GCC-Iran business relations booming despite deep-seated mistrust
London - A regional proxy war, accusations of interference in domestic affairs and the uncovering of sleeper cells are not enough to deter some Gulf Cooperation Council (GCC) members from doing business with Iran.
A Saudi-led coalition, made up mostly of GCC members, is at war in Yemen with the Iran-supported Houthi movement. In Syria, Saudi Arabia, Qatar and the United Arab Emirates are supporting moderate rebels in their civil war with the Iranian-backed regime of President Bashar Assad.
In Kuwait recently a terror cell was uncovered, which led to the prosecution of 26 people, including an Iranian national, for possession of weapons and explosives and for spying for Iran and its Lebanese proxy, Hezbollah. A terrorist bombing in Bahrain that killed a policeman and wounded several others led to a Kuwaiti member of parliament to describe Iran as the “true enemy” of Gulf Arab states.
But with the freeing of assets, estimated to be in the tens of billions of dollars, courtesy of the Iran nuclear deal, private and government-owned businesses in the GCC are looking to benefit significantly from the Islamic Republic’s new-found wealth.
Making up for lost time is the Sultanate of Oman. The GCC member responsible for bringing the United States and Iran to the negotiating table in July 2012, and the only GCC country not to participate in the conflict in Yemen, signed a memorandum of understanding with Tehran for the sale of Iranian gas to Oman in a 25-year deal valued at around $60 billion, a year before the announcement of the Iran nuclear deal. The two countries are also looking into a visa waiver programme.
At the recent opening of an Iranian-Omani trade exhibition, Iranian Ambassador to Oman Ali Akbar Sibeveih, noted that trade between the countries stood at $1 billion annually and Iranian investment in Oman was at $4 billion.
A particular industry that is set to reap the benefits of Iran’s expected increased purchasing power is the aviation business. Emirates, the Dubai-based airline, just completed its first trip to Mashhad, Iran’s second largest city and a major economic hub for the Islamic Republic.
The airline will have five flights a week to Mashhad, while flights to Tehran will continue at four a day.
“Iran is an important market for Emirates SkyCargo and, with our Dubai hub strategically located between East and West, we are able to offer Iranian manufacturers access to our global network,” said Khalid Mohd Al Hinai, vice-president cargo commercial for the Middle East, GCC and Iran.
“We anticipate that trade between the UAE and Iran to further flourish as a result of the launch of this new direct five times weekly service.”
Dubai is also looking to Iran to give its property market a significant boost. According to property consultants Cluttons in a report, “Iranian nationals will seize the opportunity to make significant real estate investments in Dubai.”
“This is expected to be among the first lead indicators of the benefits to the UAE from the lifting of Iranian trade sanctions,” Cluttons added.
The report highlighted that, before international economic sanctions were placed on Iran, Dubai was a hub for local and global business for Iranian operations, which might be the case again in the near future.
Despite the sanctions, Iran was the United Arab Emirates’ fourth largest trade partner in 2014 with nearly $17 billion in cross-border trade. In 2010, Iranians were the fourth largest foreign buyers of Dubai property, behind nationals of India, Britain and Pakistan. Iranians accounted for 12% of real estate transactions that year. According to Cluttons, that figure dropped 3% in the first quarter of 2015.
Representatives of Dubai government-owned DP World, one of the world’s biggest shipping-container handlers, recently visited Iran to see whether “the country’s ports and railway infrastructure can be used to transport goods faster between China and Europe”, the Wall Street Journal reported.
“I am not a politician, I am a businessman,” Sultan Ahmed bin Sulayem, chairman of DP World, told the publication. “What I look for is if there is an opportunity for our customers.”
Bank of America Merrill Lynch said in July that Turkey and the UAE were the most likely beneficiaries of Iranian foreign trade, which could increase to $200 billion by 2020 from $80 billion today.