Identifier
Created
Classification
Origin
07IRANRPODUBAI42
2007-06-27 13:48:00
SECRET//NOFORN
Iran RPO Dubai
Cable title:  

IRANIAN BUSINESS IN DUBAI: A BLESSING AND A CURSE

Tags:  IR PREL ECON SMIG 
pdf how-to read a cable
VZCZCXRO7228
PP RUEHBC RUEHDE RUEHKUK
DE RUEHDIR #0042/01 1781348
ZNY SSSSS ZZH
P R 271348Z JUN 07
FM IRAN RPO DUBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0137
INFO RUCNIRA/IRAN COLLECTIVE
RUEHDIR/IRAN RPO DUBAI 0130
RUEAIIA/CIA WASHDC
RHEFDHP/DIA DHP-1 WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHDE/AMCONSUL DUBAI 0121
RUEHAD/AMEMBASSY ABU DHABI 0087
RUEHAD/USDAO ABU DHABI TC
S E C R E T SECTION 01 OF 02 IRAN RPO DUBAI 000042 

SIPDIS

NOFORN
SIPDIS

LONDON FOR GAYLE; BERLIN FOR PAETZOLD
BAKU FOR HAUGEN; PARIS FOR WALLER

E.O. 12958: DECL: 6/27/2017
TAGS: IR PREL ECON SMIG
SUBJECT: IRANIAN BUSINESS IN DUBAI: A BLESSING AND A CURSE

REF: A.)RPO DUBAI 0041; B.) RPO DUBAI 0035

RPO DUBAI 00000042 001.2 OF 002


CLASSIFIED BY: Jillian Burns, Director, Iran Regional Presence
Office, Department of State.
REASON: 1.4 (d)
S E C R E T SECTION 01 OF 02 IRAN RPO DUBAI 000042

SIPDIS

NOFORN
SIPDIS

LONDON FOR GAYLE; BERLIN FOR PAETZOLD
BAKU FOR HAUGEN; PARIS FOR WALLER

E.O. 12958: DECL: 6/27/2017
TAGS: IR PREL ECON SMIG
SUBJECT: IRANIAN BUSINESS IN DUBAI: A BLESSING AND A CURSE

REF: A.)RPO DUBAI 0041; B.) RPO DUBAI 0035

RPO DUBAI 00000042 001.2 OF 002


CLASSIFIED BY: Jillian Burns, Director, Iran Regional Presence
Office, Department of State.
REASON: 1.4 (d)

1.(C) Summary: Dubai is one of the main centers of the Iranian
diaspora both in terms of sheer numbers and presence in the
business community. Iranian immigrants, both those who came
before and after the Islamic Revolution, have played a
significant role in Dubai's economic success, according to
Emirati and Iranian contacts. Dubai continues to be receptive
to Iranian expatriates, who work in all fields of business.
However, bilateral tensions and growing international pressure
on Iran have brought complications for the business community in
Dubai. End summary.

2.(C) Iranians, mostly merchants, were among the first
foreigners to set up business in the UAE, according to the Dubai
Chamber of Commerce and Industry (DCCI). The Dubai market has
been primarily oriented toward Iran since the 1950s when Iran
had the region's most dynamic economy. Dubai Ruler Sheikh
Rashid offered these Iranians incentives such as free land,
personal protection, and exemption from import and export
duties. With Iran's economic downturn and political isolation
after the Islamic Revolution of 1979, Dubai has continued to
play a critical role as a re-export hub for Iran. This cable
focuses on Iran's business presence in the UAE; a sociological
look at the diaspora community is reported septel.

3.(U) Situated less than 100 miles across the Persian Gulf, the
UAE is Iran's largest trading partner. Dubai in particular
serves as an outlet for Tehran's business with the outside
world, with goods going back and forth on large ships and
traditional dhows. The DCCI claims that in 2006, Dubai-Iran
non-oil trade was worth about $8 billion (presumably including
both exports and re-exports, although the source does not
clarify) while total Iran-Dubai trade exchanges amounted to
about $11 billion. As reported in local press, the Iranian

consulate in Dubai stated that UAE-wide exports and re-exports
to Iran totaled $7 billion in 2006, and Iranian exports to the
UAE $3 billion, expected to increase to $3.5 billion in 2007.
The article cites the Iranian commercial attachi saying that
Iran exports machinery and heavy equipment, fruits and
vegetables, processed food, building materials, and
petrochemical products to the UAE. At the end of 2006,
accumulated assets of Iranians in Dubai were estimated at $300
billion, according to Iranian government-run news agency ISNA.

