United Arab Emirates-Iran Foreign Relations

Iran and the United Arab Emirates (UAE) have enjoyed strong bilateral relations for many years. In 2011, ties were strained by the UAE’s increased cooperation with the international community in enforcing sanctions imposed against Iran. Relations were also hampered by the Islamic Republic’s proxy support of Shi’a protestors in Bahrain and the UAE’s denunciation of Iran’s activities, but the Gulf neighbors have worked to restore relations. Both countries are members of the Organization of Petroleum Exporting Countries, the Non-Aligned Movement, and the Organization of the Islamic Conference and have cooperated extensively both inside and outside these multilateral forums. Though the two countries have been in a low-level dispute for many years over the ownership of three islands in the Persian Gulf—the Greater and Lesser Tunbs and Abu Musa— they nevertheless enjoy close relations based largely on mutually beneficial economic relations.

Iran and the United Arab Emirates have extensive economic ties. Iran received 6.9% of the UAE’s exports and 2009 and was ranked as the Emirates’ second largest re-export market in 2010; a trade process that allows third parties to sell to Iran while avoiding UNSC and U.S. sanctions.[1]  The  UAE’s re-export market, however, has been crippled as of late by several new rounds of U.S. sanctions. The UAE has private investors in Iran, such as the Emirates Telecommunications Corps, which previously announced its intention to invest over $1 billion in building communications infrastructure in Iran.[2] As of 2010, some 100,000 Iranians reside in the UAE and, according to the Iranian Business Council in Dubai, the UAE hosts more than 10,000 Iranian companies. [3] A substantial deterioration of ties in late 2009 led to a reduction in trade relations between the two countries. The primary cause of the strain was initially UAE concerns over Iran’s nuclear program and its support for UN and unilateral sanctions, but later, in 2011, Iran’s interference in Bahrain’s domestic affairs further inflamed tensions. Iran and the UAE have largely managed to overcome these difficulties and in 2011 the Gulf neighbors signed an agreement that would have Iran provide the Emirates with significant quantities of natural gas.

The United Arab Emirates has claimed it is committed to abiding by U.S. and UNSC sanctions against Iran. According to Saeed al-Marri, deputy director of the UAE’s Federal Customs Authority, “if there is a UN resolution regarding certain goods not going to Iran, we will uphold it.”[4] Although the UAE’s Foreign Minister made similar remarks in 2010, between 2008 and 2011 several firms based in the UAE were sanctioned for either conducting business with Iran or for providing cover for Iranian firms doing business with the UAE. Aside from one instance in which its ambassador to the U.S. stated that the UAE would support a military strike against Iran, the UAE has consistently opposed any military confrontation linked to Iran’s nuclear program.[5]  Over the past several years, despite the UAE’s sporadic cooperation with the United States, the apparent strength of Iran-UAE bilateral relations has complicated the enforcement of U.S. and UNSC sanctions.

Nuclear:

June 23, 2011: The United States charged several firms based in the United Arab Emirates and France for plotting to provide Iran with components for fighter jets and attack helicopters without appropriate licensure. The two UAE-based defendants named in the Justice Department report were Aletra General Trading – doing business in Dubai as “Erman & Sultan Trading Co.” – and one of its purchasing agents, Syed Amir Ahmed Najifi. Najifi is an Iranian national and remains a fugitive. Three defendants based in Iran were also charged: Sabanican Company, its managing director Reza Seifi, and its president Hassan Seifi. According to a U.S. Justice Department statement, “The indictment alleges that [the defendants] were involved in the financing of such illegal arms deals and that they helped purchase and route U.S. military components they received from the United States to Iran in violation of the Iran embargo and various U.S. export laws and fraud laws.” These actions are in violation of the U.S. Arms Export Control Act (AECA), the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions Regulations.[6]

June 20, 2011: Six UAE-based shipping firms were designated for sanctions by the United States Treasury Department for their business dealings with the Islamic Republic of Iran’s Shipping Lines (IRISL). The Treasury Department said the sanctions were in response “to Iran's continued efforts to evade sanctions and its ongoing creation and use of new front companies, subsidiaries and affiliates to protect IRISL and to advance its proliferation activities.”[7]

