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Sat 24 Dec 2011 09:03 AM

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Iran bans trade finance on imports from UAE

Lawmaker says opening letters of credit for imports from UAE has been prohibited

Iran bans trade finance on imports from UAE
Boats and dhows at Dubai Creek port wait to transport cargo to Iran

Iran has prohibited the opening of letters of credit for importing products from UAE due to the Arab country's "illogical behaviour", the semi-official Mehr news agency quoted a lawmaker as saying on Friday.

"Based on the government's recent decision, opening letters of credit for imports from UAE has been banned," parliamentarian Gholam-Reza Mesbahi-Moghaddam was quoted as saying.

While Western countries have imposed tight sanctions on trade with Iran over its disputed nuclear programme, the UAE has served as a convenient conduit for other countries' business.

"Iran's neighbouring countries such as UAE should resist the meaningless pressure imposed by arrogant powers so that they can continue their economic relations with the Islamic state," Mesbahi-Moghaddam said.

According to recent data from the UAE customs authority, re-export trade between Iran and the UAE - goods sent to the UAE for on-shipment to Iran and Iranian goods sent to the UAE for on-shipment to other countries – totalled AED19.5bn ($5.3bn) in the first six months of this year, up from AED14.3bn a year earlier.

Dubai has a large community of Iranian traders.

Iranian media reported on Tuesday that the Islamic state had suspended all trade with UAE, one of its top trading partners, "until further notice" in reaction to hostile actions of the Arab country.

Iranian authorities denied the reports later that day.

International tension over Iran's disputed nuclear ambitions has been mounting in recent months as the United States and its allies fear Iran's atomic work is aimed at making nuclear weapons. Tehran has denied the charge, saying it only wants to generate electricity.

Sanctions imposed on Iran are meant to coerce Tehran into suspending sensitive nuclear work and negotiate seriously on a peaceful solution.

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mohammad 8 years ago

this is not a good news for both countries.

Red Snappa 8 years ago

'Iranian authorities denied the reports later that day.' Means I presume that this story is no longer factual, or there is a big internal power struggle going on in Iran as to whether to be more aggressive toward GCC countries.

UAE has to conform to UN sanctions policies, otherwise, the west would ultimately stop shipping goods to them too, for onward transhipment.

rouzbeh 8 years ago

I hope ur ideology Red snappa, ends at your door step. America and europe are at the brink of financial hardship. If they ( so called western allies) decide to stop doing business with UAE its going to effect them more. And besides Iran is the Number 1 trading partner of UAE, not the USA.

S.De Silva 8 years ago

If Arabs don't support each other against western sanctions, their ownership as Arabs/Muslims will loose very soon. The western leaders have started sweeping Arab power from the world. It's so obvious with what they did in Iraq, Afghanistan, Lybia, Syria,....etc. This is my opinion as a non Arab/Muslim

Abusidra 8 years ago

By such emotional and unwise decisions from Iran, the commoners suffer and businessnes get more affected. They should remember HH Sheikh Mohammed said just recently Iran is not pursuing nuclear weapons when there is no other country in the region to vouch for them. Seriously speaking UAE is the only reliable business partner for Iran at the moment which still deals in Credit terms with them.

HSA 8 years ago

Mutual interests will eventually rule the scene. Ideological and theological politics are merely a facade of a winning formula. The historical trading linkages between the two allies (UAE - Iran) are deeper than politics or government interests. Such relations and interests are quite rooted and complex. I hope the business and trade do not get trapped in the political finger-biting showdown. Such trade feeds into modest income sources for millions of non-allied hard working citizens of both countries who just want to make a living... Simply..

Telcoguy 8 years ago

@rouzbeh I hope you economics teaching ends at your door step. If you ever bothered to check your facts you would see that US exports to UAE are around US$10bn, roughly the same as Thailand, half the size of exports o Switzerland.

gordon 8 years ago

confused...Iranians are not Arab?

Heinz Klier 8 years ago

Both countries should calm down immediately. Such behavior leads to troubles of unknown magnitude. They are partners for hundreds of years. Don't forget it!

Shahriar 8 years ago

Interesting comments!
But we're surprised when heard UAE governments has set tough restrictions and rules for residency permission for Iranian passport holders and banned job opportunities.. Emirate's police behavior in Dubai Airport with most of us has "no comment"...
I'm against of the Iranian governments' diplomacy, but liked their shock since 6 years ago against "unprofessional" and "emotional" decisions against us over the last 6 years!