UAE detains ship as grip on Iran tightens

by Najmeh Bozorgmehr in Tehran and Simeon Kerr in Dubai (source: FT.com)
Friday, November 30, 2007

The United Arab Emirates has impounded a vessel bound for Iran to verify whether chemicals found aboard contravene United Nations and UAE regulations.

The move, which Iranian analysts say is causing concern in Tehran, comes as tighter international sanctions close their grip on the Iranian financial system, with the UAE - a vital trade partner for the Islamic republic - becoming more active in attempts to rein in Iranian business interests.

UAE-Iran trade rose to $12bn (€8.1bn, £5.8bn) last year, with Dubai's re-export hub the single most important entry point for goods coming into Iran.

In September the UAE, a strong US ally, introduced an export control law to prevent traders using the country to transport materials that could be used in, for example, nuclear weapons or explosive devices used against allied troops in Iraq and Afghanistan.

The impounded vessel was offloading goods at Dubai's huge Jebel Ali port, one of the main gateways into Iran.

"We need to make sure it abides by a new export law passed a few weeks ago. [We] have to make sure items are in line with our laws and abide by existing resolutions," said a UAE official source.

The test results are due to come back in a "matter of days", he said. The authorities had intercepted other vessels and would continue to do so as "normal procedure", he added.

Encouraged by the US, the UAE says it has implemented other searches of vessels that stop at its ports. It is part of the government's drive to stop the UAE's openness to business being abused for terrorist financing and money laundering.

The US embassy in Abu Dhabi declined to comment.

At the same time the UAE has become the main window to foil official and de facto sanctions against Iran, say businessmen in Tehran. The Iranian government, they add, has established "private companies" that help to bypass the effects of sanctions.

"There are so many ways to do business through the UAE and Americans cannot do much," said one former official.

Following UN sanctions targeting the Iranian banking sector, most money transfers are made via UAE banks.

Despite declines in trade with European countries, including Germany and Italy, many believe unofficial trade with these countries is rising through Dubai.

Most international banks have stopped doing business with Iran because of US pressure, which has gone beyond the UN sanctions placed on a few big Iranian financial institutions.

UAE-based banks are reluctant to deal with companies that are likely to import goods into Iran, says Nasser Hashempour, vice-president of the Dubai-based Iranian Business Council.


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