Increasingly, compliance with US sanctions against Iran could become a litmus test of the UAE’s close ties with the United States.
On the brink of a potential rift between the allies is an agreement reportedly recently struck by a private UAE company to build 300 megawatt total capacity gas-fired thermal, solar and wind power plants in the Iranian province. from Khuzestan, rich in hydrocarbons. .
Established in 2020, AJ Holding, the Dubai and Fujairah-based company, could not be reached for comment. The company’s website claims, without further details, that its portfolio includes some 600 MW of wind and solar power projects in Eastern Europe, the Baltic States and the Far East.
A photo attributed to Iran’s energy news agency Bargh News appears to show the company’s Danish CEO Allan Jespersen exchanging documents with an Iranian official.
The deal was signed as the United States warned it would tighten the enforcement of sanctions if multilateral talks in Vienna aimed at reviving the 2015 international deal that limited Iran’s nuclear program failed.
A US delegation plans to visit the United Arab Emirates, a major trading partner of Iran, this week to warn banks, petrochemicals and other companies that US authorities have evidence of not complying with sanctions and that they could be penalized.
As the Vienna talks unfolded, Anwar Gargash, diplomatic adviser to UAE President Khalifa bin Zayed, asserted that he “does not see new sanctions as a solution … There are already enough sanctions against the United Arab Emirates. Iran, “he said. At the same time, Mr. Gargash described the United States as “the UAE’s number one strategic ally”.
The United States has expressed support for the United Arab Emirates’ diplomatic relations with Iran which began in July 2019 after the United States failed to respond to attacks on oil vessels off the Emirates, including the Republic. Islamic was supposed to be responsible.
“We welcome any direct talks that lead to greater peace and stability in the region,” said Jennifer Gavito, US Assistant Under Secretary of State for Iran and Iraq.
In the highest-level contact for a decade, Sheikh Tahnoon bin Zayed, UAE national security adviser and brother of strongman Crown Prince Mohammed bin Zayed, met in Tehran last week with the Iranian president. Ebrahim Raisi.
âI expect Iran to make demands that would be very difficult for the UAE to meet. They would askâ¦ to use UAE financial institutions to do business with the world. The UAE must find out for themselves if they want to help the IRGC (the Islamic Revolutionary Guard Corps) to evade and circumvent US sanctions to protect themselves against possible future attacks, âIranian academic Ali Alfoneh said at the meeting. of a recent webinar that was part of this United Arab Emirates Security Forum hosted by the Arab Gulf States Institute in Washington (AGSIW).
Mr Alfoneh was referring to fears that Iran would target the United Arab Emirates and Saudi Arabia in a possible military confrontation with Israel and / or the United States if the Vienna nuclear talks fail.
The UAE’s concerns were magnified after the establishment last year of diplomatic ties with Israel which Iran condemned.
The United States and the United Arab Emirates are negotiating final details of the sale of US $ 23 billion of F-35 fighter jets that would make the Gulf state the only country in the Middle East except Israel, to operate the most advanced stealth warplane in the United States. Earlier this month, the United Arab Emirates agreed during a visit by President Emmanuel Macron to a $ 20 billion deal to purchase 80 French Rafale fighter jets.
âOfficials in Abu Dhabi and (in particular) Dubai are fully aware of the damage that would be done to their brand as (relatively) stable hubs in an otherwise insecure region if the pattern of attacks seen in 2019 continued and / or intensified, “said Gulf specialist Kristian Coates Ulrichsen. Mr Ulrichsen was referring to the attacks on shipping at oil installations in the United Arab Emirates and Saudi Arabia for which Iran was suspected to have been responsible.
The opening of the UAE to Iran amounts to a questionable bet that detente, amid sustained social unrest driven by economic hardship, will prompt the government in Tehran to change its policy.
“What we hope for is regime moderation … where we treat Iran as another state that we can deal with in a sustainable way, and from which they can benefit.” So if they need leverage, they can get it, but it doesn’t necessarily have to go through military aspectsâ¦ It’s the type of change that hasn’t been explored much, âMohammed Baharoon , director of the Dubai Public Policy Research Center. said in the AGSIW webinar which also included Mr. Alfoneh.
Gargash expressed hope in his remarks to the security forum that Iran would respond to the “new environment” that the UAE and Saudi Arabia were trying to create. He suggested that Iran could signal its interest in helping to achieve a ceasefire in the debilitating nearly seven-year war in Yemen.
The UAE’s bet is that Iran, like the Gulf, will accept that in order to survive in the 21st century autocratic regimes must provide public goods and can no longer depend primarily on a repressive security state. For Iran to do this, it needs a lifting of sanctions.
Likewise, the bet further assumes that the voices of the Iranian minority who argue that improving relations with the Gulf states requires a resolution of the nuclear issue and a lifting of US sanctions will resonate with policymakers in Tehran.
Majidreza Hariri, head of the Iran-China Chamber of Commerce, recently warned that Iran was at a trade disadvantage as long as sanctions were in place.
“Our status is weakening by the dayâ¦ because when we are absent from the arena of international energy trade, our competitors in the southern Persian Gulf region take our place, and when they sell more oil to China, they are forced to buy more goods than that, âHariri said.
Esfandyar Batmanghelidj, who heads the London-based think tank Bourse and Bazaar and is a visiting scholar at the European Council on Foreign Relations, noted that Iranian imports from the United Arab Emirates, estimated at $ 12 billion in 2021/2022, are expected to exceed pre-2018 levels in March of next year, the end of the Iranian calendar year. The United Arab Emirates is a major hub for re-export to Iran.
Mr. Batmanghelidj suggested that Iran’s increased purchasing power in the UAE is bolstered by oil sales to China in violation of US sanctions negotiated by the UAE as well as Malaysia.
AJ Holding’s energy deal, if confirmed, would at the very least grant Iran a symbolic victory, a contract with a company from a country closely linked to the United States that would snub US sanctions.
The UAE is unlikely to snub sanctions so blatantly. It is more likely that the contract will be further indication for Iran of what would be possible if it did its part to secure the lifting of US sanctions. This is a message Tehran has long been aware of but has so far refused to heed. So the question is whether anything has changed from Iran’s point of view. There is no indication that anything has.