Dubai // The UAE is uniquely burdened by the balancing act it must perform in its relations with Washington and Tehran, a leading political scientist said yesterday.
His comments came after a senior US official described the "special challenge" facing the UAE in implementing UN sanctions aimed at curbing Iran's possible nuclear ambitions.
The US treasury secretary, Timothy Geithner, made a brief visit to Abu Dhabi on Tuesday on his way to the G20 meeting in South Korea, and met Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.
Sheikh Abdullah bin Zayed, the Foreign Minister, and Sultan al Suwaidi, the Governor of the Central Bank, also took part in talks.
Mr Geithner expressed his appreciation to the UAE for its role in upholding the sanctions, but was also aware of the difficulties facing local businesses, an official travelling with him said.
"There's a real recognition on our part of the special challenge that the UAE faces in implementing sanctions on Iran, perhaps more so than any other country," the official said.
He said it was clear that the UAE did not want local companies to become embroiled in Iran's "illicit activities".
Dr Abdul Khaleq Abdullah, a professor of political science at United Arab Emirates University, said the UAE faced the unique challenge of navigating the somewhat ambiguous UN sanctions while maintaining relations with Iran and the US.
"The real question is whether the UAE has to go tough or tries to be lenient when implementing Resolution 1929 [the latest round of UN sanctions on Iran]," he said. "It is a very political decision because it has implications for relations with Tehran and Washington."
Businessmen with interests in Iran have appealed to the authorities to ease restrictions. On Monday, Sheikh Maktoum bin Mohammed, the Deputy Ruler of Dubai, met a group of businessmen involved in the trading of items including food, clothes and medicines between the two countries. They discussed problems such as the difficulties in securing financing and restrictions on the re-export of goods, appealing to the Government to intervene.
Morteza Masoumzadeh, the senior vice-president of the Iranian Business Council, said yesterday that his group has impressed upon local authorities that they respect their obligations towards UN sanctions.
However, what he described as the "over-reaction" of banks reluctant to engage with Iranian businesses was severely affecting livelihoods, he said.
"There are no sanctions in place to curb foodstuffs, home-appliances - these kinds of items are not under the sanctions. This is not illicit trade," he said. "I've been in Dubai for 30 years and two of my children were born here. Now I see things turning against us, and it's not easy to ignore."
Estimates place the value of UAE-Iran trade in 2009 at between $8 billion (Dh29.6bn) and $15 billion. There are roughly 400,000 Iranians living in the UAE, according to the Iranian Business Council, and approximately 25,000 companies with trade links to Iran.
The UAE has renewed pressure in recent months on Iranian businesses operating in the country. The UN Security Council imposed a fourth round of sanctions on Iran in June, aimed at restricting the Islamic Republic's possible nuclear ambitions. In the same month, the Central Bank froze dozens of accounts belonging to Iranian businesses.
The UAE itself is facing massive losses - estimated at close to $4 billion for 2010 - as a result of the sanctions, according to Dr Abdul Khaleq Abdullah.
"Who is going to compensate for these heavy losses?" he said.
* With additional reporting by agencies