VZCZCXRO7228
PP RUEHBC RUEHDE RUEHKUK
DE RUEHDIR #0042/01 1781348
ZNY SSSSS ZZH
P R 271348Z JUN 07
FM IRAN RPO DUBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0137
INFO RUCNIRA/IRAN COLLECTIVE
RUEHDIR/IRAN RPO DUBAI 0130
RUEAIIA/CIA WASHDC
RHEFDHP/DIA DHP-1 WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHDE/AMCONSUL DUBAI 0121
RUEHAD/AMEMBASSY ABU DHABI 0087
RUEHAD/USDAO ABU DHABI TC

S E C R E T SECTION 01 OF 02 IRAN RPO DUBAI 000042 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
LONDON FOR GAYLE; BERLIN FOR PAETZOLD 
BAKU FOR HAUGEN; PARIS FOR WALLER 
 
E.O. 12958: DECL:  6/27/2017 
TAGS: IR PREL ECON SMIG
SUBJECT: IRANIAN BUSINESS IN DUBAI: A BLESSING AND A CURSE 
 
REF: A.)RPO DUBAI 0041; B.) RPO DUBAI 0035 
 
RPO DUBAI 00000042  001.2 OF 002 
 
 
CLASSIFIED BY: Jillian Burns, Director, Iran Regional Presence 
Office, Department of State. 
REASON: 1.4 (d) 
 
1.(C) Summary:  Dubai is one of the main centers of the Iranian 
diaspora both in terms of sheer numbers and presence in the 
business community.  Iranian immigrants, both those who came 
before and after the Islamic Revolution, have played a 
significant role in Dubai's economic success, according to 
Emirati and Iranian contacts.   Dubai continues to be receptive 
to Iranian expatriates, who work in all fields of business. 
However, bilateral tensions and growing international pressure 
on Iran have brought complications for the business community in 
Dubai.  End summary. 
 
2.(C) Iranians, mostly merchants, were among the first 
foreigners to set up business in the UAE, according to the Dubai 
Chamber of Commerce and Industry (DCCI).  The Dubai market has 
been primarily oriented toward Iran since the 1950s when Iran 
had the region's most dynamic economy.  Dubai Ruler Sheikh 
Rashid offered these Iranians incentives such as free land, 
personal protection, and exemption from import and export 
duties.  With Iran's economic downturn and political isolation 
after the Islamic Revolution of 1979, Dubai has continued to 
play a critical role as a re-export hub for Iran.  This cable 
focuses on Iran's business presence in the UAE; a sociological 
look at the diaspora community is reported septel. 
 
3.(U) Situated less than 100 miles across the Persian Gulf, the 
UAE is Iran's largest trading partner.  Dubai in particular 
serves as an outlet for Tehran's business with the outside 
world, with goods going back and forth on large ships and 
traditional dhows.  The DCCI claims that in 2006, Dubai-Iran 
non-oil trade was worth about $8 billion (presumably including 
both exports and re-exports, although the source does not 
clarify) while total Iran-Dubai trade exchanges amounted to 
about $11 billion.  As reported in local press, the Iranian 
consulate in Dubai stated that UAE-wide exports and re-exports 
to Iran totaled $7 billion in 2006, and Iranian exports to the 
UAE $3 billion, expected to increase to $3.5 billion in 2007. 
The article cites the Iranian commercial attachi saying that 
Iran exports machinery and heavy equipment, fruits and 
vegetables, processed food, building materials, and 
petrochemical products to the UAE.  At the end of 2006, 
accumulated assets of Iranians in Dubai were estimated at $300 
billion, according to Iranian government-run news agency ISNA. 
 
Prominent Iranians in Dubai 
--------------------------- 
 
4.(C//NF) Many Iranian business families in Dubai have achieved 
prominent status, but it is the older expats who are best known 
to the general community, even though they are now Emirati 
citizens.  Some have crossed over into the UAE government, 
including cabinet positions.  Influential Iranian families, such 
as Galadari, Gargash, Al Aqili, and Rafiqdost own multiple 
businesses and investments, and exemplify the business 
opportunities available in Dubai.  The Galadari family, although 
now suffering some setbacks (as evidenced by the Dubai 
government assuming control over their newspaper, the Khaleej 
Times) has a long history of enterprise and commercial activity 
dating from the 1940s.  Originally from the city of Galadar in 
Iran, the three Galadari brothers built some of Dubai's first 
modern hotels, including the Intercontinental and Hyatt Regency 
in the mid-1970s, and one of Dubai's major roundabouts is named 
after Abdul Wahab Galadari, based on the location of his 
landmark car dealership, "Galadari Motors."  Abdul Wahab 
Galadari also founded the Gulf Times Newspaper and one of his 
sons was the editor of Khaleej Times.  Today, another one of the 
Galadari sons, Issam, is the managing director of Emaar 
International Developers, which is building Burj Dubai, planned 
to be the world's new tallest skyscraper.  Also, big families 
such as Al Aqili have significant trade ties to the US and to 
Iran, although Al Aqili has reportedly suffered setbacks in its 
investments in Iran (ref A). 
 
