SCHWARTZdubai skyscraper 298.88 (photo credit: AP)
Since Western countries placed sanctions on Iran for its nuclear program, Teheran's trade with members of the Gulf Cooperation Council (GCC) countries has increased fivefold, which explains Iran's ability to circumvent the sanctions .
The United Arab Emirates is a dedicated trading partner. Dubai in particular is Iran's largest re-export partner, exporting to Iran what it has imported from elsewhere. Based on the historical trader-shopper relationship between Dubai and Iran, this provides a win-win situation, especially in today's environment: Iran is able to bypass Western sanctions, while Dubai's diversifying economy profits enormously.
Afshin Molavi, a fellow at the New American Foundation, refers to Dubai as Iran's "lungs;" without Dubai, Iran cannot breathe. For Dubai, on the other hand, the relationship only boosts its already flourishing economy.
The UAE imported more US goods in 2006 than any other country in the Middle East, and in the same year, 60 percent of the trade between Iran and Dubai was in the form of re-exports. Frank Lavin, US undersecretary of commerce for international trade, notes that "[US] trade is booming because the UAE is booming."
Since there are no sanctions or trade regulations between Dubai and the West, and since Dubai does not strictly regulate what it exports to Iran, Iran can access embargoed European and American products, including sensitive technology. Earlier this year, American-made computer circuits turned up in the detonators used for roadside bombs targetting American troops in Iraq. The circuits had been exported to the UAE, re-exported to Iran, and eventually ended up in Iraq.
The conflict between Washington and Teheran highlights Dubai's role as a haven for Iran. Stuart Levey, the US Treasury undersecretary for terrorism and financial intelligence, traveled to Dubai and warned Arab bankers to stop dealing with Iran or face US sanctions. As a result, Dubai claims it is monitoring goods that it re-exports more closely, while blocking items that might help Iran build weapons. However, it would be wrong to assume that Dubai can control its trade, since it has no way of knowing what comes in and out of the emirate.
Much to the West's consternation, Iran refuses to abandon its nuclear program. Since military intervention appeals to no one, and with diplomacy continuing to fail, sanctions need to be strengthened. The question is, are Dubai and Iran permanently bonded to each other, or can the former be peeled away from the Iranian economic sphere?
The UAE maintains civil relations with Iran, but also with Iran's arch enemy, the United States. There are several American bases in the UAE, providing access to its ports and territory, overflight clearances and other critical logistical assistance. The "strength" of the UAE's neutrality is in fact its weakness - it can no longer remain a fence sitter, given the tensions of the current political climate.
IRAN AND Dubai may seem united, but in reality they are bound together only by economics and fear. In fact, the immediate objective of the GCC's founding was protection from Iran after the IranIraq War. Recent statements made by Iranian Deputy Foreign Minister Manouchehr Mohammadi questioning the legitimacy of the monarchies and traditional systems in the Gulf region confirm that although relations between Iran and the GCC countries are deeply rooted, they have always been at odds.
For the UAE in particular, a major thorn is the issue of three small strategically located islands that Iran occupies and the UAE claims. Iran has stationed Islamic Revolutionary Guards on the islands, and it is from here that it would attack US bases in the region in response to a Western military strike. It would also use these islands to close the Straits of Hormuz, jeopardizing global oil supplies. Iran recently opened two administrative offices on Abu Musa (one of the disputed outposts), thus reawakening the unresolved conflict and further provoking the UAE.
Dubai is precariously placed across the Persian Gulf from Iran, which means Iran doesn't actually need to attack the UAE; it just needs to rattle its saber.
According to Dr. Christopher Davidson, author of The United Arab Emirates: A Study in Survival, no incentive package the US could offer would wean Dubai away from Iran. This is because such government-backed involvement would be impossible to disguise. Even if the US could offer such a package, Dubai as well as the rest of the GCC would be unlikely to renounce their current conciliatory insurance policy vis-Ã -vis Iran.
The author wrote this piece while working at the Transatlantic Institute as a Legacy Heritage Fellow.
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