New sanctions may hurt Iran businesses in UAE

New sanctions on Iran are expected to complicate life further for Iranian businesses based in the UAE, and may force some to close down, one of their representatives said.

Morteza Masoumzadeh, vice-president of the local Iranian Business Council, also told Reuters he believed authorities would impose more restrictions after the latest wave of international punitive measures against Iran.

In Tehran, the head of an Iran-Emirates Chamber of Commerce said the UAE had taken steps beyond last month’s United Nations resolution and predicted bilateral trade would fall.

Thousands of Iranian companies and businessmen operate in Dubai, and many of them are involved in the multi-billion-dollar re-export trade with the Islamic Republic across the Gulf.

But the UAE has signalled a tightening of its role as a trading and financial lifeline for Iran after the UN Security Council imposed a fourth round of sanctions on June 9 on the major oil producer over its disputed nuclear programme.

“I predict a further decline in Iranian businesses in the UAE and other countries doing direct trade with Iran, like Turkey, Malaysia etc,” said Masoumzadeh.

“This will make it even much worse than before, there is no question about it,” he said, when asked about the impact of the new sanctions on Iranian businesses in the UAE.

His comments were in contrast to statements by Iranian officials in Tehran dismissing the latest measures. President Mahmoud Ahmadinejad has called them “pathetic”.

Previous sanctions have hurt Iranian business activities by making it more difficult to get vital trade finance, such as letters of credit, after the United States targeted two Iranian state banks with branches in Dubai three years ago.

The latest United Nations resolution calls for measures against new Iranian banks abroad if a connection to the nuclear or missile programmes is suspected, as well as vigilance over transactions with any Iranian bank, including the central bank.

US President Barack Obama signed into law sanctions on Iran’s vulnerable petrol imports last week, further stepping up pressure over nuclear work which the West suspects is aimed at making bombs – something Tehran denies.

Iranian aviation officials accused the UAE, Germany and Britain on Monday of refusing to refuel Iranian passenger planes in response to the tougher US measures, but this was later denied by the country’s Foreign Ministry. Iran and the UAE have close economic and historic relations but with Tehran facing growing Western pressure, its ties with Dubai have drawn scrutiny from Washington.

In 2009, Dubai’s re-exports to Iran – goods originally from Europe, Asia or elsewhere and then sold on to Iran – rose 4.8 per cent to Dh21.3 billion.

In a possible sign of tougher times ahead, an Abu Dhabi banking source said last week the UAE’s Central Bank had told banks to freeze any accounts belonging to dozens of Iran-linked firms targeted by the latest UN sanctions.

Meanwhile, the European Union has extended a flight safety ban on Iran Air to exclude more of the carrier’s aircraft from EU airspace, the European Commission said on Tuesday.

Two-thirds of the Iran Air fleet is now prohibited from flying into the airspace of the 27-country EU, Commission spokeswoman Helen Kearns said.

She denied the move was linked to sanctions on Iran aimed at halting its nuclear programme, or to accusations the sanctions have prevented Iranian aircraft from refuelling in European airports.

A Commission statement said an EU air safety committee had unanimously supported expanding the restrictions on Iran Air to cover its fleet of Airbus A320, Boeing 727 and 747 aircraft.

Meanwhile, Indonesian carriers Metro Batavia and Indonesia Air Asia have been removed from the blacklist after improvements in the southeast Asian country’s oversight.

Blue Wing Airlines from Surinam was added to the banned list.

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