Prominent Iranians in Dubai
--------------

4.(C//NF) Many Iranian business families in Dubai have achieved
prominent status, but it is the older expats who are best known
to the general community, even though they are now Emirati
citizens. Some have crossed over into the UAE government,
including cabinet positions. Influential Iranian families, such
as Galadari, Gargash, Al Aqili, and Rafiqdost own multiple
businesses and investments, and exemplify the business
opportunities available in Dubai. The Galadari family, although
now suffering some setbacks (as evidenced by the Dubai
government assuming control over their newspaper, the Khaleej
Times) has a long history of enterprise and commercial activity
dating from the 1940s. Originally from the city of Galadar in
Iran, the three Galadari brothers built some of Dubai's first
modern hotels, including the Intercontinental and Hyatt Regency
in the mid-1970s, and one of Dubai's major roundabouts is named
after Abdul Wahab Galadari, based on the location of his
landmark car dealership, "Galadari Motors." Abdul Wahab
Galadari also founded the Gulf Times Newspaper and one of his
sons was the editor of Khaleej Times. Today, another one of the
Galadari sons, Issam, is the managing director of Emaar
International Developers, which is building Burj Dubai, planned
to be the world's new tallest skyscraper. Also, big families
such as Al Aqili have significant trade ties to the US and to
Iran, although Al Aqili has reportedly suffered setbacks in its
investments in Iran (ref A).

Scattered in all fields
--------------

5.(C//NF) Today, Iranians in Dubai are engaged in a wide range
of business activities in Dubai and do not seem to be
concentrated in specific business sectors. The Iranian

RPO DUBAI 00000042 002.2 OF 002


government has a trade center in Dubai that holds international
business gatherings, and the independent Iranian Business
Council (IBC) operates to promote local Iranian businesses.
According to a January 2007 Middle East Online article, the DCCI
said 8,050 Iranian companies are registered in Dubai, while the
Iranian Business Council puts the numbers closer to 10,000.
(Note: Businesses in Dubai outside of free zones need to be at
least 51% locally owned; inside free zones can be 100% foreign
owned. End note.) Other Iranians work as teachers, professors,
bank officials, and doctors. Many local police are Emiratis of
southern Iranian/Baluchi origin. For example, probably a
quarter of the rotating group of police at the Dubai World Trade
Center building, the Consulate General's location, speak a Lari
dialect of FARSI, some through their heritage. Also, some older
Emiratis speak limited FARSI from the old days when FARSI was
the language of the local bazaar.

Iranian government interest
--------------

6.(C//NF) The Iranian government has two major areas of interest
regarding the Iranian Dubai business community: reversing
capital outflow from Iran to redirect investment into Iran and
keeping economic links open between the two countries,
particularly as the threat of additional sanctions rise.
Iranian government officials reportedly pay regular visits to
Dubai, although it is difficult to ascertain if the pace has
picked up in recent years. The headliner was, of course,
President Ahmadi-Nejad's May 13, 2007 visit to Dubai, which was
the first visit by an Iranian head of government since UAE
unification. While his private meeting with business people was
reportedly attended by prominent names, a source claimed he said
little of substance. We also heard that few from the
established Iranian community in Dubai attended his large rally
at the Iranian Club's soccer stadium (ref B).

7.(S//NF) In addition to the president, the Iranian Minister of
Commerce and the head of the Central Bank have reportedly
visited Dubai recently. According to press reports, the
Minister of Commerce attended a recent IBC meeting and promised
to take steps to ease UAE-Iran trade in response to member
requests. Contacts have indicated to IRPoffs that the Iranian
government is attempting to exercise greater influence over the
IBC.

8.(C//NF) As a sign of the importance both countries ascribe to
their relationship, Iran recently appointed one of its highest
profile diplomats, former Foreign Ministry spokesman and Deputy
Foreign Minister, Hamid Reza Asefi, as its Ambassador to the UAE.

9.(C//NF) The Iranian Consul General to Dubai reportedly holds
regular meetings with the sheikhs of Dubai on trade relations.
At a recent "VIP Day" to promote the Ras al Khaimah Free Trade
Zone (RAKFTZ) to the consulate and corporate communities,
Poleconoff observed the Iranian Consul General being personally
shepherded from site to site by RAKFTZ chairman Sheikh Faisal
and RAKFTZ CEO Oussama el Omari and being seated to the sheikh's
immediate right.

10.(S//NF) Comment: Dubai's relatively free business
environment and less restrictive social atmosphere continues to
attract Iranians, who already make up roughly 10% of the UAE
population. Also, the ease of transporting goods to Iran from
Dubai provides a critical supply line for Iranian imports of
goods and services, including those - Iranian and other - who
wish to skirt US sanctions and UN resolutions. The image of
Ahmadi-Nejad landing in the UAE in May as Vice President Cheney
departed exemplifies the difficulty the UAE faces in managing
its relationships with those two countries, both impossible to
ignore. End comment.
BURNS