UAE releases $700m of Iranian funds

Iran's Foreign Minister Mohammad Javad Zarif [left] seen with UAE's Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan [File photo]

The UAE has released $700 million in previously frozen funds to Iran, in a bid to improve relations between the two countries. A member of the parliament in Tehran hailed the move yesterday.

“The Emiratis have… understood that Western countries and Saudi Arabia cannot provide the [UAE] with security in the current circumstances,” Akbar Torki MP told Iranian media. “Financial relations with Iran have improved and some Iranian exchange offices in Dubai have resumed activity.”

The move is a surprise at a time when the Arab Gulf States generally perceive Iran to be a growing threat in the region, particularly due to its increasing military influence through the Shia militias it controls and funds in the Levant. Iran also supports the Shia Houthi militia in Yemen, which the UAE has until recently been fighting as a member of the Saudi-led coalition. The UAE has now more or less withdrawn from the latter and advocates a political solution.

The Arabian Gulf, particularly the strategic Strait of Hormuz, has been the subject of much tension over the past few months following Iran’s seizure of European ships and oil tankers in the summer and its shooting down of a US drone in the area. More recently, Iran is thought by many to have been behind the attack on a Saudi Aramco oil facility in in September, which hit global oil supplies by five per cent.

The unrest stems from America’s unilateral withdrawal from the 2015 nuclear deal with Iran and Washington’s re-imposition of sanctions on the country, which has resulted in increasingly tense relations between the Islamic Republic and the US and EU. In response, the US has deployed a further 3,000 troops to Saudi Arabia to monitor the Iranian threat.

Historically, the UAE, like its neighbours Qatar and Bahrain, has had links and trade with Iran despite the hegemonic threat that it is seen to pose. This step to unfreeze Iran’s assets within the UAE, therefore, suggests that the government in Abu Dhabi is looking to improve relations with the Islamic Republic and reduce tension in the Gulf, not least to avoid the possibility of direct military conflict.