UAE President and Abu Dhabi ruler Sheikh Mohamed bin Zayed Al Nahyan (center right) greets Sultan of Oman Haitham bin Tariq Al Said (center left) on Monday (local time). [EPA]
UAE President and Abu Dhabi ruler Sheikh Mohamed bin Zayed Al Nahyan (center right) greets Sultan of Oman Haitham bin Tariq Al Said (center left) on Monday (local time). [EPA]

The UAE announced Tuesday it would suspend all trade, commercial and financial dealings with Iran, in a sharp response to Tehran's escalating regional aggression, including a missile strike on UAE territory.

Afra Al Hameli, director of strategic communications at the UAE Ministry of Foreign Affairs, said in a statement Tuesday (local time) that the UAE would "suspend all trade, commercial and financial transactions with Iran until further notice, in light of the recent escalation that undermines regional and international peace and security."

Al Hameli added that the UAE "reaffirms its firm commitment to dialogue, cooperation and regional integration as essential means of promoting peace, stability and prosperity," and said the country would remain "resolutely committed to upholding the integrity of the international financial system in accordance with international law and the highest global standards."

The move is expected to deal a further blow to Iran's already battered economy, which is reeling from Western sanctions and a US naval blockade. The UAE sits at the mouth of the Persian Gulf where it meets the Gulf of Oman, making it a critical logistics and financial hub for Iran, which lies deep inside the Persian Gulf. If enforced strictly, the measures could deliver an even sharper economic blow to a country already struggling under the US blockade and Western sanctions.

Since the outbreak of war with the United States, Iran had already halted formal trade with the UAE via oil tankers and large container ships. However, the US Treasury Department has long suspected Iran of operating hundreds of shell companies in Dubai to procure foreign currency through informal networks.

Before the war broke out in February, Iranian companies were believed to have used UAE-based financial services to export crude oil in circumvention of Western sanctions. Some estimates put the value of Iranian funds held in the UAE in the tens of billions of dollars.

The UAE's sharp pivot against Iran appears to be retaliation for Iranian attacks on UAE territory. The announcement came shortly after the UAE disclosed a missile strike believed to have originated from Iran.

Earlier that day, the Ministry of National Defense announced it had detected two ballistic missiles fired from Iran, saying both appeared to target maritime traffic and fell into the sea. It was the first reported missile strike since Iran hit the UAE's port of Fujairah in May.

The Defense Ministry said the UAE was "fully prepared to deal with any threat and will firmly confront all attempts to destabilize national security." The UAE Interior Ministry also issued a missile threat alert before later lifting it.

Iran denied firing any missiles. Foreign Ministry spokesperson Esmail Baghaei said via Telegram shortly after the UAE's announcement that "all parties in the region should refrain from unfounded accusations," rejecting the UAE's claim that Iran had launched the missiles.


kate01@heraldcorp.com