Dubai: The Commercial Gateway to Iran

Dubai, called the “Hong Kong of the Middle East,” has been known for centuries as a trading port. It was once famous for its market in pearls and gold. Today, Dubai is emerging as the premier distribution center for high-tech exports to the Mideast and South Asia. U.S. officials worry that in the same way Hong Kong became a conduit for secret sales to Communist China, Dubai will become the favorite diversion point for hot cargoes to Iran.

Dubai’s strategic position on the Persian Gulf puts it at the crossroads of Asia, Africa and Europe. It is the commercial capital of the United Arab Emirates and the second largest of the seven emirates, which consist of Abu Dhabi, Dubai, Sharjah, Umm Al Quwain, Ajman, Ras Al Khaimah and Fujairah. With its liberal trade policy and efficient ports, Dubai is an ideal base for companies trading in the Middle East. And for those that register in the Jebel Ali Free Zone, life is even better: No corporate taxes, no personal income taxes, 100-percent foreign ownership allowed, no currency restrictions and no bureaucracy.

In this issue, the Risk Report probes the possibility that sensitive technology may be diverted through Dubai to U.S.-embargoed countries such as Iran, Iraq and Libya, and to other countries of proliferation concern like India, Pakistan and China. This month’s Risk Report reveals:

  • How Iran continues to import American goods through Dubai despite the trade embargo imposed by Washington in May 1995;
  • There are virtually no export controls in the United Arab Emirates on equipment useful for building weapons of mass destruction;
  • Why the Director of Dubai Customs and the Chairman of the Jebel Ali Free Zone believe the U.S. embargo against Iran will never work;
  • The names of more than 20 Iranian companies operating in the Jebel Ali Free Zone.