IRAN-UAE, Shared pain from sanctions

Ameneh Moussavi - Translated by: Babak Nadery

Talks with high-ranking Iranian officials, namely chief of staff of the President, Governor of the Central Bank, minister of industry and Iran's deputy foreign minister prove that the Emiratis are determined. A large trade delegation to challenge European proposals to seize investment opportunities arrived in Iran. The Emirati delegation headed by Chairman of the UAE Chamber of Commerce, Mohammed Thani Murshed Al Rumaithi and accompanied by UAE ambassador to Iran, Saif Mohammed Obaid Al Zaabi, Humaid Mohammed Bin Salem, General Secretary of the United Arab Emirates Federation of the Chambers of Commerce and Industry and some other representatives of the chambers of the UAE and Iranian trade officials Hamid Hosseini, Masoud Khansari and Mohammadreza Bakhtiari headed by Yahya Al Eshagh  and Its ambassador to UAE Mohammadreza Fayyaz participated in a round-table discussion and talked about the concerns of Iranian businessmen in UAE and surmounting them and the future prospects of Tehran-Abu Dhabi relations in post-sanctions era.

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Q: Is curtailing Iran-UAE economic ties in recent years solely due to sanctions or there are also other reasons for that?

Mohammad Reza Fayyaz: Despite the imposed sanctions and all the tough restrictions, Tehran-Abu Dhabi trade has reached US$ 16 billion. So trade between the two countries has never been cut. The volume of our trade exchanges stood at US$ 20 billion, US$ 23 billion, US$ 17.8 billion and US$ 15.7 billion in 2010, 2011, 2012 and 2013, respectively. There has certainly been a decline in the relations and both Iranians and Emiratis have suffered from the pain. All the seven emirates tried to evade sanctions during the past years consequently, our relations were not noticeably affected by the sanctions. UAE remains our major trading partner. This small country plays a big role in global economy. As the squeeze has been tightened on financial dealings, it has become very difficult to do business and we have tried our hardest to facilitate banking transactions.

Q: I mean the challenges for Iranian migrants. Has the situation affected the presence of Iranian businessmen in UAE and the economic relations of the two countries?

MOHAMMADREZA FAYYAZ:  New UAE immigration laws and procedures have caused problems for thirteen different nationalities. Of course the authorities have changed their attitude towards the expatriates for the last six or seven months. On the other hand only a few number of Iranians had to relocate and this couldn't affect our economic relations.

Saif Mohammed Obaid Al Zaabi: There are currently 500000 Iranians residing in UAE who are entirely satisfied with their lives. You cannot generalize such minor issues.

Mohammed Thani Murshed Al Rumaithi:  There have always been obstacles in the way of doing business and we try to overcome them in UAE.      

Q: So the EU and the US sanctions are the major obstacles to Iran-UAE economic relations?

MOHAMMADREZA FAYYAZ: Sure. It is not confined to our relations with UAE. When you are deprived of the global banking system there is no difference between UAE and other countries particularly when the sanctions are put by the UN. We believe that the sanctions are cruel and unfair, even the Emiratis have been hurt by them and look for lifting the sanctions. They are eager to boost their ties with Iran.

SAIF MOHAMMED OBAID AL ZAABI: The Iranian ambassador to UAE is acutely aware of the measures taken by Iranian and Emirati businesspeople. He is right about our desire for lifting sanctions. Dr. Fayyaz has attended trade conferences in Tehran and Abu Dhabi and is well aware of all the obstacles and issues.

Q: By the way. Iranian businessmen are not satisfied with banking transactions…

SAIF MOHAMMED OBAID AL ZAABI: Most of Emirati banks are privately owned and follow international banking rules and regulations. Unfortunately, the UN sanctions lie in that international framework. There are large banks in UAE and they are all afraid of what happened to the largest French bank over violation of the sanctions. At the moment central banks of the two countries are negotiating on surmounting the current obstacles.

Yahya Al Eshagh: The problems will be over. We hope that our old friends step in to boost ties earlier than others. Some of our problems are rooted in dissensions and both governments are determined to overcome the problems and boost the economic ties which will benefit both sides.

Q: How hopeful are the Emiratis to have presence in Iran bonanza in post-sanctions era?

MOHAMMED THANI MURSHED AL RUMAITHI: There is currently a noticeable volume of trade exchange between the two nations. As a businessman, I believe that after lifting the sanctions there would be a great chance to expand our economic relations.

YAHYA AL ESHAGH: I also believe in a turnaround, there have always been ups and downs in our relation but it has never been cut. During the Iran-Iraq war when I was in the Ministry of Commerce, our brothers in UAE helped with our imports at that time.

