Iran Tracker

Reaction to June 2009 Iranian Presidential Election:

In June 2009, the United Arab Emirates congratulated Iranian President Mahmoud Ahmadinejad on his re-election following the country’s June 2009 presidential elections. UAE Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan criticized what he described as foreign meddling on the part of the West and said that"[t]he UAE was one of the first countries to congratulate President Ahmadinejad. All countries in the region are in the same boat in believing that it's not in the interests of any country to be exposed to instability."[1] In August 2009, in time for Ahmadinejad’s inauguration, UAE President Sheikh Khalifa bin Zayed al-Nahyan again offered his country’s congratulations to his Iranian counterpart. During a telephone conversation, the two leaders agreed on the importance of expanding bilateral cooperation.[2]

Nuclear:

The United Arab Emirates has claimed that it is committed to following the United Nations Security Council’s sanctions against Iran. According to Saeed al-Marri, deputy director of the Federal Customs Authority, “if there is a UN resolution regarding certain goods not going to Iran, we will uphold it.”[3] In September 2008, however, the United States charged sixteen companies, including five that were 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.[4] Beyond acting as a conduit for goods to a sanctioned Iran, the UAE has also publicly stated that it opposes any military confrontation linked to Iran’s nuclear program.[5]  In December 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 apply pressure to Iran to suspend its nuclear enrichment.[6]  Similarly, in April 2009, US 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.[7]

 The apparent strength of Iran-UAE bilateral relations has been a source of concern for the United States. In July 2009, Howard Berman, the chairman of the US House of Representatives Foreign Affairs Committee, lamented 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." 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."[8]  The US Treasury Department announced in July 2009 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,” however refrained from explicitly raising the threat of new sanctions.[9]

During a January 2010 meeting with German Foreign Minister Guido Westerwelle, UAE Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan appeared in agreement with German dissatisfaction over Iran’s lack of cooperation with the International Atomic Energy Agency in regard to its nuclear program. The Emirati minister stressed, however, that his country "hope[s] that Iran will behave so cooperatively that sanctions will not be necessary."[10]

Adding to his comments earlier in the year, Sheikh Abdullah announced on March 13, 2010, that his country will comply with any sanctions imposed on Iran by the United Nations. The comments came during a joint press conference with visiting Cypriot foreign minister, Markos Kyprianou. Abdullah reiterated that he hopes the international community will resolve the standoff with Iran "through diplomatic means” before the imposing of fresh sanctions on Tehran becomes necessary.[11] The minister’s remarks came only days after a visit by US Defense Secretary Robert Gates to Abu Dhabi. According to Gates, the UAE had indicated that it was willing to place pressure on China, an economic partner, to support forthcoming Security Council resolutions against Iran.[12]

Economic Relationship:

Iran and the United Arab Emirates have enjoyed extensive economic relations, with bilateral trade totaling roughly $15 billion in 2009 (making the country one of Iran’s most prominent trading partners), growing despite ever increasing UNSC sanctions.[13] According to the Iranian Business Council in Dubai, more than 10,000 Iranian companies do business in the UAE, and Iran is the largest market for the Emirates’ non-oil exports and re-exports, which allows third parties to sell to Iran while avoiding UNSC and American sanctions targeting Iran.[14] The UAE also has private investors in Iran, such as the Emirates Telecommunications Corps, which intends to invest over $1 billion in building communications infrastructure in Iran.[15] As of 2010, some 100,000 Iranians reside in the UAE.[16] A high volume of economic exchange notwithstanding, a substantial deterioration of ties in late 2009-2010, primarily caused by UAE concerns over Iran’s nuclear program and support for West-backed UN and unilateral sanctions, has led to a sharp reduction in trade relations between the two countries.   

