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Tuesday, June 24, 2008

'Our friends' in Dubai

One of the reasons that international sanctions against Iran have been so ineffective is that the Iranians have managed to circumvent them by anticipating what sanctions the West will try next and taking effective countermeasures ahead of time. For example, recently the West announced sanctions against Melli Bank, Iran's largest bank. But by the time they had been announced and implemented, Iran had withdrawn $75 billion from the European banking system and transferred it back to Iran or to Asian banks. Iran's silent partner in helping it to avoid the sanctions has been Dubai, which is considered an American ally. For example, financial intermediaries in Dubai helped funnel money back to Tehran from Europe. Counterterrorism blog discusses the close relationships between the two countries.
Iran's main conduit in avoiding sanctions has been Dubai in the United Arab Emirates. There are historical reasons for this: since the beginning of the 20th century, Dubai and Iran have enjoyed close trade relations. Also, Dubai welcomed several waves of Iranian immigrants.

Not a week goes by without an Iranian minister or official visiting Dubai.

The 350,000 Iranians of Dubai compose the third largest community after the Indians and the Pakistanis. The large fortunes belong to families of Iranian origin. There are 8,200 Iranian companies today in Dubai compared to 6,500 in 2005.

Dubai has become Iran's back-up base and Iranian companies that do business abroad prefer to be based in the emirate. More than 200 flights each week link Dubai to the main Iranian cities. The port ships merchandise of all kinds to Iran, from cars to electric machinery and food.

The official trade figure between the two countries is $6 billion annually, but the smuggling amounts to an estimated additional $1.2 billion a year. Out of that $1.2 billion figure about $250 million stems from U.S. goods, supposedly banned from entering Iran.
One has to wonder why the United States hasn't figured this out yet, but the Bush administration seems totally clueless when it comes to Dubai. Two years ago, as you may recall, the administration wanted to turn over control of six major American seaports to a company in which the government of Dubai was a major shareholder. At the time it came out that the firm was actively involved in enforcing the Arab boycott, which is illegal in the United States. Eventually Dubai Ports World, the company involved, sold its interest in the ports' operation to an American company.

Dubai and the United Arab Emirates (UAE) of which it is part have consistently worked against America's (and Israel's interests). The UAE has given financial support to the families of 'Palestinian' terrorists. It has denied entry to Israelis seeking to attend international conferences. But it looks after US interests in Iran and, most importantly from an American perspective, has been a significant investor in the United States.

So long as the United States decides that its friendship with Dubai is more important than preventing Iran from acquiring nuclear weapons, international sanctions against Iran will continue to be all bark and no bite. Israel, on the other hand, should have no such conflicts of interest.


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