US sanctions choking Iranians’ trade in UAE

Iranian traders in Dubai are complaining that UAE’s further enforcement of the U.N. sanctions against their country is chocking up their businesses, the UAE-based The National reports.

UAE is one of the important trading partners to Iranians, and Dubai is estimated to take an average of 70 percent of the $30 billion annual, non-oil trade with Iran.

“UAE as any other U.N. member state is under legal obligation to implement this sort of sanction, however the last two are political sanctions (U.S. and EU) do not put the UAE under any obligations to enforce it,” said Dr. Mustafa Alani, a Senior Advisor and Program Director of Security and Terrorism Studies, at the Gulf Research Center.

US unilateral sanctions are the hardest

Unlike U.N. imposed sanctions, which will deem milder due to the Chinese and Russian ongoing trade with the sanctioned Islamic republic, the U.S. led sanctions are the toughest leading to a domino effect of constrained trade relations of countries and parties stuck in between.

“The U.S. sanction will oblige all the American companies to implement these sanctions, and all the non-American companies dealing with American companies as well,” Dr. Alani said.

According to Dr. Alani, Americans are very influential in the banking, insurance, financial, and transportation sectors.

In a letter to The New York Times, UAE’s envoy to Washington, Youself al-Otaiba, wrote that the UAE, besides freezing bank accounts and financial assets of companies and individuals suspected of supporting proliferation and weapons development, “has closed down dozens of international and local companies involved in money laundering and the transshipment of dual-use materials”.

Beside the UAE sharing intelligence with international authorities to intercept “sensitive transshipments,” dozens of ships and hundreds of shipments suspected of violating the sanctions had been stopped or inspected, al-Otaiba wrote.

In June, the U.N. Security Council passed a fourth round of sanctions against Iran, followed by unilateral sanctions from the United States and the European Union.

Iranian traders, who say local and international banks are denying them letters of credit, which they need to enable them to ship simple materials such as foodstuffs to Iran.

“We observe the banks in the UAE, whether foreign or local banks, are applying more and more daily restrictions to the Iranian traders and businesses,” said Morteza Masoumzadeh, the vice president of the Iranian Business Council (IBC) in Dubai and managing director of Jumbo Line, a shipping agency.

“How is it possible that a bank in the UAE is not opening a letter of credit for us to import 10,000 tons of rice from Thailand to Bandar Abbas? Rice has nothing to do with nuclear energy, nothing to do with Revolutionary Guards,” he said.

Letters of credit

A letter of credit is a bank document that assures sellers that a trading partner will pay for imported goods. It is used frequently in international trade.

At the moment, Iranian traders here cannot get letters of credit and European insurers are banned from insuring cargo going to Iran, said Abbas Bolurfrushan, the managing director of Arya Insurance and an ex-president of the IBC. He has been in the UAE for 28 years. He said that letters of credit opened by Iranian banks, meanwhile, are essentially worthless.

The U.S. limits access to American financial markets for entities that violate its unilateral sanctions, which target the Islamic Revolutionary Guard Corps – an arm of Iran’s military said to be increasingly in control of policy – and its affiliates.

“As soon as the American sanctions came into effect unilaterally, and then the Europeans followed and then the Japanese followed and even the South Koreans, it became tighter for Iranian business people to operate,” said Bolurfrushan.

Since many Iranian companies are set up here with the sole aim of serving the Iranian market, trade licenses that have an Iranian name on them trigger concern at banks, said Masoumzadeh.

He said banking activity had slowed because Iranian businesses could not transfer money in Euros or dollars to Iran.

Businessmen defend their entrepreneurship stance

Many of the traders have no ties to the Iranian government or the Revolutionary Guard, businessmen argue.

“All the Iranians in Dubai are really puzzled because they are private sector and they have nothing to do with the government of Iran and they are the actual victims of these sanctions,” Bolurfrushan said.

Iran’s new ambassador to the UAE said that while he understood the UAE must adhere to international measures, he hoped the UAE would treat Iran in a “brotherly” manner.

“We are not satisfied or happy with what the U.N. has decided. But we also don’t blame our brothers in the UAE,” Mohammed Reza Fayyaz said.

“Brothers help each other, forgive each other and, in difficult situations, they hold each other’s hands for help,” he said.

According the Iranian Business Council, a Dubai-based group that promotes economic ties, there are about 8,000 Iranian businesses, and at least 1,200 trading companies, operate in Dubai, in addition to $2.8 billion worth of gasoline that passes through the UAE to Iran each year, amounting to 75 percent of Iran’s refined fuel imports.

Nader Ghadessi, the owner of Award Technology, which trades in industrial goods used in oil and gas and filtration and does business with Iran, said Iranian-owned businesses that did not deal with Iran had not been affected, but those that did had suffered from a decline in cash transfers and difficulties in securing letters of credit.

(Written by Dina al-Shibeeb)