DUBAIRe-exports to Iran from the United Arab Emirates dropped by nearly a third in the first half of 2012, as tighter international sanctions curbed one of the Islamic Republic's key trading relationships, according to U.A.E. officials.The contraction of the re-export trade from Dubai and other emirates in the U.A.E. is a dramatic illustration of the way sanctions have forced Iran to cut back on its consumer goods imports in the face of ever-tighter sanctions, which have led to a sharp drop in oil exports and a collapse in the Iranian currency.
"Of course the international sanctions on Iran have had a great impact on the size of trade and was the main reason behind the drop recorded," said Abdulla Al Saleh, the U.A.E. undersecretary for foreign trade, in an interview. He said the U.A.E.'s re-exports to Iran fell to 13.28 billion dirhams ($3.6 billion) in the first half of 2012, down 32% from the same period of 2011.
The U.A.E. remains one of Iran's largest Middle East trading partners, mainly due to the re-export trade, sending everything from tractors to television sets across the Persian Gulf to the southern port of Bandar Abbas.
Iran has faced progressively tougher sanctions from the U.S. and the European Union this year, in order to pressure the country to curb its nuclear program. Iran denies it is planning to produce nuclear weapons.
The slump in Iran's oil exports this year has triggered a sharp drop in the Iranian currency, and forced Iran to cut back on imports. Last month, Iran slapped a ban on the imports of 2, 000 luxury items, including mobile phones, laptops and cars, in an effort to conserve foreign currency.
In its regular survey of the Middle East economies issued in November, the International Monetary Fund estimated that Iran's total imports will drop by 11% to $85.5 billion in the Iranian fiscal year that ends in March 2013, from $96.1 billion in the preceding fiscal year.
Attempts to reach Iranian officials for comment on the trade data were unsuccessful. But the U.A.E. said total recorded exports to Iran, including re-exports and direct exports, were about $4 billion in the first half of 2012, suggesting that the U.A.E. provides about 10% of Iran's total imports.
The U.A.E. statistics show that trade with Iran is dominated by food products and other consumable goods, as well as jewelry and electronic goods.
The U.A.E. figures show that nearly three-quarters of the U.A.E.'s trade with Iran passes through Dubai, one of the seven emirates that make up the U.A.E. Dubai alone saw a 24% drop in its total trade with Iran during the first half of 2012 to 12.7 billion dirhams, according to figures from Dubai customs.
Goods destined for Iran are mainly unloaded in Dubai's Port Rashid or Jebel Ali and then re-exported to Bandar Abbas.
U.A.E. officials said their country will respect United Nations sanctions that prevent the transfer of military equipment to Iran, but doesn't feel bound to abide by unilateral sanctions imposed by the U.S. or the European Union.
"The U.A.E. very much adhered to the United Nations' sanctions on Iran, though we feel that the best way of dealing with this issue is through peaceful negotiations," the U.A.E.'s Economy Minister Sultan Al Mansouri said in an interview.
But Mr. al Saleh, the foreign trade undersecretary, said some U.A.E. banks and private sector companies may feel obliged to comply with the U.S. and EU sanctions "so that they won't be subject to sanctions by western countries."
Last year, the U.S. threatened sanctions against Dubai-based Noor Islamic Bank, saying it had emerged as a key financing vehicle for Iran's oil trade. The bank subsequently said it had agreed to halt dealings with Iran.
According to data from Dubai customs, the main exports from the emirate to Iran in the first six months of 2012 were gold, stationary and office supplies, glass, sanitary items and polyethylene. Imports from Iran included gold as well, carpets, steel, and food items.
By The Wall Street Journal
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