TRT:

Kazim Alam

The UAE is weighing a major financial strike against Iran for launching over 1,000 drones and missiles towards Emirati soil.

Media reports say officials in Abu Dhabi are considering freezing billions in Iranian assets.

The UAE is also planning to target Tehran’s shadow companies and currency exchanges that help Iran navigate a sanctions-ridden international trade system.

Iran claims that US forces utilise regional bases to launch attacks against the country, deeming those facilities “legitimate targets” for retaliation.

A freeze of Iranian assets in the UAE will significantly prevent Tehran from accessing foreign currency and global trade networks.

It will have severe consequences for Iran’s economy, which was already reeling under immense pressure even before the latest spree of US-Israeli strikes.

For years, the Gulf states have pursued economic ties with Iran in hopes of easing regional tensions.

But recent escalations seem to have changed that calculus, analysts say.

“The Gulf strategy towards Iran has changed over the past decade to one of economic engagement in the hope of improving the leverage to reduce tensions and risk of conflict," Timothy Ash, an associate fellow at Chatham House, tells TRT World.

The UAE has implicitly allowed a number of Iranian businesses and individuals to operate in the shadows, away from the sanctions spotlight cast by the treasury departments of Western governments.

Iran uses shell companies registered in Dubai’s free-trade zones to mask the origin of its oil.

Tehran circumvents the Western sanctions by sending oil, mostly to Beijing, in ‘dark-fleet tankers’ against payments in the yuan via second-tier Chinese banks.

But Ash says the UAE’s approach towards economic engagement with Iran has backfired.

“With the pre-emptive strikes that went through multiple gears of escalation and then retaliation from Iran at Gulf states, that strategy has failed,” he says.

Iran now sees the conflict as existential, which, in turn, is driving its aggressive response.

“Arguably for Iran, the war is about survival. Hence, it’s lashing out wherever it could,” Ash says.

The UAE’s potential freezing of Iran-linked assets can mirror the West’s actions against Russia.

The US and European powers froze Russian central bank reserves, cutting Moscow's war funding.

Pointing out the difference in approach, Ash says Gulf states once criticised the West for freezing the assets of the Central Bank of Russia to browbeat Moscow into ending the war against Ukraine.

Now, they are considering the same move against Iran, he says.

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