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Why can't the UAE prevent Iranian money from entering Dubai?

2019-08-11T13:22:02.779Z



As the world swings to the brink of another financial crisis, some places are worried like Dubai, and Iran remains the only one able to pump money into its arteries.

"Every week a new title foreshadows a looming crisis that the city of skyscrapers will face," says a report by the US website Lublug.

The prices of villas in Dubai have fallen to their lowest level in a decade, and only last year recorded a 24% drop in prices.

The decline in tourism has also led Dubai to record the lowest occupancy rate since the 2008 financial crisis, even as the country prepares to host Expo 2020 next year.

He recalled a report by Bloomberg in November that Dubai was losing its luster because its role as a world trade center had been undermined by the global tariff war, particularly because of the United States' drive to stop trade with Iran.

Dubai and Iranian capital
In the wake of the global financial crisis, specifically in 2009, Dubai's real estate market collapsed, threatening to bankrupt several major banks and developers, some of which were state-owned.

Abu Dhabi, which accounts for a significant share of the emirate's oil wealth, tried to lift Dubai out of this predicament by offering a $ 10 billion bailout that was later doubled to $ 20 billion, he said.

The author pointed out that the passage of former US President George W. Bush sanctions law on Iran in 2006, deepened Iran's economic crisis under President Mahmoud Ahmadinejad, and this contributed to the departure of capital and the stability of most of them, especially in Dubai.

Global investors pulled their capital out of Dubai after the global financial crisis, while Iranian businessmen kept their deposits in Dubai banks.

The Iranians continued to invest in Dubai's troubled real estate market and used its ports for re-export, as US sanctions limited Iran's direct access to world markets.

For Iranian industry and financial leaders, Dubai was not just a distant emerging market, but a vital channel for the global economy in the face of tightening sanctions.

Lublug report reaffirms Dubai lost its luster (Reuters)

Abu Dhabi pressure
The financial crisis and US sanctions have contributed to deepening mutual cooperation between Dubai and Iran, a result that contradicts the goals of decision makers in Abu Dhabi and Washington.

The crown prince of Abu Dhabi, the de facto ruler of the UAE, has long regarded Iran as a rival state and has rejected Iranian influence in Dubai, where many of the leading trade families originate from Iran.

The Weblog report also noted that the efforts of the former US President Barack Obama to establish a multilateral sanctions campaign gave Mohammed bin Zayed the opportunity to limit Iran's presence in Dubai's economy.

In an attempt to isolate Iran economically, US officials traveled to Dubai to meet banks and companies and discourage them from engaging in business with Iran.

Rather than resist US interference in the UAE's economic sovereignty, the report says Abu Dhabi has doubled the US message, as the financial rescue plan put Abu Dhabi in a position to dictate its policy on Dubai. The new policy called on Dubai to close its doors to Iranian money. .

In subsequent years, Iran's presence in Dubai's economy declined significantly.

While commercial exchanges continued, banks refused Iranian funding, closed accounts of Iranian companies, and offered to provide services to individuals holding Iranian citizenship.

More recently, when the Trump administration established ties with Mohammed bin Zayed, the UAE began to reject more Iranian demands for residency, and over the past three years some 50,000 Iranians have left the UAE, the report says.

Relationships repair
There are new indications at the moment that Dubai may be seeking to repair its trade relationship with Iran.

The writer reviewed the announcement of the Chairman of the Iranian Business Council in Dubai Abdul Qader Faqihi that "trade between Iran and the UAE has resumed again", and that negotiations with the "rulers of Dubai" resulted in the approval of the authorities in Dubai to grant Iranian capitalists who want to conduct legitimate trade With the UAE working visas, banks opened accounts for these at the request of the Dubai authorities.

UAE's opening to Iran may be linked to efforts to reduce tensions at Strait of Hormuz (Reuters)

Strait of Hormuz
This slight openness to Iran may be linked to efforts to reduce tensions in the Strait of Hormuz, where Abu Dhabi is reconsidering regional entanglement and the risks of conflict in the region.

"In fact, Dubai is unlikely to reach out to the Iranians without Abu Dhabi's approval," the writer said. It is clear that economic concerns - not security - explain the change in UAE policy, because Dubai will soon need another financial bailout from Iran.

"The UAE's actions towards Iranian businessmen have changed ... Steps have been taken to resume relations ... As the UAE economy declines, officials have decided to cooperate with the UAE," said Farshid Farzankan, president of the UAE-Iran Joint Chamber of Commerce. Iran. "

Now, ten years after the financial crisis, Dubai is still paying its debt to Abu Dhabi. As the UAE prepares for the next global recession, Iran remains the only country able to pump huge sums of capital into Dubai, as global investors retreat.

Source: aljazeera

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