Economy New sanctions seen hurting Iran businesses in Dubai

New sanctions seen hurting Iran businesses in Dubai

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Reuters: New sanctions on Iran are expected to complicate life further for Iranian businesses based in the United Arab Emirates, home to regional trade hub Dubai, and may force some to close down, one of their representatives said.

By Fredrik Dahl

DUBAI, July 6 (Reuters) – New sanctions on Iran are expected to complicate life further for Iranian businesses based in the United Arab Emirates, home to regional trade hub Dubai, and may force some to close down, one of their representatives said.

Morteza Masoumzadeh, vice president of the local Iranian Business Council, also said he believed the authorities in the Gulf Arab federation would impose more restrictions after the latest wave of international measures against Iran.

Thousands of Iranian companies and businessmen operate in Dubai, many of them involved in the multi-billion-dollar re-export trade with the Islamic Republic across the Gulf.

But the UAE, a U.S. ally, has signalled a tightening of its role as a trading and financial lifeline for Iran after the U.N. Security Council last month imposed a fourth round of sanctions on Tehran over its disputed nuclear programme.

“I predict a further decline in Iranian businesses in the UAE and other countries doing direct trade with Iran, like Turkey, Malaysia etc,” Masoumzadeh told Reuters.

“This will make it even much worse than before, there is no question about it,” he said on Monday when asked about the impact of the new sanctions on Iranian businesses in the UAE.

His comments were in contrast to statements by Iranian officials in Tehran dismissing the latest measures. President Mahmoud Ahmadinejad has called them “pathetic”.

IRAN TRADE

Previous sanctions have hurt Iranian business activities by making it more difficult to access vital trade finance, such as letters of credit, after the United States three years ago targeted two Iranian state banks with branches in Dubai.

The latest U.N. resolution calls for measures against new Iranian banks abroad if a connection to the nuclear or missile programmes is suspected, as well as vigilance over transactions with any Iranian bank, including the central bank.

“I’m sure that from now on … trade transactions in foreign currencies such as the euro and (UAE) dirhams will become more difficult,” said Masoumzadeh, who rejects any idea that Dubai is a centre for illicit trade with Iran.

Further stepping up pressure on Iran over nuclear work the West suspects is aimed at making bombs, something Tehran denies, U.S. President Barack Obama last week signed into law sanctions on Iran’s vulnerable petrol imports.

Iranian aviation officials accused the UAE, Germany and Britain on Monday of refusing to refuel Iranian passenger planes in response to the tougher U.S. measures, but this was later denied by the country’s Foreign Ministry.

Iran and the UAE have close economic and historic relations but with Tehran facing growing Western pressure, its ties with Dubai have drawn scrutiny from Washington.

In 2009, Dubai’s re-exports to Iran — goods originally from Europe, Asia or elsewhere and then sold on to Iran — rose 4.8 percent to 21.3 billion dirhams ($5.8 billion).

In a possible sign of tougher times ahead, an Abu Dhabi banking source said last week the UAE’s central bank had told banks to freeze any accounts belonging to dozens of Iran-linked firms singled out by the latest U.N. sanctions.

“I have no doubt that more restrictions will be applied towards Iranian businesses by the UAE authorities,” said Masoumzadeh, who has a Dubai-based shipping business. (Editing by Alistair Lyon and Samia Nakhoul)

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