Abu Dhabi: The UN Security Council's fresh sanctions on Iran aimed at increasing its international isolation over its nuclear programme may shrink the bilateral trade between UAE and Iran. Iran's trade ties with other Gulf Cooperation Council (GCC) states are also expected to face far-reaching consequences as goods imported by Iran are subjected to greater scrutiny, industry experts said yesterday.

The US has been spearheading a drive to isolate Tehran due to its nuclear ambitions. The US fears that Iran's uranium enrichment programme is focused on making nuclear weapons. Iran denies the charge, claiming its nuclear programme is meant for peaceful purposes.

US official visits UAE

Visiting US treasury undersecretary for terrorism and financial intelligence, Stuart Levey, held discussions in Abu Dhabi on how the UAE and other countries of the GCC can help with regard to the fresh sanctions, a person familiar with the developments at the UAE Foreign Ministry told Gulf News yesterday.

Levey is holding talks in the UAE, Bahrain and Lebanon this week on the sanctions imposed by the UN Security Council on Iran.

Imports affected

Already ships carrying petroleum to Iran face greater scrutiny at ports in the UAE, forcing the Islamic Republic to seek alternative hubs. While the latest sanctions have excluded Iranian crude oil sales, refined oil products imports have been affected. There is reportedly closer tracking of ships operating in UAE ports which had previously been used by Iran to transport fuel cargoes.

"UN sanctions will have an adverse impact on the trade between UAE and Iran. Dubai Customs is being strict on goods shipped via Emirates to Iran," said Jitendra Gianchandani, chairman and managing partner of Jitendra Consulting Group.

"As well, most of the banks are not allowing free movement of the transfer of funds, which is another problem and has brought down the trade level between two countries," he added.

In June, shortly after the UN Security Council announced its fresh round of sanctions on Iran, the UAE Central Bank told financial institutions in the country to freeze 41 Iran-linked accounts. The Islamic state and the UAE have had close economic and historic relations.

Last year Dubai's re-exports to Iran — goods originally coming from Europe, Asia or elsewhere and then sold on to Iran — rose 4.8 per cent to Dh21.3 billion.

The UN Security Council expressing deep concern about Iran's lack of compliance with its previous resolutions on ensuring the peaceful nature of its nuclear programme, imposed additional sanctions on the country on June 9, expanding an arms embargo and tightening restrictions on financial and shipping enterprises related to "proliferation-sensitive activities".

The UN body decided that Iran should not acquire interests in any commercial activity relating to uranium enrichment and other nuclear materials or technology in other states, and that all states should prevent the transfer to Iran of any tanks, armoured combat vehicles, large-calibre artillery systems, attack helicopters, or missiles and related systems or parts. It also called upon all states to report to the relevant sanctions committee, within 60 days, on the steps they had taken to implement the necessary measures.

Resolution

A source at the UAE's Ministry of Foreign Trade said as far as the trade with Iran is concerned, only the trade in goods banned by the UN Security Council will be affected. "We will implement the UN resolution. But trade in other items not on the banned list can continue," he added.

Iran is the world's fifth-biggest crude oil exporter but previous US sanctions mean it has suffered from lack of investment in refineries, forcing the Organisation of Petroleum Exporting Countries' (Opec) member to import some 40 per cent of its gasoline needs.

"The insurers operating in the UAE and within the region are not in a position to underwrite new risks of Iranian interests which falls within the purview of the latest UN/US sanctions on Iran," said Mohammad Rayees, managing director for Berns Brett Masaood in Abu Dhabi.

Kuwait: banks' bid rejected

Kuwait's central bank has reportedly rejected bids from four Iranian and one Iraqi banks to open branches in Kuwait after they failed to meet the required criteria, a local daily said.

According to a local banking insider, the five whose bids were turned down are not major banks either in their own countries or internationally, Kuwait Times reported.

While looking at the banks' financial status after they filed applications for branches in Kuwait, the central bank discovered that they "lack a sufficiently sound financial base that would qualify them to obtain licences", the bank official said.

"After its decision to allow foreign banks to operate in Kuwait, the central bank decided to introduce controls to ensure that these banks will have the necessary sufficient experience in foreign banking operations," the insider was quoted as saying.

However, the official said that there was a strong element of realpolitik behind the decision to turn these banks down.

— With inputs from Habib Toumi, Bahrain Bureau Chief