 Over the past several years, the Emirates’ willingness to cooperate with Iran has caused tension with the United States by complicating the enforcement of sanctions against Iran. In November 2008, US Treasury Undersecretary for Terrorism and Financial Intelligence Stuart Levy explained that "there is a challenge in the (United Arab Emirates) especially because of deep commercial ties between the UAE and Iran.” [17]

 Despite these ties, however, a member of the Iranian parliament’s Energy Commission, Moayyed Hosseini Sadr, announced in August 2009 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.” The agreement stipulated that Iran export 350 million cubic feet of gas per year to Kuwait by 2009, but Tehran broke the agreement after market conditions turned unfavorable.[18]  Previous contract breaches notwithstanding, in September 2009 an unnamed Emirati company signed a 25 year contract to import natural gas from Iran.[19]

In January 2010, the UAE announced plans to amass a three-month food stockpile to defend against supply disruptions, a move that could impact supplies to Iran. The statement was made by the chairman of the Iran Trade Centre in Dubai, Ali Pashang. The UAE explained that, under the first phase of a plan, it would build stockpiles of 15 commodities, a process that was already underway at the time of the statement. The move could have significant implications for Iran as the UAE is part of a major supply route for the Islamic Republic. Pashang also warned that “because of this stockpiling here today there are not enough surplus commodities that could be shipped to Iran from the UAE.” 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.[20]

Following the adoption of additional sanctions against Iran by the UNSC in June 2010, the UAE froze 41 bank accounts belonging to Iranian business figures. Although the sanctions aimed to frustrate Iran’s military and financial activities, Hamid Hosseini of Iran's Chamber of Commerce claimed that the frozen accounts did not belong to “key traders.” Nevertheless, Iran was quick to express its discontent with the actions of its major economic partner, with the Iran-UAE Joint Chamber of Commerce chairman, Masoud Daneshmand, saying that "we don't approve the Emirati behavior because they are taking measures of their own volition which they are not required to take by the Security Council resolution and Iranian traders don't like this."[21] Daneshmand further added that because the UAE had acted beyond the scope of what was demanded by the UN resolution, “Iran [will scale] down trade ties with the UAE in coming months." [22]

While it was not immediately clear what actions Tehran would take to reduce economic ties with the Gulf state, CP World, a Dubai-based cargo forwarding firm, announced that between May and July 2010 transactions with the Islamic Republic fell some 20%. 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.” Dubai’s Iranian Business Council has indicated that it anticipates bilateral trade between Iran and the UAE to fall by as much as 50%, possibly reaching only $6 billion in 2010.[23]

In July 2010, the United States approved unilateral sanctions targeting Iran’s gasoline imports. According to the secretary of the Iranian Airlines Union, Mehdi Aliyari, "since [early July], [Iranian] planes have been refused fuel at airports in Britain, Germany, and UAE, because of the sanctions imposed by America." Heshmatollah Falahatpisheh, a member of the Iranian parliament’s National Security and Foreign Policy Commission, suggested 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.”[24] The Abu Dhabi Airports Company has denied that a ban on refueling Iranian aircraft is in effect.[25]

The head of the UAE central bank has ridiculed rumors that Iranian officials have been considering adopting the UAE dirham for payment in oil exports. Responding in July 2010 to the possibility of such a change, Sultan Nasser al-Suwiedi quipped that the bank has “no time to entertain jokes.” Presently, Iran uses the euro for oil market transactions.[26]

[Click here for more information on UAE’s business activity with Iran.]

Diplomatic/Military Relationship:

Iran and the United Arab Emirates have enjoyed strong bilateral relations for many years. Both countries are members of the Organization of Petroleum Exporting Countries, the Non-Aligned Movement, and the Organization of the Islamic Conference and have had extensive cooperation both inside and outside these multilateral forums. Though the two countries have been in a low-level dispute over the ownership of three islands in the Persian Gulf—the Greater and Lesser Tunbs and Abu Musa—for many years, they nevertheless enjoy very close relations based largely on extensive and mutually beneficial economic relations.

