* Dubai is historic hub for Iran commerce
* Lower tensions should smooth business, trader says
* Payment problems hinder business
By Stephen Kalin
DUBAI, Nov 25 The sheer complexity of the
interim Iranian nuclear deal and the expected slow pace of
implementation tempered optimism among traders in the Gulf
emirate of Dubai on Monday over the impact of up to $7 billion
in sanctions relief.
But the expected concessions have been enough to give a
psychological boost to the Iranian business community in Dubai,
the main gateway into the economically isolated country.
Despite a decade of sanctions, Iran has managed to get most
of the commodities and goods it needs via Dubai's flourishing
re-export market. But new embargoes imposed by the United States
and its allies in late 2011 and early 2012 hit hard.
At Dubai Creek on Monday, Iranian labourers loaded washing
machines, televisions, mattresses and other goods onto small
wooden and steel ships destined for Iran, about 160 km (100
The dozens of ships that line the docks here make the
roughly 12-hour journey across the Strait of Hormuz a few times
An Iranian trader named Reza, who has been exporting
cosmetics products to Iran by boat for nearly ten years, told
Reuters the deal constitutes "a positive step" but said he did
not expect it to generate benefits overnight.
"We're hoping that the tension between Iran and the West
will be reduced, and that will result in a smoother business
relationship because business has dropped dramatically in the
last two years," he said.
The vast majority of trade between Iran and its Gulf Arab
neighbours is routed through Dubai, home to tens of thousands of
ethnic Iranians and one of seven emirates making up the United
Arab Emirates (UAE).
Two-way trade, excluding oil, between Iran and Dubai fell to
10.8 billion dirhams ($2.9 billion) in January-June from 12.3
billion dirhams in the same period of 2012.
That drop slowed from a 31 percent plunge to 25 billion
dirhams in all of 2012.
Sanctions imposed by Western nations have damaged Iran's
economy in the past two years by freezing its access to credit
markets and preventing it from exporting oil, which was its
principal source of foreign reserves.
A tentative deal reached over the weekend offers the country
potential access to $1.5 billion in trade in gold and precious
metals and the suspension of some sanctions on its auto sector
and petrochemical exports in exchange for curbing its nuclear
program. It will also give Iran access to some $4.2 billion in
sales from its reduced oil exports.
Many Iranian traders in the UAE are uncertain as yet how far
they will benefit from any extra trade generated by the deal,
but they hope it will have a ripple effect by easing access to
credit markets, facilitating transportation and opening simpler
ways to send and receive payments.
A businessman who works for an Iranian food company based in
Dubai told Reuters he is waiting to see how far the deal will
"The main issue we face is about payment," he said. "At the
moment we have to use money traders and that is not ideal. So if
that is sorted out, this deal will be very handy for us."
Such a development would help the emirate become the main
staging post for an eventual return of foreign capital to Iran.
Dubai's Iranian Business Council has shrunk to about 200
members from 600 as the sanctions caused businessmen to move to
countries such as Turkey and Malaysia, Hossein Asrar Haghighi, a
founder of Dubai's Iranian Business Council, told Reuters in
The hope is that some of these council members will now
The Iranian currency appreciated nearly four percent on
Sunday following news of the deal, and it sustained that level
on Monday, according to a local money changer.
Mehran Ershadifar, who runs a construction company in Dubai
and a trading company in Iran, has lived in the UAE for two
decades and says tighter restrictions the over past few years
have made it increasingly difficult to conduct business.
The growth in trade created by the nuclear deal is small for
now, he said, but "the dam is broken."