May 24, 2011: The United States imposed sanctions against two oil and shipping firms in the UAE for trading with Iran. One of the companies, the Royal Oyster Group, was owned by the UAE while the other company, Speedy Ship, was jointly owned by the UAE and Iran. According to U.S. Deputy Secretary of State James Steinberg, “All of these companies have engaged in activities related to the supply of refined petroleum products to Iran, including the direct supply of gasoline and related products.”[8]

July 6, 2010: Yousef al Otaiba, UAE ambassador to the U.S., confirmed that a nuclear armed Iran would be unacceptable to his country and, when asked about a potential military strike against Iran, suggested that the UAE would be supportive: “If you are asking me, ‘Am I willing to live with that versus living with a nuclear Iran?,’ my answer is still the same: ‘We cannot live with a nuclear Iran.’ I am willing to absorb what takes place at the expense of the security of the UAE.”[9] Kazem Jalali, a member of the Iranian parliament’s National Security and Foreign Policy Committee, responded by announcing that Tehran may be forced to cancel tours to the Emirates in order to “to guard the reputation of the Iranian people.”[10] Conversely, Karim Abedi, another member of the committee, stated that “such news reports [of Otaiba’s comments] are nothing but propaganda meant to damage the Iran-Emirates relationship.”[11] The UAE foreign ministry claimed that al Otaiba’s statements were reported incorrectly and “out of context.”[12]

March 11, 2010: U.S. Defense Secretary Robert Gates stated that the UAE had indicated its willingness to pressure its economic partner China to support forthcoming Security Council resolutions against Iran.[13] Defense Secretary Gates was in Abu Dhabi to discuss regional security issues.

January 11, 2010: During a meeting with German Foreign Minister Guido Westerwelle, UAE Foreign Minister Sheikh Abdullah bin Zayed al Nahyan reiterated that his country will comply with any sanctions imposed on Iran by the United Nations. The Emirates’ minister stated: “We are very concerned about Iran's non-transparent behaviour with regard to its nuclear programme…. That is based on its lack of cooperation with the IAEA (International Atomic Energy Agency). We want more active cooperation from Iran.”[14] Abdullah stressed that he hopes the international community will resolve the standoff with Iran “through diplomatic means” before fresh sanctions on Tehran become necessary.[15]

July 28, 2009: Howard Berman, the chairman of the U.S. House of Representatives Foreign Affairs Committee, stated that “[f]or many years, Iran has sought to use the UAE as a transit point to illicitly procure items to support its nuclear and other WMD (weapons of mass destruction) programs.”[16] The congressman called into question “the extent to which the UAE has been a reliable partner of the United States in working to prevent Iran’s efforts to develop a nuclear weapons capability.”[17]

July 9, 2009: The U.S. Treasury Department announced that Treasury Secretary Timothy Geithner will meet with officials in the UK, Saudi Arabia, the UAE, and France to discuss international sanctions against Iran's nuclear program. The announcement of Geithner’s visit to Europe and the Middle East came days after the Group of Eight (G8) reaffirmed its commitment to finding a “diplomatic solution to the issue of Iran’s nuclear program,” but refrained from explicitly raising the threat of new sanctions.[18]

April 27, 2009: U.S. Special Adviser for the Persian Gulf and Southwest Asia Dennis Ross visited Egypt, Saudi Arabia, the United Arab Emirates, Oman, Bahrain and Qatar to discuss diplomatic efforts to engage Iran.[19]

December 16, 2008: The five permanent members of the UN Security Council – Britain, China, France, Russia, and the United States – plus Germany held a meeting with eight Arab states – Bahrain Egypt, Iraq, Jordan, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates – to discuss how the UN could pressure Iran to suspend its nuclear enrichment. According to Secretary of State Condoleezza Rice, “all participants expressed support for the ongoing work of the UN Security Council, the (six powers) and the IAEA (International Atomic Energy Agency) regarding the Iranian nuclear file.”[20]