Q: Could we say the Emiratis tried to moderate the sanctions?

YAHYA AL ESHAGH: Yes, we could say so.

Q: Various trade delegations paid visits to Iran to explore investment opportunities. What's your motive for stepping in Iran's market? Your country backed the western countries against Iran.

MOHAMMED THANI MURSHED AL RUMAITHI: Our relations have a totally different story. We are delighted that other countries show their interest in Iran but it will not affect our trade ties. UAE has a long history of trade with Iran and there is a large Iranian trading community in UAE.

In general, I do not agree with you, our US$ 16 billion trade proves that despite the western sanctions we kept our bond strong. You should know that there are many business tycoons in our trade delegation and Iran bonanza has attracted them. Business creates relations. Trade is a key factor in our relations with the rest of the world and we have been successful in global commerce. Without sanctions we would have been able to enhance our trade ties and exploit the potentials. Fortunately, Iranian traders are familiar with the UAE market and its investment opportunities. We asked the Tehran Chamber of Commerce to help Emirati investors to explore opportunities in Iran. Let me add that Iranian investors earn 6% to 8% return in UAE.

 Q: What are investment areas of interest in Iran for the Emiratis? What are major obstacles for Iranians businessmen in UAE?

SAIF MOHAMMED OBAID AL ZAABI: Emirati tycoons are all set to cooperate with Iran on industry, commerce and transportation. In our meetings with Iran's minister of industry, governor of central bank and chief of staff of the President we discussed options for boosting ties. I am optimistic about the outcomes of our negotiations.

YAHYA AL ESHAGH: According to Iran's Five-Year Development Plan, Iran seeks to attract US$ 900 billion foreign investment. Investors can access to 300 million consumers through Iran and this would be a golden opportunity. We would like to broaden our relations with our brothers in UAE, albeit our trade has never been less that US$ 10 billion.

Hamid Hosseini: Major obstacles in the way of doing business are restrictions on banking transactions and difficulties with using Iranian labor. Moreover, Iranian businessmen resident in UAE are facing visa problems. These issues led to relocation of Iranian businessmen to Oman and Turkey. We hope for a turnaround in our relations with UAE after the return of this trade delegation. With regard to the long history of doing business in UAE we prefer to carry on our commercial activities in UAE.

MOHAMMED THANI MURSHED AL RUMAITHI: Let me first tell you that the purpose of this visit to Iran is exploring grounds for investment opportunities. The visits must be continued so that both Iranian and Emirati investors can have access to up-to-date information. 

On the issues, let me tell you that some of them are due to sanctions and also to the new immigration laws and procedures in UAE which are not exclusive to Iranians. These issues are not considered as obstacles in the way of boosting trade ties with Iran which we are determined to actualize. As you can see all representatives of the chambers of UAE are now in Tehran. In order to tackle the issues and complaints of Iranian traders, an especial council was established in UAE. We asked our Iranian counterparts to establish such  a council in Tehran.

Q: You talked about decisive efforts to boost Iran-UAE economic ties. What are the common grounds for the expansion of cooperation?

YAHYA AL ESHAGH: There is a growing investment potential in transportation and logistics industry. Funding transportation and, in particular, rail transportation is a priority in budget of Iranian year 1393(2014) and Fifth Five-year Development Plan. Tehran Chamber of Commerce is ready to provide the Emirati investors with the necessary information. Mr. Khansari, head of Transportation Commission of Tehran Chamber of Commerce, can advise Emiratis on that.

Masoud Khansari: 500 million tons of cargoes are being transported annually in Iran. There are growing opportunities in both rail and road transportation industry of Iran for Emirati investors. Iran is a door to Caucasus and all the seven landlocked countries such as Azerbaijan, Turkmenistan, Tajikistan, Armenia and so on. They can use Iran's south border. UAE is currently supplying these countries with their imports and obstacles in the way of transporting must be overcome. A neat solution would be trilateral investments by Iran, UAE and a third country in that region. We had the same experience with Germany and Uzbekistan in order to export cotton to Europe through the Port of Bandar Abbas.

SAIF MOHAMMED OBAID AL ZAABI: Rail transportation is a great idea. The Emir of UAE has received positive reports from the private sector and as a result we are prepared to step up our efforts. 95% of the obstacles in the way of bilateral relations have been surmounted and we will soon observe the outcomes of this visit to Iran. Our next stop would be Armenia and trilateral investments will be surely discussed in Yerevan. UAE has constructive relations with Caspian Sea countries and the post-Soviet states.

