This record is a partial extract of the original cable. The full text of the original cable is not available.

S E C R E T SECTION 01 OF 03 ABU DHABI 002815 
 
SIPDIS 
 
NOFORN 
 
E.O. 12958: DECL: 06/20/2015 
TAGS: PREL ETRD PINR IZ IR GCC TC
SUBJECT: UAE-IRAN RELATIONS: AN UNEASY CALM 
 
REF: A. ABU DHABI 1008 
     ¶B. 04 ABU DHABI 3642 
     ¶C. ABU DHABI 510 
 
Classified By: AMBASSADOR MICHELE J. SISON, REASONS 1.4 (B) AND (D). 
 
¶1. (C) Summary: The UAE and Iran have long had a wary 
co-existence.  While the two countries enjoy robust trade 
ties and have historical social and cultural links, Iran's 
nuclear program and the possibility of a clandestine weapons 
component, interference in Iraq's internal affairs, and 
continued military occupation of three disputed islands cast 
a shadow on its political relations with the UAE.  In 
response to the perceived threat, the UAE is reinforcing its 
military capability to protect its borders, but is also 
careful not to jeopardize the substantial commercial 
interests it has with Iran by antagonizing the militarily 
superior Islamic Republic.  President Khalifa is following in 
the footsteps of his father, the late Sheikh Zayed, who 
advocated using diplomatic approaches with Iran.  We will 
discuss UAE/Iran economic and commercial relations septel. 
End Summary. 
 
UAE/Iran: Close Trade and Historical Ties 
------------------------------------------ 
 
¶2. (U) Trade and cultural links between the UAE and Iran are 
significant.  There are places in the UAE, such as Sharjah's 
fishing port, where the only language one hears is Farsi.  In 
Dubai, which acts as a major re-export center for Iran, there 
are more than 2,000 Iranian companies active in the port.  An 
estimated 250,000 Iranians reside in the UAE, including more 
than 150,000 in Dubai alone, and many Emiratis belong to the 
Arab Qawasim tribe which once lived on the Iran and UAE 
coasts.  Commercial ties between Dubai and Iran are 
expanding: the UAE is Iran's largest non-oil trading partner, 
and the majority of the UAE exports (and re-exports) to Iran 
come from Dubai and the northern emirates.  According to 
official statistics, 2003 non-oil trade between the two 
countries stood at over $3.3 billion.  Although the UAE has 
not finalized its statistics, officials from the Ministry of 
Economy and Planning estimate that trade between the UAE and 
Iran during 2004 grew by 50% from 2003.  In contrast to the 
brisk commerce the UAE enjoys with Iran and despite cultural 
and social ties that have spanned the Gulf for centuries, 
UAE-Iran political relations are problematic -- most would 
say strained. 
 
UAEG: Iran a "Major Threat" 
--------------------------- 
 
¶3. (C) Iranian intentions in the UAE and in the Gulf as a 
whole are a grave concern to the Emiratis.  Iran is a "major 
threat" to the UAE, MFA Under Secretary Abdullah Rashid Al 
Noaimi told us last month.  The UAE believes that Iran is 
determined to develop nuclear weapons and possess an arsenal 
of long-range missiles, he said.  Abu Dhabi Crown Prince 
Sheikh Mohammed bin Zayed (MbZ) told visiting NATO 
parliamentarians June 18 that Iran's military presence in the 
Gulf poses a threat to Gulf trading routes and the Straits of 
Hormuz.  MbZ said he was concerned that the Iranians may have 
a "hidden, long-term agenda" rooted in their past as a 
"Persian superpower."  The UAE does not believe the Iranian 
argument that they need nuclear energy for peaceful purposes 
when Iran has vast oil and gas resources and is burning off 
as waste enough natural gas to replace the power that would 
be produced at its nuclear power plants.  This was a point 
Under Secretary of State for Arms Control and International 
Security John Bolton had made to the UAEG during his visit 
here in January 2005.  MbZ also said he considered the EU-3 
initiative to be "very good," but added that he was 
"skeptical" about the EU's effectiveness in persuading Iran 
to abandon its nuclear program.  He expressed concern that no 
one was telling Iran what the "red lines" were.  The 
potential threat from Iran partly explains the Emiratis' 
quest for a stronger military deterrent, including its 
acquisition of 80 F-16 Block 60 fighter aircraft from the 
U.S., the first tranche of which were delivered in May. 
 
