Successive Iranian governments have underlined for decades that Iran’s top foreign policy priority is to have close relations with all immediate neighbors. However, in the past few years, deteriorating relations with Saudi Arabia and the United Arab Emirates have been a major impediment to a more constructive set of regional relations. From a trade and investment point of view, the hiccups in the Iran-UAE relationship — and especially Iran-Dubai ties — have been more damaging, especially as Dubai has played a key role as a regional hub for Iranian imports and financial transactions.
In the past two decades, the UAE has regularly been one of Iran’s top trading partners, mainly because during the sanctions years a considerable segment of the country’s imports were routed through Dubai. After the lifting of nuclear-related sanctions, Dubai was fully equipped to take advantage of Iran’s growing external trade. Furthermore, Dubai has always been the first port of call for financial transactions between Iran and the rest of the world. Dubai had always benefited from its developed infrastructure, but also from hosting so many Arab families of Iranian descent — a fact that increased the efficiency of economic and cultural relations. Therefore, the recent political climate has been a major impediment to Iran’s international economic relations. Abu Dhabi’s insistence on reducing relations with Tehran has also been disappointing to many Dubai stakeholders.
