As you walk past the gold-dispensing ATMs, seven-star hotels, and cadres of police driving BMW 5-series, you would never stop to think that you are in the Arabian Peninsula. But between thousands of miles of arid desert and ocean coastline lies a small city internationally recognized as a symbol of wealth, luxury, and opulence.
Home to the tallest structure in the world, the Burj Khalifa, Dubai is a city-state within the United Arab Emirates that has seen unprecedented growth over the past half century largely in part to the discovery of oil and the establishment of “free economic zones” that have attracted business from across the world. The resulting boom in financial services and trade has transformed Dubai into a global hub and one of the most ethnically diverse (and expensive) destinations in the world. So diverse in fact, that 84 percent of residents are foreign born.
The Jebel Ali Free Zone was established outside of Jaleel Airport in 1985 and has now become home to over six thousand companies stretching over an area of nearly 30 square miles. Businesses from all over the globe have relocated here to enjoy some of the most lax financial laws in the world. No personal income tax, no import or export duties, no restriction on currency, and exemptions on corporate taxes for 15 years are just some of the privileges that make Dubai a haven for multinational corporations.
This attention from corporations is somewhat profitable, however. These free zones have seen double-digit growth in annual revenue and provide hundreds of thousands of jobs in the UAE. The Jebel Ali Free Zone alone equates for 20 percent of all foreign direct investment into the UAE and 25 percent of Dubai’s annual GDP. This reliance on foreign business caused severe economic deterioration during the global financial crisis.
Major corporations aren’t the only businesses with incentive of having branches in Dubai. Thousands of smaller companies, many from India and Iran, have businesses in Dubai as a gateway to the global market. As a result, Dubai is home to a large central Asian population, with more than half of all foreign born residents being of Indian or Pakistani descent.
Dubai surprisingly also has one of the most prominent Iranian communities in the world as a result of Persian settlements established there centuries ago. Its close proximity to Iran made Dubai a historically premiere destination for trade between Arabs and Persians. And the tradition seems to have continued; one in four Dubai residents speaks Farsi and can trace their roots back to Iran.
When taking into account historical trade ties, it doesn’t come as a surprise that Iran is one of Dubai’s top re-exporting destinations, providing billions of dollars worth of business for the city-state. According to the Dubai Chamber of Commerce, trade between Dubai and Iran has increased to nearly $12 billion over the course of the past four years. More importantly, the UAE is Iran’s largest importing partner, providing Iran with more goods than even super-producer China. It is no surprise that Iran experts refer to Dubai as “Iran’s offshore business center” and gateway to the global market.
With the pro-reform movements of the Arab Spring having shaped the political atmosphere of the Middle East, the United States is looking for new measures to offset Iranian influence in the region. Since 1979, the United States has taken significant steps to impose sanctions against Iran. Although substantial, sanctions targeting the Iranian regime have failed to promote any regime change, and seem to have empowered the clergy’s grasp on power while worsening living conditions of everyday Iranians.
Sanctions against Iran have, in turn empowered Iran to produce one of the most indigenously developed military forces in the world. With recent U.S. allegations of an Iranian plot to assassinate a Saudi ambassador on American soil, the United States needs to focus its efforts to engage Iran on its ambitions in the region, as well as its nuclear program. Many political hawks are calling for increased sanctions, the expulsion of Iranian diplomats from U.S. soil, and increased aide to pro-reform groups within Iran.
But rather than escalate relations (or what remain of them) with Iran, the United States can use Dubai as an invaluable diplomatic interlocutor. Similar to Oman’s role in negotiating the release of two U.S. hikers in Iran, Dubai could serve as a platform to foster dialogue between Iran and the United States.
Taking into account that the Iranian economy relies heavily on imports, and that the U.S. economy could be improved by increasing trade exports, it could be seen that increased selective trade with Iran via Dubai would prove to be mutually beneficial to all parties involved. American companies, starved for clients, now have access to millions of new clientle while Iranian companies, desperate for business, are eager to take advantage of the technical services offered by American companies (e.g. oil refining, petrochemicals, IT solutions).
Increased trade between nations does not only foster dialogue, but it also eases tensions. Countries are generally far less likely to engage in hostile activities against states they trade with. An easing of tensions with Iran would work to reduce the likelihood of a nuclear arms race in the region, as well as ensuring a politically stable Iraq and Afghanistan long after the withdrawal of U.S. troops.
Dubai’s role as an international city, with combination of eased tax laws and an extremely diverse population, places it as a nexus for global trade. Its attraction to the world’s largest corporations have provided it with unprecedented growth, as well as creating an economic gateway to world market. And as relations between the United States and Iran dissolve, Dubai’s deep ties to Iranian business can provide an essential platform for dialogue and engagement between two countries that have been at odds with one each other for more than a quarter century.
a global affairs media network
Dubai: the Diplomatic Interlocutor
December 28, 2011
As you walk past the gold-dispensing ATMs, seven-star hotels, and cadres of police driving BMW 5-series, you would never stop to think that you are in the Arabian Peninsula. But between thousands of miles of arid desert and ocean coastline lies a small city internationally recognized as a symbol of wealth, luxury, and opulence.
