International financial sanctions against Iran are hurting its trade with the United Arab Emirates, the UAE’s economy minister Sultan bin Saeed al-Mansouri said on Monday.

“Trade with Iran was always with consumable items...We should not really stop that. The issue is with the financial transactions...regarding that, it has been affected,” he told a news conference.

“If you want to export 20 tonnes of rice, the financial system does not allow you to do that.” Mansouri did not elaborate.

Banking sanctions led by the United States have made it legally dangerous for many banks around the world, including those in the UAE, to do business with Iran, making it very difficult for Iran to finance its foreign trade.

Dubai has been a major centre for trade with Iran; re-export business between the two countries – goods sent to the UAE for on-shipment to Iran, and Iranian goods sent to the UAE for on-shipment to other countries – totaled Dh31.9 billion ($8.7 billion) in the first nine months of 2011, data from the UAE customs authority show.

The International Monetary Fund has estimated the sanctions could cost the UAE as much as 0.7 per cent of gross domestic product if trade halts completely.