Countering Iran's Nuclear/Proliferation Threat 
--------------------------------------------- - 
 
¶4. (C) Iran's pursuit of WMD capabilities is another serious 
concern for the UAE's leadership, and senior UAEG officials 
have consistently expressed to us their conviction that Iran 
is intent on developing nuclear weapons.  In his meeting with 
U/S Bolton last January, Minister of Information Sheikh 
Abdullah said that all countries must join in applying 
pressure to Iran and that anything less would not result in a 
positive outcome (ref C).  Sheikh Abdullah also expressed 
concern that if the U.S. were to refer Iran's case to the UN 
Security Council, Iran could use its wealth and resources to 
buy votes in the UN.  The UAEG voiced its opposition directly 
to Hassan Rowhani, Secretary of Iran's Supreme Council for 
National Security, when he called on President Khalifa June 7 
as part of a regional tour to brief Gulf leaders on Iran's 
talks with the IAEA.  For his part, Khalifa stressed the need 
for all countries to be committed to eliminating all banned 
weapons and to resort to peaceful negotiations to resolve any 
existing conflicts as per the UN charter, and expressed hope 
that Iran would reach an agreement with the EU-3.  The 
Iranians are "bazaaris" who will continue bargaining with the 
international community on their right to develop a nuclear 
program "until the end," Al Noaimi opined to Ambassador on 
June 8.  Al Noaimi also told us that a nuclear Iran would be 
very dangerous and "not acceptable" to the UAE. 
 
¶5. (S/NF) However, with Iran as a considerable trading 
partner, the UAEG sustains a delicate balance in maintaining 
its viable economic interests and halting suspected 
proliferation from Iran.  Significant numbers of Iranian 
front procurement companies are suspected of operating out of 
Dubai.  The government of Dubai has shut down a number of 
suspected Iranian front companies and stopped containers that 
were suspected of being diverted to Iran.  In October 2004, 
the MFA handed over to the Ambassador a list of 28 UAE-based 
Iranian companies whose activities were suspicious (ref B). 
Two months ago, the UAEG, acting on an Interpol Red Notice, 
arrested Dubai-based Iranian Mahmud Seif, who is wanted for 
attempting to export latest generation Night Vision Goggles 
from the U.S. to Iran in violation of the U.S. Arms Export 
Control Act.  The Iranian government has been pressuring the 
UAEG for Seif's release, Al Noaimi told Ambassador June 19, 
while the USG has been working with the UAEG to have Seif 
deported to the United States. 
 
¶6. (S/NF) While these types of actions send a clear message 
to the Iranians that the UAE will not tolerate Iranian 
proliferation activities, Dubai Customs continue to face 
challenges in examining cargo for export to Iran due to 
difficulties recognizing dual-use technology.  However, with 
the implementation of the U.S. Department of Homeland 
Security's Container Security Initiative (CSI) in March, 
Dubai Customs has been noticeably quick to respond when given 
information about a specific container, company or individual 
suspected of being involved in proliferation activity. 
Furthermore, Dubai Customs recently informed Embassy's DHS 
Attache that it now wanted to search all Iranian containers 
destined for the U.S. because they had seen a dramatic 
increase in unmanifested cargo (i.e. smuggling) in containers 
originating in Iran. 
 
Shared Concerns about Iran's Influence in Iraq 
--------------------------------------------- - 
 
¶7. (C) Since the end of the Iraq war, the UAE has grown 
increasingly concerned about Iran's influence in Iraq,s 
internal affairs and its hegemonic intentions in the Gulf. 
MbZ told USAF Chief of Staff General John Jumper February 24 
that the UAE would support "any Iraqi, Shi'a or Sunni, Muslim 
or Kurd, who was not under the control of Iran" would be an 
acceptable Iraqi leader in the eyes of the UAE (ref A).  MbZ 
told the NATO parliamentarians this week that the UAEG is 
concerned about Iranian involvement in Iraq.  He said Iranian 
funds were flowing into Iraq, and that Iran was influencing 
the Iraqi Cabinet.  Iran also has an influence on Shi'a 
minorities in other Arab states, he added.  The UAE 
leadership has not publicly denounced Iranian interference in 
Iraq, and some of our contacts speculate that this goes back 
to the UAEG's unwillingness to upset the status quo, at least 
in terms of its economic and commercial interests with Iran. 
The bottom line for the UAE is that the Gulf does not want 
Iraq to fall under the influence of Iran leaving the region 
with "two Irans," a political-military analyst at the UAE 
Armed Forces' Directorate for Military Intelligence told Pol 
Chief June 7. 
 