Home to the tallest structure in the world, the Burj Khalifa, Dubai is a city-state within the United Arab Emirates that has seen unprecedented growth over the past half century largely in part to the discovery of oil and the establishment of “free economic zones” that have attracted business from across the world. The resulting boom in financial services and trade has transformed Dubai into a global hub and one of the most ethnically diverse (and expensive) destinations in the world. So diverse in fact, that 84 percent of residents are foreign born.
The Jebel Ali Free Zone was established outside of Jaleel Airport in 1985 and has now become home to over six thousand companies stretching over an area of nearly 30 square miles. Businesses from all over the globe have relocated here to enjoy some of the most lax financial laws in the world. No personal income tax, no import or export duties, no restriction on currency, and exemptions on corporate taxes for 15 years are just some of the privileges that make Dubai a haven for multinational corporations.
This attention from corporations is somewhat profitable, however. These free zones have seen double-digit growth in annual revenue and provide hundreds of thousands of jobs in the UAE. The Jebel Ali Free Zone alone equates for 20 percent of all foreign direct investment into the UAE and 25 percent of Dubai’s annual GDP. This reliance on foreign business caused severe economic deterioration during the global financial crisis.
Major corporations aren’t the only businesses with incentive of having branches in Dubai. Thousands of smaller companies, many from India and Iran, have businesses in Dubai as a gateway to the global market. As a result, Dubai is home to a large central Asian population, with more than half of all foreign born residents being of Indian or Pakistani descent.
Dubai surprisingly also has one of the most prominent Iranian communities in the world as a result of Persian settlements established there centuries ago. Its close proximity to Iran made Dubai a historically premiere destination for trade between Arabs and Persians. And the tradition seems to have continued; one in four Dubai residents speaks Farsi and can trace their roots back to Iran.
When taking into account historical trade ties, it doesn’t come as a surprise that Iran is one of Dubai’s top re-exporting destinations, providing billions of dollars worth of business for the city-state. According to the Dubai Chamber of Commerce, trade between Dubai and Iran has increased to nearly $12 billion over the course of the past four years. More importantly, the UAE is Iran’s largest importing partner, providing Iran with more goods than even super-producer China. It is no surprise that Iran experts refer to Dubai as “Iran’s offshore business center” and gateway to the global market.
With the pro-reform movements of the Arab Spring having shaped the political atmosphere of the Middle East, the United States is looking for new measures to offset Iranian influence in the region. Since 1979, the United States has taken significant steps to impose sanctions against Iran. Although substantial, sanctions targeting the Iranian regime have failed to promote any regime change, and seem to have empowered the clergy’s grasp on power while worsening living conditions of everyday Iranians.
Sanctions against Iran have, in turn empowered Iran to produce one of the most indigenously developed military forces in the world. With recent U.S. allegations of an Iranian plot to assassinate a Saudi ambassador on American soil, the United States needs to focus its efforts to engage Iran on its ambitions in the region, as well as its nuclear program. Many political hawks are calling for increased sanctions, the expulsion of Iranian diplomats from U.S. soil, and increased aide to pro-reform groups within Iran.
But rather than escalate relations (or what remain of them) with Iran, the United States can use Dubai as an invaluable diplomatic interlocutor. Similar to Oman’s role in negotiating the release of two U.S. hikers in Iran, Dubai could serve as a platform to foster dialogue between Iran and the United States.
Taking into account that the Iranian economy relies heavily on imports, and that the U.S. economy could be improved by increasing trade exports, it could be seen that increased selective trade with Iran via Dubai would prove to be mutually beneficial to all parties involved. American companies, starved for clients, now have access to millions of new clientle while Iranian companies, desperate for business, are eager to take advantage of the technical services offered by American companies (e.g. oil refining, petrochemicals, IT solutions).
Increased trade between nations does not only foster dialogue, but it also eases tensions. Countries are generally far less likely to engage in hostile activities against states they trade with. An easing of tensions with Iran would work to reduce the likelihood of a nuclear arms race in the region, as well as ensuring a politically stable Iraq and Afghanistan long after the withdrawal of U.S. troops.
Dubai’s role as an international city, with combination of eased tax laws and an extremely diverse population, places it as a nexus for global trade. Its attraction to the world’s largest corporations have provided it with unprecedented growth, as well as creating an economic gateway to world market. And as relations between the United States and Iran dissolve, Dubai’s deep ties to Iranian business can provide an essential platform for dialogue and engagement between two countries that have been at odds with one each other for more than a quarter century.