 In October of 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.[27] 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 in July 2009. The honor was granted to laud the ambassador’s role in strengthening Iran-UAE ties in several different fields.[28]

 In August 2009, the Financial Times reported that the United Arab Emirates had 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 supposedly ordered by an Iranian company linked to Iran’s Islamic Revolutionary Guard Corps. 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.[29]

 The UAE has demanded Iran enter into discussions over the status of three Persian Gulf islands, Abu Musa, Lesser Tunb, and Greater Tunb. In October 2009, Emirati Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan stated that “Iran should end its occupation of UAE’s islands,” arguing that the “sovereignty of three islands in the Persian Gulf was hampering greater ties” between the UAE and Iran.[30]    Though the UAE has made claims on the territories, Iran has consistently rejected the Emirati position, with Iranian Foreign Ministry Spokesman Ramin Mehmanparast arguing in November 2009 that islands have long been considered an “integral part” of Iran.[31] The Gulf Cooperation Council (GCC)—consisting of the UAE, Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia—has endorsed the UAE’s claims, leading Mehmanparast to criticize the GCC’s involvement in the dispute as “clear interference in Iran’s internal affairs” adding that “interference of other parties will never help solve the problem.” [32] In April 2010, the Iranian Foreign Ministry lambasted comments by Foreign Minister Sheikh Abdullah, who had previously compared Iran’s continued possession of the disputed islands to the Israeli occupation of Palestinian lands. In response to the comments, Mehmanparast suggested that “the UAE foreign minister's remarks about the Iranian islands in the Persian Gulf are neither right nor well-considered." The Iranian foreign ministry spokesman urged Emirati officials to “avoid making remarks which would benefit the Zionists.”[33]

Territorial arguments aside, in December 2009, Iranian Foreign Minister Manouchehr Mottaki and his UAE counterpart, Sheikh Abdullah, signed five agreements aimed at expanding political and social cooperation, primarily in the field of judicial affairs. That same month, joint committees of the two countries dealing with coastal patrol forces and consular affairs held meetings to discuss enhanced collaboration.[34]

 During a December 8, 2009 meeting with Abdullah, President 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.[35]   

 While attending the fifth meeting of the Iran-UAE Joint Consular Committee on April 14, 2010, State Minister for Foreign Affairs Anwar Mohammed Qarqash reiterated Sheik Abdullah’s calls for improved relations. Qarqash stressed that "reinvigoration of relations with important regional countries, including the Islamic Republic of Iran, underpins [the UAE’s] diplomacy." 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." The Joint Committee session concluded with the signing of a 16-paragraph memorandum of understanding.[36]

 UAE-Iran relations took a sharp negative turn in the summer of 2010 following the adoption of United Nations Security Council Resolution 1929 in June of that year. The UAE quickly took measures against Iranian financial assets in the country, freezing 41 accounts. Iranian officials criticized the Emirates for having done more than absolutely required according to the resolution.[37] Later that month, Tehran reportedly banned the import of automobiles from the UAE. The prohibition occurred due to the UAE printing the controversial name “the Arabian Gulf” (in lieu of “the Persian Gulf”) on certain parts of the vehicles.[38]

 Further exacerbating tensions, in July 2010 the Emirati ambassador to the United States, Yousef al-Otaiba, claimed that “a cost-benefit analysis" suggested that a pre-emptive military strike against Iran could be preferable to a nuclear armed Iran. Speaking during an interview at the Aspen Ideas Festival, Otaiba stated that "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."[39] Iranian officials responded to the remarks with a combination of threats and understanding. Kazem Jalali, a member of the Iranian parliament’s National Security and Foreign Policy Committee, claimed that Tehran may be forced to cancel tours to the Emirates in order to “to guard the reputation of the Iranian people.”[40] Conversely, Karim Abedi, also a member of the committee, stated that "such news reports [of Otaiba’s comments] are nothing but propaganda meant to damage the Iran-Emirates relationship."[41]

 Emirati Assistant Foreign Minister for Political Affairs Tareq al-Haidan attempted to clarify and contextualize the ambassador’s words, saying that "the statements came as part of general discussions held on the sidelines of an unofficial gathering in which Mr. Otaiba was speaking and were taken out of their context." The assistant foreign minister added that "Iran is a neighboring country and we maintain historic relations with it…the UAE respects and believes in the sovereignty of other states and in the principle of non-interference."[42]

[Click here for more information on the Gulf Cooperation Council]