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Dubai Eyes Iran Opportunities
Economy, Domestic Economy

Dubai Eyes Iran Opportunities

There is a certain air of inevitability about Iran’s return to the international fold in the wake of the nuclear settlement between Tehran and the P5+1 group of international powers. Western sanctions will be lifted by early 2016 as part of the July 14 deal.
Many international investors are eying opportunities in quiet anticipation. Across the Persian Gulf, in Dubai—a finance hub better known for its sprawling malls, outrageously high skyscrapers, lavish marinas, outlandish beach resorts and tourist enticing year-around sunshine—anticipation is at its highest and with good reason, reads a recent article in American business magazine Forbes.
As Iran’s relations with the West started deteriorating and sanctions on Tehran began escalating in tandem, away from Dubai’s more glamorous quarters, resourceful smugglers bundled anything from American-made cigarettes to Chinese manufactured PCs on to dhows—traditional Arabian sailboats—and headed across the Persian Gulf to Iran in order to make a buck or two in defiance of western sanctions.
The activity, which gained considerable traction over the last decade, continues to this day in plain sight from Dubai Creek, a dock not far from the city’s international airport, which has been described as “illegal but harmless”.
Dubai’s smugglers aren’t the only ones at it. Smugglers from Khasab, in Oman’s Musandam peninsula do likewise. However, the scale of dubious activity in both hubs is not even comparable. Now with Iran opening up, Dubai would be at the heart of it all and very much in the heads of investors.
Consider this: In terms of sheer trading volumes from the UAE, three Emirates—Abu Dhabi, Sharjah and of course Dubai itself—are collectively Iran’s second largest partner, slotting in right after China. Around 9,500 “Iran facing” companies call Dubai their home, though many might well be mere paper companies for the men in dhows!  Finally, around 375,000 Iranians call the UAE their home, with three-quarters of them living in Dubai.
Naturally, there is a buzz in the city’s financial circles about Iran. It is yet to be seen how things pan out from here, but senior executives at the Dubai practices of some of the biggest global accounting and legal firms point to a rising number of queries.
Even if US investors are treading cautiously, anecdotal evidence suggests few others are doing likewise. Atop the query pile are Chinese and European investors, says one consultant. Regional ties aside, there is clear thinking behind coordinating preliminary investor pitches from Dubai.
Two key areas where Iran could use cooperation are finance and oilfield technology and services; Dubai is the leading regional hub in both sectors.
Starting with the first, almost every global bank has a presence in the Emirate, though there have been some notable retreats (e.g. Barclays ) in the wake of the financial crisis and Dubai’s own property market taking a tumble in 2008-09. The big four accounting firms (PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, and KPMG) also have an established presence in Dubai, as do most of the leading global law firms.
Executives craving connectivity can rely on seven daily flights between Dubai and Tehran. According to a transport ministry official, the number will rise with a second new airport (Al Maktoum International) set to expand services. Smart money is on Tehran looking to Dubai to finance its needs.
Secondly, the country’s energy sector is in dire need of oilfield technology partnerships following years of sanctions. Handy then that, Dubai’s Jebel Ali free trade zone hosts a veritable who’s who of the industry. Big beasts such as Schlumberger and Halliburton might have to hold back until Washington gives the all clear, but European players such as Amec, Petrofac , Hunting and Lamprell, to name a few, are very well placed in Jebel Ali.
Cooperation in the civil aviation sector is another area of opportunity. But it won’t be as straightforward, as neither of the two giants of aviation—Boeing and Airbus—can move unless all sanctions are lifted. Both have a substantial services presence in Dubai, whose airport overtook London’s Heathrow as the busiest in the world earlier this year.
Iran has a dire need for new planes as well as spare parts for Iran Air’s aging fleet. In August, newswire Reuters cited Mohammad Khodakarami, caretaker director of Iran’s Civil Aviation Organization, as having said that Tehran would buy 80 to 90 new planes from both leading aircraft manufacturers, adding up to 300 new planes within five years, once the sanctions are lifted.
All in all, there is a palpable sense that Dubai would be the preferred gateway to Iran. Simply put, the Emirate is eying business opportunities in Iran, has a pretty good batting average as the region’s commercial hub and that trumps everything else.

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