The United Arab Emirates (UAE) on Wednesday suspended all trade with Iran, after suffering the latest wanton missile attack from Iranian forces.
The Iranian Foreign Ministry scrambled to deny reports of the missile attack that pushed the UAE too far, implying that it could have been a “false flag” operation conducted by enemies of the Islamic Republic.
The UAE was attacked repeatedly by Iranian drones and missiles this year and Iran has bombed dozens of ships belonging to Abu Dhabi’s state-owned ADNOC energy company, but the reported launch of two ballistic missiles by Iran on Tuesday was the first act of aggression from Tehran in about three months.
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The Emirati Defense Ministry said its air defense systems “detected two ballistic missiles launched from Iran toward the country.”
“The first fell outside the country’s territorial waters, while the second fell within its territorial waters,” the statement said.
The UAE Foreign Ministry announced a halt to all trade and financial transactions with Iran on Wednesday, “in light of regional escalations that undermine regional and international peace and security.”
The UAE’s move could prove to be highly consequential, because despite Iran’s provocations this year, the two countries have a robust trade relationship valued at some $28 billion – and the Emirates have long been crucial to helping Iran’s economy survive under U.S. sanctions. The two nations are both members of BRICS, the China-led, anti-U.S. economic and security coalition named after core members Brazil, Russia, India, China, and South Africa.
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Although the UAE officially supports the sanctions and periodically punishes violators, an unofficial sanctions-defying trade pipeline runs through Dubai. The U.S. government has asked the UAE government to crack down harder on sanctions violators over the years.
Foundation for Defense of Democracies (FDD) senior fellow Miad Maleki said on Wednesday that the UAE and China are “Iran’s two economic bloodlines,” and if the Emiratis mean business with their trade embargo, “it’ll close the one the U.S. Navy couldn’t touch.”
Maleki noted that the UAE “has been Iran’s Number One import supplier for five consecutive years,” and its currency markets support 80 percent of Iran’s foreign exchanges for imports, including 40 percent of its purchases of essential goods, from soybeans to industrial machinery.
“Most of what Iran calls ‘imports from the UAE’ was never Emirati. Dubai has been basically Iran’s window to the world economy,” he said. The vast majority of Iran’s imports from Dubai are actually third-party goods, like gasoline from India, car parts from China, and soybeans from Brazil.
In response to a question about whether China could pick up the slack or not, Maleki said there is simply “no substitute for Dubai” in Iran’s economic strategy, thanks to its close physical proximity, prodigious logistical capacity, and “large exploitable diaspora.” Also, China’s shipping costs have already skyrocketed due to the Iran crisis, so it would have great difficulty covering the extra costs of delivering the goods Iran used to get from Dubai.
The Iranian regime has given hints that it knows that it might have gone too far. Early on Wednesday, the Iranian military seemingly boasted of the missile attack on the UAE and issued belligerent warnings that “any assistance of facilitation provided to the aggressor U.S. military” could trigger comparable strikes on Persian Gulf countries.
Iranian Foreign Ministry spokesman Esmaeil Baqaei, on the other hand, frantically claimed the missile attack on the UAE was a hoax.
“Baqaei expressed regret over unfounded accusations against the Islamic Republic, saying such claims run counter to the principle of good-neighborliness and undermine ongoing efforts to strengthen trust among regional countries and prevent further insecurity,” reported Iran’s state-run Islamic Republic News Agency (IRNA) on Wednesday.
“He called on all regional parties to refrain from baseless allegations against Iran, citing the complex regional circumstances created by continued US and Israeli malign activities against regional peace and security,” IRNA said of Baqaei’s remarks.
“The spokesperson also referred to the history of multiple alleged false-flag operations in the region,” the report added.
UAE presidential adviser Anwar Gargash on Wednesday strove to refute the accounts of Abu Dhabi helping Iran evade sanctions and prop up its economy.
“Some platforms targeting the UAE are circulating false information about the country, at a time when the state continues to focus its efforts on addressing regional developments and preparing for the post-phase period,” Gargash said.
“As for the rumors being spread, such as those related to the cancellation of labor residencies or the provision of financial facilities to Iran and others, they are untrue information and part of desperate media campaigns,” he insisted.
Emirati media reported that President Donald Trump spoke with UAE President Sheikh Mohamed bin Zayed al Nahyan by telephone on Tuesday and Secretary of State Marco Rubio also spoke with UAE National Security Advisor Sheikh Tahnoon bin Zayed al Nahyan.
The State Department said Rubio “underscored the importance of freedom of navigation through the Strait of Hormuz” in his conversation with Sheikh Tahnoon, and discussed “U.S.-UAE coordination to hold Iran and its terrorist proxies accountable for ongoing attacks.”