Monday, December 21, 2009

Dubai Fall Out Could Affect Iran

I came across a very interesting piece in Newsweek recently about the possible fall out that the financial crisis in Dubai might have on the Iranian nuclear issue. This perked my interest particularly because as my readers know I have lived in Dubai and still have a deep interest in what happens there for personal and political reasons. My readers also know that the fate of Iran is probably my favourite issue to debate having spent a significant amount of time in that country preparing for my dissertation. But most of all, Iran, its fate and the conclusion of the nuclear issue is the number one political issue facing the Gubu World that we live in today. The story is as follows.

When I lived in the UAE I became aware of the following facts. Only about %20 of the populations of Dubai and Abu Dhabi (the 2 most prominent of the 7 Arab Emirates) consist of indigenous Arabs, known as Emiratis. These people are exceptionally privileged. Also there has always been a great deal of tension between the two rival families in charge of both Emirates, these being the Maktoums in Dubai and the Zayed's in Abu Dhabi. They were in fact killing each other up until the modern UAE was formed under the leadership of the late Sheik Zayed in 1971. It should be stressed however that the UAE is a stable country and the experiment of the Arab federation ruled from the Capital in Abu Dhabi but with significant autonomy for the 6 other Emirats has proven to be a success. Having said that, one source of the tension between the two is that a large percentage, possibly as high as %25, of Dubai Emiratis are in fact of a Persian background, owing to the fact that in the 19th century many Iranian traders with Dubai ended up settling there. A consequence of this is that Dubai and its Persian Emiratis, many of whom speak Farsi as a first language, is the most Pro Iranian entity in the Arabian Gulf. This has caused tension with Abu Dhabi particularly because the islands of Abu Musa, Greater Tunb and Lesser Tunb are occupied by Iran but claimed by the UAE. However Dubai does not control its own foreign policy so its pro Iranian leanings manifests itself in its business dealings.

The UAE is a federal country. However unlike other federal countries like the USA there are few federal laws and the Emirates are free to govern themselves when it comes to everything except foreign policy. However, this may be set to change dramatically with the recent news that Dubai World, Dubai's flagship company is unable to meet its debts. International investors were stunned and held their breath for a few days until oil rich Abu Dhabi announced that it would come to Dubai's aid. However it was clear to all who understand the UAE that if Abu Dhabi are going to bail Dubai out of their massive debt, they are going to do so on their terms. One such term will likely be that Abu Dhabi will have a greater say in who Dubai does business with. This could be hugely significant when it comes to imposing sanctions on Iran over the nuclear issue. In particular it could have a dramatic effect on the attempts by Stuart Levey the US undersecretary of the Treasury for terrorism and financial intelligence, and the focus of the aforementioned Newsweek article, to reign in the finances of the Iranian Revolutionary Guard Corps IRGC. Many senior IRCG members have assets in Dubai as do other officials in the regime who see Dubai as a safe and friendly place to keep money, away from the reach of international sanctions. At an utterly crucial time in the Islamic Republic, When the IRGC may be required to suppress dissenters and possibly ultimately even the Iranian Army itself the Revolutionary Guards and other loyalist might find themselves being squeezed financially.

This story becomes all the more important with the recent death of reformist cleric Grand Ayatollah Montzeri whose funeral today has apparently sparked clashes.
This is the scene in Qom today where the spiritual leader of the reformist movement, Ayatollah Montazeri was buried. Might his death lead to a renewal of clashes between reformers and the Basij militia.


GW said...

A fascinating post, Ted. Thanks much for the insight.

Ted Leddy said...

Thanks GW

I appreciate it.