Trade between Iran and the United Arab Emirates has surged as the Persian Gulf’s commercial capital eased restrictions on business activity between the two neighbors, business people and officials say, according to Financial Times.
Executives said the UAE has in recent months rolled back limits on corporate registrations and the issuance of visas to companies from Iran, which remains subject to tough US sanctions. Iranian financiers are also exploring how to enhance bilateral trade by creating financial mechanisms to fund legitimate transactions, they added.
Flourishing trade relations between Iran and the UAE, the traditional center for re-exports into the Islamic republic, forms part of the Persian Gulf state’s pivot towards regional de-escalation and a focus on business.
“UAE foreign policy seems to have shifted toward one that is primarily driven by economic statecraft,” said Afshin Molavi, senior fellow at Johns Hopkins University School of Advanced International Studies in the US, while adding that current and future sanctions on Iran would temper this growth.
UAE diplomatic outreach to Iran has been strengthened by the China-brokered breakthrough this year that re-established relations between the Islamic republic and Saudi Arabia.
The Saudi-Iranian rapprochement has raised hopes that ongoing negotiations could extend into a lasting political settlement.
While China is Iran’s premier trade partner, the UAE is the second largest. Trade between Iran and the UAE has recovered from a pandemic slump of $11bn in 2020/2021 to $24bn in the 12 months ending in March, according to Iranian data.
The increase surpasses the $22bn recorded in 2012 before US-led sanctions started to bite. Iranian officials have said they are now targeting a further increase in bilateral trade towards $30bn in the next two years.
“Pressure from the UAE central bank has decreased and some Emirati banks have started opening bank accounts,” said Masoud Daneshmand, a former head of Iran-UAE chamber of commerce. “Currently, some Iranian companies which used to be in the UAE but had become inactive have become active again. Some new companies have also started business.”