The Impact of US Sanctions on Iranian Businesses in Dubai

"Murshid Market" with its Iranian restaurants and shop names in Persian has been a center for small trade transactions with Iran in Dubai's old section for recent decades. However, this situation is changing. Nearly one in ten shops is closed or has a 'For Rent' sign on its door. Now, the number of Indian and Pakistani traders is significantly higher than that of Iranians. Reuters reported that due to US sanctions, the activities of Iranian traders and shopkeepers who still continue to operate have become more difficult. Dubai has long been a key contact point for Iran with the outside world, but with the implementation of sanctions, trade between the two countries has decreased. Saffron, food, and clothing sold by Iranian traders in this market are not sanctioned, but they say the conditions for transactions have worsened. UAE banks, fearing US penalties, have reduced their services and transactions with Iranian customers. Transactions in rials, which have lost about 70% of their value against the dollar this year, are uncertain. Aftab Hassan, an Iranian trader and member of the Iranian Traders Council in Dubai, says, 'Many Iranians have closed their shops, and operating in Dubai has become more difficult for them.' According to him, some are looking to leave Dubai and move their businesses elsewhere. The difficulty of banking transactions for Iranians in Dubai has jeopardized the export of products from other countries to Iran through Dubai's port and airport. According to International Monetary Fund statistics, last year, 29% of Iran's $71.5 billion imports came from the UAE, particularly Dubai. The volume of trade between Iran and the UAE, which was about $2.5 billion in December last year, decreased to $1.75 billion in July this year. In 2014, at the peak of the previous round of sanctions, the monthly trade volume between the two countries was about $1.9 billion. Mehrdad Emadi, an Iranian economist residing in London, says the devaluation of the rial in the months before the sanctions was one of the main reasons for the decrease in Iran's imports because purchasing foreign goods became more expensive while wages did not increase, leading to reduced consumer spending. He states that due to US pressures, banks in the Gulf countries are worried about dealing with Iran, making money transfers for transactions more difficult. According to the head of the UAE Central Bank, National Bank and Export Bank will continue their activities in this country. An Iranian trader in Murshid Market says Dubai banks do not open accounts for Iranians without the joint signature of a UAE citizen and require extensive documentation. He states that money transfers through banks have become almost impossible. The head of the UAE Central Bank recently said that banks in this country are cautious about dealing with Iran due to financial relations with American banks. He added that the National Bank and Export Bank will continue their activities in this country. A spokesman for the UAE Ministry of Economy told Reuters that the country fully complies with US sanctions. Last month, the Central Bank of Iran announced that UAE banks no longer conduct currency transfers for Iranian traders, and Iran is seeking other options for its banking activities in the region. Dubai, which has had active trade relations with Iran for over a century and has more than 200,000 Iranians (over five percent of its population), has previously adapted to the pressures of sanctions, and traders have always found ways to conduct transactions. Some Iranian traders have used bank accounts of citizens from other countries for banking transactions or bypassed currency transfer issues by trading goods directly for goods. However, the Obama administration was not very strict in implementing all nuclear sanctions against Iran and left a few small avenues for trade and banking relations open. It seems that the Trump administration will act more strictly in this regard. In 2011, the Iranian Traders Council in Dubai had 500 members, but this number has now decreased to 50. Hossein Asrar Haghighi, an Iranian trader and member of this organization who has lived in Dubai for 37 years, says one reason for the decrease in membership is that many traders are not interested in connecting with this organization during the sanctions. According to him, some Iranian traders are considering moving to Turkey or Europe.