September 18, 2008: In reference to sanctions levied against Iran by the UN Security Council, Deputy Director of the UAE’s Customs Authority, Saeed al-Marri, affirmed, “if there is a UN resolution regarding certain goods not going to Iran, we will uphold it.” Despite this announcement, however, the United States charged sixteen companies, including five based in Dubai, with exporting dual-use goods—materials that can be used for civilian or nuclear weapons industries—to Iran in violation of Security Council sanctions. [21]

March 26, 2007: UAE officials declared that it opposes any military confrontation linked to Iran’s nuclear program.[22]

Economic:

July 4, 2011: Director of Iran’s Customs Administration Abbas Memarnejad reported that the UAE was the number two importer of Iranian products and among the major exporters of products to Iran.[23]

July 20, 2010: The head of the UAE central bank Sultan Nasser al-Suwiedi rejected reports that Iranian officials were considering adopting the UAE dirham for payment in oil exports. The Sultan quipped that the bank has “no time to entertain jokes.” At time of report, Iran was using the euro for oil market transactions.[24]

July 14, 2010: CP World, a Dubai-based cargo forwarding firm, announced that between May and July 2010 transactions with the Islamic Republic fell some 20 percent. The firm’s director, Abhijit Pradhan, claimed that “if this gets really vigorous, then surely there will be a very big impact on exports and imports.”[25] Dubai’s Iranian Business Council has indicated that it anticipates bilateral trade between Iran and the UAE to fall by as much as 50 percent, possibly reaching only $6 billion in 2010.[26]

July 8, 2010: Secretary of the Iranian Airlines Union, Mehdi Aliyari claimed that, “since [early July], [Iranian] planes have been refused fuel at airports in Britain, Germany, and UAE, because of the sanctions imposed by America.”[27] Heshmatollah Falahatpisheh, a member of the Iranian parliament’s National Security and Foreign Policy Commission, warned that Iran may respond to such measures, noting that “Iran reserves the right to take retaliatory actions in cases that its planes or ships face any problem.” Falahatpisheh further stated that Iran “should definitely retaliate against the United Arab Emirates.”[28] The Abu Dhabi Airports Company has denied that a ban on refueling Iranian aircraft is in effect.[29]

July 6, 2010: The chairman of the Iran-UAE Joint Chamber of Commerce Masoud Daneshmand announced that Iran would begin limiting trade with the UAE after the Gulf Emirate froze 41 bank accounts of Iranian businessman doing business in their country. The diplomatic and economic escalation came about after the UAE adopted United Nations Security Council Resolution 1929 in June of that year, a resolution which included additional sanctions against Iran. Iranian officials criticized the Emirates for having done more than absolutely required according to the resolution.[30]

January 15, 2010: Officials in the UAE announced that the Emirates plan to amass a three-month food stockpile to defend against supply disruptions. The move could have significant implications for Iran as the UAE is part of a major supply route for the Islamic Republic. Chairman of the Iran Trade Center in Dubai Ali Pashang warned that “because of this stockpiling here today there are not enough surplus commodities that could be shipped to Iran from the UAE.”[31] He added that if Iran needed more foodstuffs, it would have to increase imports from other countries such as India and Brazil rather than depend on supplies from UAE traders.[32]

September 14: 2009: The Managing Director of the National Iranian Gas Expert Company (NIGEC) Reza Kasaeizadeh announced that an unnamed Emirati company signed a 25 year contract to import natural gas from Iran.[33]

August 12, 2009: A member of the Iranian parliament’s Energy Commission, Moayyed Hosseini Sadr, announced that Iran will likely seek nullification of a gas deal with the UAE’s Crescent Company. According to Sadr, “considering the infractions by the Emirati side, any relevant international legal body would vote for the nullification of the deal.”[34]

November 19, 2008: U.S. Treasury Undersecretary for Terrorism and Financial Intelligence Stuart Levy explained that, with respect to enforcing sanctions against Iran, “there is a challenge in the (United Arab Emirates) especially because of deep commercial ties between the UAE and Iran.”[35] Levy singled out Iran’s Bank Melli and Bank Saderat as financial institutions that deserve more scrutiny.[36]

