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Dubai jittery over business with Iran - FT.com

August12,20125:25pm

Dubaijitteryoverbusiness withIran
ByCamillaHall

TheNewYorkstatefinancialwatchdogsentshiversdownbankersspineslastweekas itaccusedStandardCharteredofhiding$250bnoftransactionswithIran.Nowhere werethosechillsfeltmorethaninDubai,Iranslongstandingtradingallyinthe MiddleEast. Allinternationalbanksarescaredstiffatthemomentofhavinganylinkstoany Iranianentities,saidoneseniorbankofficialinDubai.Butyoullalwaysbeonestep behindcleverpeopletryingtogetaroundthesystemitsprettysophisticated. TheUnitedArabEmirateshascommittedto implementingUNsanctionsdirectedatsensitiveIranian nuclearactivities.However,USsanctionsaremakingitincreasinglyimpracticalfor banksandenergycompaniesintheUAEtodobusinesswithIran. OverthepastyearthosesanctionshaveledtoseveralentitiesfromtheUAEbeing publiclynamedandshamedfortheirIranianbusinessinterests. Therealtippingpointwasattheendof2011,withthelatestroundofUSbanking sanctions,potentiallyexposingnonUSbankstosanctionsbytheUS,saysPatrick Murphy,aspecialistinIraniansanctionsasaseniorassociateatClyde&Co.,thelaw firminDubai. ThatwasarealwakeupcallforbanksoutsidetheUSstilldealingwithIran.They didntwanttoruntheriskofbeingcutofffromtheUSbankingsystem,headds. WiththetoughenedstanceofUSpoliticians,theoverarchingmessageofbusinesswith themorushasleftmainstreamUAEbasedbanksandtradingcompanieswithlittle optionbuttocomply.Iftheydonot,theyrisktheireasyaccesstodollars,crucialfor theUAEeconomywherethecurrencyispeggedtothegreenback. TheimplicationsofthisareparticularlyimportantforDubai,theUAEstradinghub, whichhaslongreliedonIranasamajorbusinesspartner,andishometoanestimated 300,000Iranians.Thesanctionsarealreadychangingthis.

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8/13/12

Dubai jittery over business with Iran - FT.com

MembershipoftheIranianBusinessCouncilinDubaihasdroppedtotwothirdsofthe nearly400membersithadtwoyearsago,saysHosseniAsrarHaghighi,spokesman andcofounderoftheorganisation. Iranianshavebeenlivinghereasoneofthemostprominentcommunities,hesays. Nowtheyhavetorestartsomewhereelseandthatrelocationwilltakesome economicactivitywithit. NoorIslamicBank,whosechairmanisasonofDubaisruler,wasforcedtoadmitin MarchthatithadendedrelationswithIranianbanksinDecembertocomplywithUS sanctionsagainstthecountry,sendingaclearsignaltootherUAEbasedlenders. Beforethat,theUShadalreadymadeanexampleofotherUAEbasedcompanies allegedlydealingwithIransenergysector.InMaylastyearRoyalOysterGroupand SpeedyShipwereamongcompaniesaccusedofbeingamongthelargestsuppliersof refinedpetroleumproductstoIran. Then,inJanuary,HillaryClinton,USsecretaryofstate,restrictedUSbusinesswith FalOil,anotherDubaibasedcompanyconductingtradewithIransenergysector.Fal respondedtothesanctions,sayingtheywereinappropriateandunwarranted. Assanctionsbite,Iranianshavelookedtocashtransactionstoparktheirfunds.Inthe firsthalfoftheyearIranianinvestorspurchasedrealestateworth$128minDubai, landdepartmentdatashows,whichcreatesaneffectivedrainontheIranianeconomy. EverypennyspentnotinvestinginIranisabonusfortheauthoritiestryingtosqueeze thealreadychokingeconomy.Still,gettingthoseamountsofcashintotheUAEis physicallyriskyforIranianinvestors. DubaisdirectforeigntradewithIranprobablyrosetoDh36bn($9.8bn)lastyear, comparedwithDh27.2bnin2010,accordingtoDubaicustoms,whichdoesnotpublish thedataregularly.However,alargeproportionofthatisreexport,andrepresents goodssuchasfood,cars,rugs,diamondsandgold.Pricefluctuationsaffectthedata. TogetaroundUSbankingsanctionsinparticular,tradersbartergoodstoavoidthe needforlenders.SmallbusinessesorindividualsalsoleanonDubaismyriadof unregulatedmoneyexchanges.WhiletheseexchangesremainachannelforIranian funds,highcommissionsandcurrencydepreciationmakethemfarfromideal. AlthoughtheUAEisnowviewedasacooperativepartnerforimplementingUS sanctions,itshistoricrelationshipwithIranisnotsoeasytodeconstruct,asmany Emiratifamiliestracetheirrootstotheirneighbour,withdecadeslongtradelinks. Traderscomplainthatbusinesshasslowedandtheyhavebeenaffectedbythesteep depreciationoftheIraniancurrencyoverthepastyear.
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8/13/12

Dubai jittery over business with Iran - FT.com

TheUSdecisiontocutofffinancialdealingswithanIraqibankandanewcampaignby aUSgroupagainstLebaneselenderspointstotherestoftheMiddleEastnolonger beinganeasyoptionforIranianbusinesseither. DespitetheclosetiesbetweentheShialedgovernmentinIraqandtheUS,thepost SaddamHusseinBaghdadisoneofTehransclosestallies. InJuly,theUScuttieswithElafIslamicbank,anIraqiprivatebank,aftertheUS Treasurydepartmentsaidithadengagedinactivityinthepastyearworthtensof millionsofdollarswiththeExportDevelopmentBankofIran,sanctionedbytheUSin 2008andtheEUin2010. InternationalbanksinDubaihavebeenparticularlyconcernedoverdealingwith Lebanonsbanksforfearthattheyareunknowinglydealingwithfundsthatmightbe relatedtoHizbollah,theTehranbackedShiagroup. UnitedAgainstaNuclearIran,aUSlobbygroup,haslaunchedacampaignagainstthe Lebaneseeconomy,insistingthatHizbollahwasengagedinamoneylaundering schemetohelpfacilitateIransevasionofsanctionsachargethattheLebanese centralbankhasvehementlydenied.TheUSorganisationhascalledonholdersof Lebanesesovereigndebtandothersecuritiestodivesttheirholdings. WithUSsanctionstighteningthenoosefarbeyonditsborders,Iranianstryingtogo abouttheirdailybusinessabroadwillhavetobeevermorecreativetokeeptheir livelihoodsprofitableandtheirfinancessafe. AdditionalreportingbyRoulaKhalafinBeirut

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