MOHAMMADREZA FAYYAZ: Iran's route is surely beneficial. It would not make sense to go to Armenia through, say France! Our Emirati partners tend to expand their relations with Armenia and Iran is located on their path to Armenia. I suggest a scheme for trilateral on-going cooperation in production, transportation and so on.

MOHAMMED THANI MURSHED AL RUMAITHI: I do agree with this idea. There are no land and maritime borders between UAE and the Caspian Sea countries and countries such as Armenia and Azerbaijan. Iran is an important transit road for us and this could also boost our own reciprocal ties.

YAHYA AL ESHAGH:  According to what UAE officials have said, it seems that Abu Dhabi and other emirates are determined to boost economic ties. I suggest the establishment of a joint committee to tackle the problems and issues of Iranian and Emirati businessmen. We believe that such committee would be a great solution to overcome the obstacles. Hamid Hosseini, Mohammadreza Bakhtiari, Masoud Khansari and Ala Mir Mohammad Sadeghi would be Iranian representatives in the joint committee. We look forward to introducing the Emirati counterparts by UAE Chamber of Commerce heads.

MOHAMMED THANI MURSHED AL RUMAITHI:  There would be no problems at all for the establishment of a joint committee. Heads of Dubai and Abu Dhabi chambers are currently here to discuss that. The majority of Iranian traders work in these two emirates.

MOHAMMADREZA FAYYAZ: This could be discussed from a different point of view. We can have UAE and Iran tables in both Tehran and Dubai or Abu Dhabi chambers for addressing traders' problems and issues. We predict a massive influx of clients at the beginning which of course will be reduced gradually. Mutual understanding between Iranians and Emiratis would help them to tackle their problems more effectively.

MOHAMMED THANI MURSHED AL RUMAITHI: As I said earlier, we embrace the concept of a joint committee in our chamber and there are no problems with that. We currently have a particular council for addressing the issues and complaints of Iranian businessmen in UAE. Many cases have been resolved by the council so far and many are under investigation. We handle all the inquiries at the council.

 HAMID BIN SALEM:  I have been travelling to Iran and hosting Iranian trade delegations for almost twenty years. There is an unprecedented heat for strengthening economic relations. I would like to ask our Iranian partners in the chamber to facilitate addressing the probable issues of Iranian investors in UAE by informing both sides. We would like both Iranians and Emiratis enter the negotiations with a new vision for the future. There is a long road ahead of us and we all wait impatiently for lifting the sanctions.

MOHAMMADREZA FAYYAZ: Fortunately, this roundtable and the sophisticated talks and detailed questions helped us to analyze feasibility of our plans for enhancing economic ties. The fact that Emiratis are so determined to boost the ties makes us more confident. I have lived in UAE and I am well aware of all their efforts. It is good for Iranian investors to be closely involved. We are delighted with such large trade delegation visits to Iran and comprehensive talks with Emiratis.

Q: What are the issues and problems for Iranians in UAE?

HAMID HOSSEINI: Mr Al Zaabi mentioned that 95% of the issues have already been resolved. As a businessman with 20 years of experience in UAE I would say that there is no security in our economic relations and Iranian businessmen are not well protected in UAE.

There have always been issues with residency visas and work permits. It is not possible to employ Iranians and they have difficulties in transferring funds into their bank accounts. Today, I shipped goods to a state-owned Emirati company but they asked for a non-Iranian third party to sign the contract. UAE banks ask for documents even for small amounts of money transfers. These issues have made doing business in UAE tough, risky and costly. Iranian businessmen expect the central bank of the UAE and Emirati authorities to address these issues as well and not just the sanctions, so we will be able to work freely in UAE in future.

SAIF MOHAMMED OBAID AL ZAABI: In the last months during my tenure, issuance of tourist and business visas has surged. There are 68 flights to Dubai per week and all of them are fully packed. UAE is still Iranian's favorite destination. I don't deny the fact that Iranians are facing problems in my country however, they are better off comparing to other UAE foreign nationals. As I mentioned, banks in UAE are privately owned and are not controlled by the central bank. The current issues must be resolved gradually. Our banks have been put under pressure over dealing with Iran and consequently we have no other options. We hope for the best, we hope for a day that a single credit card in the hands of Iranians resolves all their problems.  American and European banks turned up the heat on our banks and this negatively affected our relations with western banks.

 MOHAMMED THANI MURSHED AL RUMAITHI: We have also been hurt by this shared pain. It has been a big challenge for Emirati traders.  We have called out our concerns and hope that a comprehensive agreement between Iran and 5+1 helps us to strengthen our bilateral economic ties while having constructive relations with the international community.

Note: This Article was first published in Tejarat-e-Farda magazine.