Long-running Dispute over the Islands 
------------------------------------- 
 
¶8. (C) Another irritant in the political relationship is the 
34-year-old dispute over three strategically located islands 
in the Gulf ) Abu Musa and the Greater and Lesser Tunbs. 
The islands have been under Iranian military occupation since 
1971, and most of the UAE nationals living and working on the 
islands were expelled in 1992.  Both countries claim 
sovereignty over the islands.  The UAE raises the islands 
issue at every major international and regional meeting, 
including calls for bilateral negotiations that would result 
in giving territorial sovereignty over the islands to the 
UAE, or for a resort to the International Court of Justice. 
The UAE's claim to the islands is supported by GCC members. 
Iran has rejected any regional or international mediation or 
arbitration, saying it is only willing to talk bilaterally 
with the UAE only to clear up what it calls 
"misunderstandings."  Iranian Foreign Ministry spokesman 
Hamid Reza Asefi rejected a GCC resolution issued at the 
foreign ministers' summit about the islands.  IRNA quoted 
Asefi June 12 as saying, "These three islands have been an 
inseparable part of the Iranian territory and will remain so 
and allegations made in this regard lack any legal basis." 
None of our contacts believed that the Iranian presidential 
election would change Iran's stance on the islands. 
 
Fishing Boat Tit for Tat 
------------------------ 
 
¶9. (C) The diplomatic tension ebbs and flows.  In May, the 
Iranian coast guard seized UAE fishing boats and their crews 
and accused them of crossing into Iranian waters.  Iran 
detained six UAE fishermen, an Omani, 20 Asian fishermen, and 
five dhows.  Iran freed the fishermen 23 days later, on June 
8, after UAE diplomats intervened.  During the same period, 
the UAE had seized two Iranian boats.  Although the latest 
fishing boat incident is over, Al Noaimi told Ambassador that 
the Iranians acted like "bullies," going as far as emptying 
the fuel tanks from the dhows before returning them to the 
UAE. 
 
Limits to UAE Criticism of Iran 
------------------------------- 
 
¶10. (S) Officially, MbZ and HbZ, in cooperation with Dubai 
Crown Prince Sheikh Mohammed bin Rashid in Dubai, make Iran 
policy.  Some of our contacts said they believe that the UAE 
leadership is not taking Iran's ambitions seriously.  Khalifa 
Bakhit Al Falasi, a former ambassador to Australia and now a 
reformist and human rights advocate in Dubai, told Pol Chief 
that he tried in vain in the 1990s to get HbZ to prevent Iran 
from "gaining a foothold and more influence in the UAE," but 
the UAEG did nothing.  Now, he said, "Iranians are all over. 
They know what's going on.  Their influence is spreading." 
 
¶11. (C) The Gulf Research Center (GRC), a Dubai-based think 
tank, believes the government of Iran is seeking to pressure 
the UAEG to close the center for criticizing Iranian 
influence in Iraq.  "The Iranians are concerned that the 
GRC's views will be adopted by the UAEG and others, which is 
happening," GRC president Abdelaziz Sager told Pol Chief. 
But Al Falasi and others asserted that the UAE's leadership 
has refrained from taking any action to limit Iran's growing 
influence within the UAE so as not to jeopardize substantial 
local commercial interests, particularly in Dubai.  Academic 
Ebtisam Al Kitbi said Dubai's economic and commercial 
interests "override" its political interests.  "They want 
money.  They don't consider the political ramifications." 
Laheeb Abdul Khaleq, an Iraqi Sunni journalist, opined that 
if Abu Dhabi were to stop supporting the northern emirates 
financially, Iran would "fill the gap" and the northern 
emirates would welcome Iran's aid. 
 
Comment: 
------- 
 
¶12. (C) While the Emiratis have been openly critical of Iran 
on the islands dispute, and President Khalifa has made clear 
to Iran's Rowhani the UAE's commitment to nuclear arms 
nonproliferation, the UAE leadership has yet to utter a word 
in public about Iran's interference in Iraq's internal 
affairs.  Our assessment is that the UAEG is unlikely to risk 
jeopardizing its substantial commercial interests with Iran 
by antagonizing Tehran. 
SISON