[UAE’s business activity with Iran]

Diplomatic:

July 9, 2011: Saif Mohamad al Za’abi, the UAE’s new envoy to Iran, presented his credentials to Iranian president Mahmoud Ahmadinejad. Al-Za’abi expressed his country’s desire to improve bilateral relations with Iran “in all fields.”[37]

July 1, 2010: Iran banned automobile imports from the UAE. The prohibition occurred due to the UAE printing the controversial name “Arabian Gulf” (rather than “Persian Gulf”) on certain parts of the vehicles.[38]

April 21, 2011: UAE foreign minister, Sheikh Abdullah bin Zayed al Nahayan called on Iran to “reconsider its policies” and to “respect the unity and sovereignty of Gulf countries” by refraining from interfering in their domestic affairs.[39] The minister added, “I'm trying to choose my words carefully. I don't want to act like some Iranian officials who throw their words in an abrasive and indecent way.”[40]

April 14, 2010: While attending the fifth meeting of the Iran-UAE Joint Consular Committee Iran’s representative, Deputy Foreign Minister Hassan Qashqavi, lauded the state of relations between the two countries, saying that “there is no limitation for the deepening of brotherly and friendly ties between Iran and the UAE."[41] The Joint Committee session concluded with the signing of a 16-paragraph memorandum of understanding.[42]

April 21, 2010:  Iran’s foreign ministry spokesman, Ramin Mehmanparast, lambasted UAE Foreign Minister Sheikh Abdullah’s March 2010 comments, in which he compared Iran’s continued possession of the three disputed Persian Gulf islands—Abu Masa and the Greater and Lesser Tunbs—to Israel’s presence in disputed territories. Mehmanparast suggested that “the UAE foreign minister's remarks about the Iranian islands in the Persian Gulf are neither right nor well-considered."[43] In his remarks, the UAE foreign minister said “The occupation of any Arab land is an occupation…There is no difference between Israel’s occupation to the Golan Heights, southern Lebanon, the West Bank or Gaza, as occupation remains occupation…No Arab land is more precious than another.”[44]

March 18, 2010: The Gulf Cooperation Council endorsed the UAE’s claims to the disputed islands of Abu Musa and the Greater and Lesser Tunbs.  An Iranian official then criticized the GCC’s involvement in the dispute as “clear interference in Iran’s internal affairs.”[45]

December 8, 2009: During a meeting with UAE Foreign Minister Sheikh Abdallah bin Zayid al Nuhayyan, Iranian President Mahmoud Ahmadinejad urged the Gulf region to cooperate in order to block “the arrogant powers” from exporting their own problems to the Middle East. The Emirati minister responded by encouraging a broad expansion of interaction between Iran and the UAE.[46]

October 30, 2009: The UAE demanded Iran enter into discussions over the status of three disputed islands in the Gulf. Emirati Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan had stated previously that “Iran should end its occupation of UAE’s islands,” arguing that the issue was disrupting ties between the UAE and Iran.[47]

August 28, 2009: Reports surfaced that the UAE seized a ship bound for Iran after discovering several containers of North Korean weapons. The vessel, the Bahamian-flagged ANL-Australia, was carrying rocket-propelled grenades and ammunition. The ship was searched in accordance with United Nations Security Council resolution 1874, which widened earlier prohibitions on arms imports and exports to and from North Korea.[48]

July 28, 2009: Highlighting the improvement of bilateral relations, UAE President Sheikh Khalifa bin Zayed al-Nahyan presented the Iranian ambassador to United Arab Emirates, Hamid Reza Asefi, with the Order of Independence. The honor was granted to laud the ambassador’s role in strengthening Iran-UAE ties.[49]

October 29, 2008: Iranian President Mahmoud Ahmadinejad paid an official state visit to the UAE. During the visit, the two countries signed a memorandum of understanding that outlined the development of a joint UAE-Iran committee designed to increase bilateral cooperation.[50]