Gulf states have complicated relationship with Iran

By David Andrew Weinberg, Special to CNN

Editor’s note: David Andrew Weinberg is a senior fellow at the Foundation for Defense of Democracies. You can follow him @DavidAWeinberg. The views expressed are his own.

In a controversial interview aired this week, Dubai ruler Mohammed bin Rashid Al Maktoum called for sanctions on Iran to be dropped. His proposal for prematurely unwinding the sanctions regime represents the most tangible success thus far for Iran’s efforts to weaken the Saudi-led consensus in the Gulf against Tehran.

Perhaps unsurprisingly, though, those actors most amenable to Iranian overtures have been Gulf leaders with a political or financial stake in engaging the Islamic Republic.

Shortly after Iran reached a short-term nuclear accord in November, its foreign minister, Javad Zarif, embarked on a regional tour of the Gulf, initially setting out to visit Kuwait, Oman, and Qatar. At the end of his tour, Zarif also tacked on an unexpected trip to the United Arab Emirates, where he met with the rulers of Dubai and Abu Dhabi.

Qatar and Oman each share energy resources with Iran, Kuwait has an influential Shiite minority, and Dubai has long served as an illicit hub of trade and investment for Iran.

Soon after Zarif left the Arab side of the Gulf, word broke that Iran had redeployed some of its warplanes off of Abu Musa, one of the three islands Iran occupies that the United Arab Emirates claims as its own. A day later, Defense News reported that the two sides were actually quite close to an agreement whereby the UAE would regain control of the islands and Iran would maintain rights to the seabed. Now follow-on reports suggest that Oman might even help facilitate a deal between Iran and the UAE by promising the Iranians a foothold on the Arabian Peninsula instead.

A deal to evacuate the islands is hard to envision actually being ratified domestically within Iran. Yet the mere fact Zarif was allowed to pursue such an ambitious initiative suggests he has at least a yellow light from Iranian Supreme Leader Ali Khamenei. The Supreme Leader may well see it as a way to divide and conquer his country’s main rivals in the Gulf.

Indeed, it seems likely it was Iran’s new position on the islands that gained Zarif last-minute permission to visit the UAE, not Iran’s nuclear negotiations with the P5+1. And because the UAE’s claim to the islands is exercised through Ras al-Khaimah and Sharjah, these two emirates have now been given a stake in any efforts by Dubai to unravel the Iran sanctions regime.

Most other Gulf leaders have indicated they would only support the removal of sanctions if Iran stops its subversion attempts through Shiite communities in the Gulf and the Levant. However, Sheikh Mohammed’s remarks suggest he is eager to see Dubai reclaim its position as an economic gateway to Iran without first insisting that it end its destructive behavior.

For years, American officials struggled to secure cooperation from Dubai on stopping illicit trade and finance with Iran. In 2009, U.S. broadcaster Dan Rather described Sheikh Rashid’s little kingdom as not just “a 21st century monument to capitalism” but also “one of the easiest places on earth to launder money” according to his administration sources. A former U.S. intelligence official recently told me “Dubai floats on Iranian cash.”

Ultimately, Dubai’s dealings with Iran were only reduced in a meaningful sense after the global financial crisis of 2008 brought the emirate’s real estate and credit markets crashing down. Dubai had to turn to Abu Dhabi, its oil-rich neighbor to the west, for a massive economic bailout, enabling Abu Dhabi to start rolling back this Iran-oriented shadow economy. On his latest visit to the UAE, Secretary of State Kerry put the UAE’s price tag for supporting sanctions against Iran at about $19 billion.

But now that tenuous arrangement is coming undone: Dubai’s economy is recovering, and the tiny city-state has reclaimed its confidence, having recently won its bid to host an upcoming World Expo in 2020. Evidently, Dubai is also becoming more assertive in its demands for trade with Tehran, even if that means turning a blind eye to Iranian efforts to achieve hegemony throughout the region.

The biggest obstacle Mohammed bin Rashid faces in this endeavor is still his neighbor to the west. Abu Dhabi ruler Khalifa bin Zayed Al Nahyan is perceived by some as giving free rein to his younger brothers to craft defense and foreign policy for the UAE, especially Abu Dhabi’s Crown Prince Mohammed bin Zayed. Indeed, the latter Bin Zayed was described in a leaked U.S. cable as “the man who runs the United Arab Emirates,” except on oil policy or budgetary matters.

In his BBC interview this week, Mohammed bin Rashid said he trusted Iran would not use its nuclear program for aggression because Ahmadinejad once told him so. On the other hand, the New York Times reported that Mohammed bin Zayed once argued forcefully that it would be a mistake to appease Iran because in this regard “Ahmadinejad is Hitler.”

Bin Zayed has also spent two decades striving to transform the UAE’s armed forces from a band of squabbling militias to the point where they would be uniquely capable among the Gulf states in case of a regional conflagration. In his newly released book, former Defense Secretary Robert Gates even describes Abu Dhabi’s Crown Prince as “one of the smartest, canniest people I have ever met.”

In 2010, the UAE’s ambassador to Washington made headlines for observing that “our military, who has existed for the past 40 years, wake up, dream, breathe, eat, sleep the Iranian threat.” You can probably guess which capital he was speaking for at the time: Abu Dhabi or Dubai.