The new Casablanca: Why Dubai draws Iran, intrigue, and tusk smugglers
Dubai is known to be among the world's most freewheeling business environment – and one that is attractive to Iranian businesses looking to circumvent Iran sanctions.
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Dubai is loath to sever its longtime bonds with Iran, snub a powerful neighbor, or snuff out lucrative trade.Skip to next paragraph
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With the US bearing down, though, Dubai has agreed to comply with UN sanctions, which limit trade in weapons, shipping, and banking. It is also reportedly withholding work visas from Iranians and taking more time to clear Iranian shipments.
Banks, under pressure from US Treasury officials, are squeezing Iranian businesspeople, denying them the credit lines critical to trade.
"There is no doubt" the authorities are singling out Iranians, says Masoum Zadeh of the Iranian Business Council, who has been a trader here for 28 years. His spacious office overlooks the Dubai Creek, an artificially expanded waterway that has become a launching point for many shipments to Iran. "They don't say it, but we can feel it."
Why spies flock to Dubai
Indeed, with so many Iranians in Dubai, US consular officials here regularly pump that large pool for information or recruit them to spy, says Jim Krane, author of a recent book about Dubai.
Many countries have active intelligence operations here in this open and strategic spot, he says. "There are so many reasons to be in Dubai ... business, tourism, and conferences, that it's easy for spies to maintain 'plausible deniability.' "
Israel's Mossad is widely believed to have sent dozens of agents to Dubai to assassinate Mahmoud al-Mabhouh, the Hamas operative, though Dubai's tough-talking police chief made clear that such a brazen attack was a step too far. After a quick and impressive investigation, his department secured international arrest warrants for some two dozen suspects from abroad.
Dubai has also drawn praise for its "swift and extensive" cooperation in cracking down on terrorism financing after the US Congress's 9/11 commission found that most of the funds for the 2001 attacks were funneled through the city. Suspected terrorism activity was "dealt with expeditiously" and punished, said the FATF.
As for the crackdown on illicit trade with Iran, it's unclear how much the authorities are making a dent – particularly for state-backed companies. US officials say they may be fighting a long battle and that they hope to persuade Dubai to crack down harder or risk its international reputation.
Yet even if the emirate were to sacrifice its breezy business climate, illegal traders would just go elsewhere, says Prof. Jean-François Seznec at Georgetown University in Washington, a Gulf specialist.
Dubai follows a long line of entrepôts where smugglers and money launderers gather, he points out, arguing that "there's always a market for this kind of free trade."