Iran General NewsDubai is the 'hole in the net' of sanctions...

Dubai is the ‘hole in the net’ of sanctions on Iran

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ImageDaily Telegraph: Iran is evading United Nations sanctions by running a global network of merchants prepared to supply equipment that could be of military use.

The Daily Telegraph

Iran is evading United Nations sanctions by running a global network of merchants prepared to supply equipment that could be of military use.

By Damien McElroy in Dubai

ImageDubai, the home of the Gulf's largest port and Iran's crucial economic outlet, is central to this effort. A company indicted in America for allegedly exporting "dual-use" electronics to Iran remains open for business in Dubai. Meanwhile, people named in American courts for allegedly conspiring to deal in banned items are reported to be living normally in the city.

Last month, US prosecutors levelled these charges against eight businessmen, including one Briton. Some are believed to be at large in Dubai. Five companies all based here were also charged, including Mayrow General Trading, which was accused of selling Iran tiny computer chips, of a kind frequently recovered from sophisticated roadside bombs deployed to kill American and British forces in Iraq. But Mayrow is still trading in Dubai and its phone line is operating.

Iran relies on Dubai in the manner that Communist China once depended on Hong Kong: as a free port for an isolated regime.

America and her allies have responded with an extensive surveillance operation, with US officials monitoring shipments in and out of the city since 2002. HM Revenue & Customs has followed suit with an official post at Britain's Consulate in Dubai. But the warrens of glass-walled shops present inspectors with a maze of challenges.

Only about one per cent of Dubai's 10,800 registered merchants are thought to have ties to Iran. But there are tens of thousands of outlets and countless "businessmen" operating beneath the radar.

The spirit of the souks – where if a merchant cannot find a product it probably has not been made – defies the latest detective techniques.

Nasir Khan, a US Commerce Department official, claimed the situation was too sensitive to discuss in public. "If you see me quoted, I shouldn't have been talking," he said.

Port officials argue that safeguards are in place to prevent the shipment of banned technologies. "Dubai Customs has developed a programme for controlling export and materials of dual usages," said Mohammed Al-Mari, the cargo operations director. "The programme works on the control of products or materials contained in the international controlled lists."

But Dubai's Jebel Ali port is expanding so fast – with container volumes growing by 20 per cent in the first half of this year – that screening cargo properly is a mammoth undertaking.

There is no doubt that Abdul Qadeer Khan, the Pakistani scientist who helped build his country's nuclear arsenal and covertly aided Iran and Libya as well, channelled banned components through Dubai.

Sheikh Mohammed bin Rashid al-Maktoum, the city state's ruler, has managed to preserve friendly ties with both America and Iran. But experts believe that Dubai, one of seven autonomous enclaves making up the United Arab Emirates, remains a key weakness in the enforcement of sanctions on Iran.

"The UN sanctions and the US pressure to cut off the banks is hurting. But Iran's end runs, chiefly setting up shelf companies and so forth in Dubai, are a significant hole in the net," said Mark Fitzpatrick, an expert on Iran's nuclear programme at the International Institute for Strategic Studies. "The Emirates has adopted an exports control law, but is only beginning to implement it."

Dubai pays a political price for its close ties to Iran. When its largest port operator bought P&O in 2005, there was a US Congressional revolt against Dubai's involvement in America's maritime security.

More recently, the city has joined an international effort to isolate Iran's main state-owned banks – Melli, Mellat and Saderat.

But these measures have inflicted indiscriminate pain on Dubai's Iranian business community, including those opposed to the regime.

Amin Hazaveh, who owns an internet cafe, has begun closing his shop because his line of credit has been withdrawn. With only Iranian assets, he cannot borrow from Dubai's banks. "The atmosphere has turned difficult," he said. "But this is Dubai – there are always options. It's just the straightforward choices are disappearing."

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