Scattered in all fields 
----------------------- 
 
5.(C//NF) Today, Iranians in Dubai are engaged in a wide range 
of business activities in Dubai and do not seem to be 
concentrated in specific business sectors.  The Iranian 
 
RPO DUBAI 00000042  002.2 OF 002 
 
 
government has a trade center in Dubai that holds international 
business gatherings, and the independent Iranian Business 
Council (IBC) operates to promote local Iranian businesses. 
According to a January 2007 Middle East Online article, the DCCI 
said 8,050 Iranian companies are registered in Dubai, while the 
Iranian Business Council puts the numbers closer to 10,000. 
(Note: Businesses in Dubai outside of free zones need to be at 
least 51% locally owned; inside free zones can be 100% foreign 
owned. End note.)  Other Iranians work as teachers, professors, 
bank officials, and doctors.  Many local police are Emiratis of 
southern Iranian/Baluchi origin.  For example, probably a 
quarter of the rotating group of police at the Dubai World Trade 
Center building, the Consulate General's location, speak a Lari 
dialect of Farsi, some through their heritage.  Also, some older 
Emiratis speak limited Farsi from the old days when Farsi was 
the language of the local bazaar. 
 
Iranian government interest 
--------------------------- 
 
6.(C//NF) The Iranian government has two major areas of interest 
regarding the Iranian Dubai business community:  reversing 
capital outflow from Iran to redirect investment into Iran and 
keeping economic links open between the two countries, 
particularly as the threat of additional sanctions rise. 
Iranian government officials reportedly pay regular visits to 
Dubai, although it is difficult to ascertain if the pace has 
picked up in recent years.  The headliner was, of course, 
President Ahmadi-Nejad's May 13, 2007 visit to Dubai, which was 
the first visit by an Iranian head of government since UAE 
unification.  While his private meeting with business people was 
reportedly attended by prominent names, a source claimed he said 
little of substance.  We also heard that few from the 
established Iranian community in Dubai attended his large rally 
at the Iranian Club's soccer stadium (ref B). 
 
7.(S//NF) In addition to the president, the Iranian Minister of 
Commerce and the head of the Central Bank have reportedly 
visited Dubai recently.  According to press reports, the 
Minister of Commerce attended a recent IBC meeting and promised 
to take steps to ease UAE-Iran trade in response to member 
requests.  Contacts have indicated to IRPoffs that the Iranian 
government is attempting to exercise greater influence over the 
IBC. 
 
8.(C//NF) As a sign of the importance both countries ascribe to 
their relationship, Iran recently appointed one of its highest 
profile diplomats, former Foreign Ministry spokesman and Deputy 
Foreign Minister, Hamid Reza Asefi, as its Ambassador to the UAE. 
 
9.(C//NF) The Iranian Consul General to Dubai reportedly holds 
regular meetings with the sheikhs of Dubai on trade relations. 
At a recent "VIP Day" to promote the Ras al Khaimah Free Trade 
Zone (RAKFTZ) to the consulate and corporate communities, 
Poleconoff observed the Iranian Consul General being personally 
shepherded from site to site by RAKFTZ chairman Sheikh Faisal 
and RAKFTZ CEO Oussama el Omari and being seated to the sheikh's 
immediate right. 
 
10.(S//NF) Comment:  Dubai's relatively free business 
environment and less restrictive social atmosphere continues to 
attract Iranians, who already make up roughly 10% of the UAE 
population.  Also, the ease of transporting goods to Iran from 
Dubai provides a critical supply line for Iranian imports of 
goods and services, including those - Iranian and other - who 
wish to skirt US sanctions and UN resolutions.  The image of 
Ahmadi-Nejad landing in the UAE in May as Vice President Cheney 
departed exemplifies the difficulty the UAE faces in managing 
its relationships with those two countries, both impossible to 
ignore.   End comment. 
BURNS