Corporations in the UAE cautiously optimistic on Iran deal

Local firms companies, analysts and Iranian businessmen in the United Arab Emirates (UAE) welcomed the preliminary nuclear agreement reached between the world powers and Iran late last week.

However, they also said that lifting sanctions would take time until both sides fully reap the benefits.

UAE stock markets in Dubai and Abu Dhabi gained for the third session straight on Monday.

This was in "anticipation that the deal with Iran will multiply the nearly 100 billion Dirham (27.45 billion U.S. dollars) in trade between the two countries," said Dr. Nasser Saidi, renowned Dubai-based economist and former chief economist of the Dubai international financial center (DIFC) in his weekly e-mailed economic commentary.

Asked if Emirates NBD, the Dubai-based bank and biggest lender by assets in the UAE expects to capitalize on the lifting of sanctions, CEO Shayne Nelson told Xinhua last month "I think sanctions will not be lifted from one day to the next, but they will be gradually eased."

"Then there will be a window which will allow foreign banks to return to Iran. For Dubai and the UAE as a whole, lifting sanctions represents a big opportunity," Nelson added.

Iran harbors 15 percent of the world's known oil reserves, while the UAE has eight percent of the "black gold", mostly based in the capital of Abu Dhabi.

Back in 2008, Nelson was the Middle East's regional CEO for British lender Standard Chartered Bank in Dubai, and he had to close the bank's office in Tehran due to the tightening of sanctions against the Islamic republic, then ruled by president Mahmoud Ahmadinedjad.

Once called "Iran's gateway to the world," Dubai suffered in recent years, especially after the U.S. and its European allies imposed a tight oil and finance embargo against Tehran in 2012.

These measures severely bit into bilateral trade between the sheikhdom and the Islamic republic.

Only a partial easing of sanctions in 2014 when frozen oil receipts worth 4.2 billion dollars were made available to Iran revived trade between the UAE and Iran with hope for more.

A new boost in trade between the UAE and Iran could be a major relief for the UAE's non-oil private sector which according to HSBC has started to stutter since January 1 2015.

Earlier in the week, HSBC said the monthly purchasing managers' index for the UAE dipped to a 17-month low of 56.3 in March, down from 58.1 in February.

Whilst details of the solutions reached between the P5+1 group and Iran on lifting sanctions will have to be worked out by the parties until June 30, small and big corporations in the UAE are ready to catch a windfall "in case no negative surprises or new diplomatic obstacles occur until the final deal is sealed", said Iranian jeweler Nasir, owner of Just Jewels shop in Dubai's famous gold souk in the old town of Deira.

The district of Deira is the old town of Dubai, famous for its high concentration of Iranian traders.

Nasir, who comes like many Dubai-based Iranians from the city of Shiraz, said he expects a final deal to be good for trade, tourism, banking and entities in the UAE with existing ties to his home country.

Financial constraints even weighed on exports of humanitarian goods (food, pharmaceuticals) as most foreign and local banks stopped opening accounts for Iranian businessmen and refuse to issue letters of credit for export-import companies which were doing business with Iran.

An Iranian insurance agent who spoke on the condition of anonymity said that at first the framework will not change much. "We have to wait for the details and then see how to get back to normal."

Shop owner Younis said he does not agree with some Gulf Arab commentators that Iran's rise would rival Gulf Arab economies. "It will be good for everyone. Trade relations between Gulf Arab states and Iran have been in place for centuries, so why would they suffer if Iran is back on the map?"

According to the Iranian business council in Dubai, there are 100,000 Iranian nationals living in the UAE, and most UAE airlines, Emirates, Etihad, FlyDubai and AirArabia fly on a daily basis between the Gulf state and major Iranian cities. Endit