A glossy magazine lies on a wooden table in a fifth-floor office at Bank Melli Iran's regional headquarters in Deira, part of the bank's promotional material for trade with Iran that shipping companies say has declined sharply since US-led sanctions started in 2006.
Along with tracts about the country's economic promise from Ayatollah Ali Hoseyni Khamenei and articles about science and technology is a simple description of the bank's purpose in the UAE. "Bank Melli Iran offers a range of banking products and services to its customers with a particular focus on trade finance," it says. While estimates vary, trade between the UAE and Iran is thought to be worth between US$10 billion (Dh36.72bn) and $15bn a year. Iran still routinely shows up on government-issued lists of the top destinations for non-oil exports and re-exports, which is little surprise given the country's location and the cultural ties that date to a time when pearl diving and the textiles business were economic juggernauts. The men in the dhow yards on Dubai Creek say it takes just a week or so to get to Iran's southern ports on their rickety, brightly-painted ships, a much easier journey than the 21-day sail to Karachi or the month-long voyage to Mumbai.
Financing from Bank Melli Iran and Bank Saderat Iran, among other banks, has lubricated this trade for decades. To ensure that they get paid, exporters in Dubai typically demand a letter of credit, or a promise from the importer's bank to pay up when the shipment arrives. Without such short-term credit, many large international shipments would not happen. A main thrust of US-led sanctions on Iran, which were stepped up after the UN Security Council last month approved fresh restrictions on financing and military goods, has been constraining banks and limiting letters of credit for shipments to the country.
The latest tightening, some traders in Dubai say, has crimped the flow of goods to Iran, even those not covered by sanctions. Traders have been forced to resort to cash payments and deal only with customers they know and trust, says Morteza Masoumzadeh, the head of the Iranian Business Council in the UAE and the owner of a company that imports goods from Europe and re-exports them to Middle Eastern and African countries.
"Iranian banks have virtually been disabled for the Iranian traders in the UAE and I'm sure in other places in the world, anywhere Bank Melli and Bank Saderat have branches," he says in his office overlooking the Dubai Creek shipyards. "Our suppliers, whether they're in Europe or other countries, they do not accept a letter of credit issued by the Iranian banks. That's why at least 70 per cent of our business is reduced when you compare it to two years ago."
Officials at Bank Melli Iran and Bank Saderat Iran would not discuss how the sanctions have affected them. But the pressure has only increased in recent months. Stuart Levey, the under secretary for terrorism and financial intelligence at the US Treasury, visited the UAE in April to describe his country's sanctions efforts. Earlier this week, the UAE Central Bank sent a message to banks asking that the accounts of 41 businesses be frozen because of their dealings with prohibited companies, most of which are connected with Iran's powerful Revolutionary Guard Corps.
Mr Masoumzadeh says none of those companies is among the 1,000 or so members of the Iranian Business Council, which comprise just a fraction of the estimated 8,000 Iranian companies in the UAE. An Iranian diplomatic source says the country's embassy in Abu Dhabi is monitoring the situation but has not made diplomatic inroads with UAE officials. "We see what's in the papers, but we have not seen anything formal, so we are just studying the matter at present," the source says. "Relations with the UAE are very progressive and you know we have a good economic relationship. We have more than $15bn [in trade] between the two countries."
Iranian traders have already tried to get around sanctions, with varying degrees of success. They approached local banks for help with financing shortly after sanctions began in 2006 but were given a cool reception. Insuring shipments to Iran is still possible, according to an Iranian insurance executive. But he says the policies underwritten by Iranian insurers had to be issued by third-party banks.
While the sanctions have hit some Iranian traders hard, others have been spared. Many small businesses have not been affected at all, simply because they have always paid in cash. The re-exporters who ship American and European goods to Iran through Dubai have taken the biggest hit. Even for them, though, it is not impossible to get American goods into Iran. They do it openly, they say, because they know customs officials are far more concerned about goods with possible military or nuclear uses than common consumer items.
Yet even if sanctions continue for the foreseeable future, Mr Masoumzadeh says he does not expect many traders to leave Dubai. He likened the sanctions to the period during the Iran-Iraq war in the early 1980s, when trade with Iran slowed. "After 30 years, where can we go? My children were born here. They live here. How can I change my life? How? It is like our home here now." afitch@thenational.ae