In The Guardian, Raymond Barrett writes:
Dubai – separated from Iran by the waters of the Gulf – has excelled as a channel for circumventing the variety of international sanctions that have built up over the decades. Be it restrictions on badly needed aviation spare parts, “dual use” electronics or blackballed financial institutions, Dubai is one of several major ventricles through which contraband and money flow in and out of Iran.
Yet Dubai has always preferred the term “re-exporting” to “sanctions busting”, and the process itself is relatively straightforward. Iranian firms establish legitimate trading concerns in Dubai’s Jebel Ali Free Zone or in the bustling district of Deira close to the city’s famous reek; prohibited items are then purchased, with Dubai listed as the final destination on the manifest. Depending on the scale of the enterprise, cargo planes or diesel-powered dhows then transport the goods to Iranian ports such as Bandar Abbas or Kish.
Dubai has long been a vibrant regional entrepot for trade, both legitimate and illicit, and this was a natural role for it to assume. Along with an estimated 400,000 Iranians living in Dubai, around 40% of the “local” population are ajam – an Arabic term used to denote emigrants from the southern coast of Iran who moved to Dubai more than a century ago.
Over the years, this Dubai connection has morphed into a $10bn-a-year import/export industry vital to both parties and supplying Iran with everything from electronics to cosmetics.
While much of the re-export trade involves innocuous consumer goods such as air-conditioners and tyres, criminal cases in US courts occasionally shine a light on “sanctions busters”. In the eyes of the US department of justice, the big fish that got away must be AQ Khan, the father of Pakistan’s nuclear bomb, who sold centrifuges used to enrich uranium to Tehran while using Dubai as the trans-shipment point.
As America’s desire to pursue sanctions has waxed and waned under different presidents, Dubai has rolled with the prevailing winds. When the shortlived “Persian detente” of the latter Clinton years changed to the “axis of evil” mantra of the junior Bush administration, Dubai demurred accordingly. The local authorities were always most welcoming when US officials swept into town calling for tougher enforcement of export controls and financial transactions. While such visits were sometimes followed by minor crackdowns, words alone were never going to get of rid of a business model embedded deep in Dubai’s DNA.
“With Dubai listed as the final destination on the manifest” reminds me of a similar scheme used to ship weapons to Iraq during the Iran-Iraq war. At that time, weapons were shipped to various “final destinations” and then sent on to Iraq. Many North American and European companies made quite a business out of it. The author Mark Phythian describes this in his book “Arming Iraq”.