The United Arab Emirates (U.A.E) is weighing freezing billions of dollars of Iranian assets held in the Gulf state, the Wall Street Journal (WSJ) reported, a move that could sever one of Tehran’s most important economic lifelines.
If the U.A.E. goes ahead, it would significantly curb Tehran’s access to foreign currency and global trade networks as its domestic economy, already buckling under inflation, is now engulfed in a military conflict.
Emirati officials have privately warned Iran—which has fired more than 1,000 drones and missiles at targets in the U.A.E. —of the possible action, people familiar with the warnings said. It isn’t clear when, or if, the Emirati government will decide to act.
The U.A.E. has for years functioned as a financial hub for Iranian businesses and individuals seeking a haven from Western sanctions, according to analysts tracking Tehran’s activities and the U.S. Treasury.
Iran’s sanctions-evasion infrastructure has allowed Tehran to keep selling oil abroad and use the proceeds to fund weapons programs and regional proxies, they say.
The U.A.E. has previously said it adheres to sanctions and has a strong commitment to protect the integrity of the global financial system.
Any move by the U.A.E. to limit Iranian financial activities there “would be very significant, because the U.A.E. is the most important conduit for Iran’s engagement with the global economy,” said Esfandyar Batmanghelidj, chief executive of Iran-focused think tank Bourse & Bazaar.
U.A.E. authorities are weighing several measures to dismantle illicit Iranian operations, officials familiar with the matter said. They range from freezing the assets of U.A.E.-based shadow companies used to mask trade to a sweeping financial crackdown on local currency exchanges which are used to move money outside of formal banking channels.
If the U.A.E. decides to move on Iran’s shadow-financing empire, a prime target would be accounts affiliated with the Islamic Revolutionary Guard Corps., the powerful group responsible for defending and perpetuating the regime, the officials familiar with the discussions said.
Tehran has allocated a growing portion of its oil for the IRGC, as well as other parts of the defense and security complex, to sell on the international market, according to a Treasury publication last June.
Beyond financial maneuvers, policymakers are also considering direct maritime action, such as seizing Iranian ships, two of the officials familiar with the discussions said. Such moves would be aimed at crippling Iran’s shadow fleet of oil tankers and intermediaries operating across Emirati ports and shipping lanes.
Any efforts to squeeze Iranian assets would mark a sharp departure from the U.A.E.’s historical effort to balance its strategic alliance with the U.S. against its proximity to Iran. Until now, the country has largely refrained from weaponizing its financial sector against its neighbor across the Persian Gulf.
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