UAE’s Iran Strategy | Foreign Profile

Escalating ties and regional tensions

The UAE and Iran are on opposite sides of the thorniest issue in the Middle East today. The United Arab Emirates is a partner of the United States, while Iran is one of the most important adversaries of the United States. The UAE also recently normalized relations with Israel, which have backed opposing sides in Yemen’s civil war.In fact, Iran-backed Houthi rebels launched attack Clashes in Abu Dhabi and Dubai in early 2022 have intensified the conflict in the UAE. Despite these differences, the two countries have forged an increasingly friendly relationship in recent months.

The UAE recalled its Iranian ambassador in 2016 to protest a mob attack on the Iranian embassy in Saudi Arabia. In the years since, relations between the two countries have been unusually cold. UAE relations begin to ease in 2019 engaged Following the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA), Iran sought to maintain stability in the region and deter Iran from taking rash actions.

The UAE’s main interest is to maintain a peaceful Gulf to boost oil exports, while Iran seeks sources of foreign manufactured goods.Since then, economic ties between the two countries have grown rapidly as the UAE is Iran’s main source of economy resource Foreign manufactured goods under U.S. sanctions. Setbacks in bilateral ties have surged — for example, the UAE’s signing of the U.S.-backed Abraham Accord sparked a backlash in Tehran — but overall the thaw continues.

Pragmatic ties: trade and commerce drive development

The UAE’s significant economic interests in Iran have been a major factor driving friendly relations. UAE is by far the largest exporter of non-oil products to Iran, accounting for 68% of Iranian exports import. During the six-month period of 2021, the UAE Export Shipments to Iran are three times that of Turkey, which is the second largest exporter.UAE exports worth $7 billion, a figure that may be underestimated as many exporters avoid Can’t declare their cargo because of sanctions. This export volume is possible because the UAE has become Iran’s main link to the global economy since the reimposition of tough U.S. sanctions in 2018.

UAE firms order manufactured goods from Western and East Asian firms, then profit resale They sell to Iranian customers at high prices. The arrangement works for both parties, as Iran cannot obtain the goods from other sources, while Emirati companies make huge profits.Total exports to Iran will reach beyond $12 billion in 2022.The two countries are also keen to expand ties in the near future, pledging to increase trade $30 billion by 2025.

In addition to its direct economic ties with Iran, the UAE is keen to use its involvement to reduce the potential for Iran to destabilize the region.Iran has a long history seize Ships in the Gulf, and an outbreak of Iranian proxies in Yemen could wreak havoc.As the United States seeks reduce As a key pillar of regional security, its commitment to the Middle East appears set to be undermined. Iran may seek to exploit this and gain influence across the region, potentially increasing its presence in Iraq, Yemen, Lebanon and other unstable countries. That could provoke a reaction from Saudi Arabia and its Gulf partners. The UAE is seeking to reduce the likelihood of such a conflict by deepening Iran’s dependence on its neighbors.

The UAE is not the only country eager for a friendlier relationship with Iran. Kuwait Recently reinstated as its ambassador to Iran, Saudi diplomats are maintaining dialogue with their Iranian counterparts. The Saudis are less keen on formal relations with Iran, but they are also interested in avoiding conflict.There are potential points of compromise and dialogue even between the two countries, including with Iran by strengthening social ties between its citizens admirers Go to Mecca. Economic dynamism in the Gulf’s major oil exporters requires regional stability, and a hostile Iran is bad for business. To maintain vital oil revenues, political rivalry and historical hatred must be managed, Emirati policymakers and diplomats have suggested.

The way forward: economic interdependence and regional friction

Despite the incentive to improve relations, tensions between the UAE and Iran over differences in regional conflict are likely to persist.UAE-Israel ties normalized offended Iran, may become an obstacle to further deepening relations.Relations with the US could also be a sticking point as US officials have been pressuring their UAE counterparts implement The sanctions regime is stricter.

Regional conflicts, opposed by the UAE and Iran, will also continue to weigh on bilateral relations.Yemen war is biggest challenge facing UAE-Iran relations, but pause Amid the ongoing fighting since April, there are hopes that a more permanent ceasefire, brokered by the United Nations, will be possible. If a deal is reached, it would make cooperation in the Gulf easier and could allow the UAE and Iran to more effectively moderate other bilateral differences. At present, the proxy war in Yemen is the top priority of the regional policies of the two countries, and the differences between the two sides on how to solve the problem take priority over strengthening cooperation.

A resolution to the conflict would give both sides more room to deepen ties without fear that an outbreak in Yemen could lead to an unpredictable diplomatic spat. If fighting resumes, it is likely to be more intense than before, given the volatile nature of the truce, and could lead to further attacks on the UAE by Iranian-backed militants. It could also sour the relationship to the point where the newly appointed ambassador could be recalled. While the relationship between the UAE and Iran will be heavily affected by the outcome of negotiations in Yemen, their interconnected economic interests should allow them to remain friendly and curb the development of regional tensions.

Meanwhile, economic ties between the UAE and Iran are likely to continue to deepen.The trade relations between the two countries have a lot of room for development, especially in the field of natural resources extraction. Emirati companies have expressed strong interest in Iranian resources such as gold, diamonds, metals and metal raw materials, and it is likely that they will increase their investment in the mining industry in the near future.In recent months, Iran has attracted more than $300 million FDI from the UAE, which is likely to continue to increase due to the underdeveloped nature of the Iranian economy. Many of these materials are likely to be exported to the UAE, increasing UAE investment in Iran while also increasing UAE imports of Iranian products.

Likewise, the UAE is likely to continue to increase exports of manufactured goods to Iran. Iran has few other sources from which to import these goods, and re-exports to Iran have become a major industry in the UAE. The industry will continue to grow due to its highly lucrative nature and its influence in the UAE’s dealings with Iran. It is difficult for Iran to disrupt economic activity in the UAE when trade between the two countries supplies most of Iran’s manufactured goods. However, if the U.S. and Iran reach a new nuclear deal, growth in exports could be threatened, as the lifting of U.S. sanctions could allow Iran to obtain cheaper manufactured goods from other sources.However, given the current state, such access is unlikely talks Renew.