The Economist March 19th 2022 43
Middle East & AfricaTradeanddiplomacyintheGulfThe dhow usually wins
I
n daylight hours the boats leaving
Khasab’s port motor off to fish, or ferry
tourists to isolated fjords. After nightfall
the traffic turns north. Just 100km separate
this Omani town from the port of Bandar
Abbas in Iran (see map on next page), an
hour or two’s journey by chugging dhow.
This has made it a longstanding hub for
smuggling—although that term suggests a
level of skulduggery hardly apparent in
Khasab’s sleepy port (pictured above). Au
thorities tolerate the trade, so long as it
happens after dark.
A decade ago, as multilateral sanctions
piled up on Iran, meant to press it into
talks over its nuclear programme, boats
headed north stuffed with appliances and
luxury cars. On the return journey some
carried nervouslooking sheep to be sold
in the neighbouring United Arab Emirates
(uae). Business is not quite so good today.
Iran has closer trade ties with China and a
growing manufacturing sector, both of
which diminish the need for refrigerators
and televisions lashed to dhows.
Still, places like Khasab illustrate the
complicated relationship between Iranand its neighbours. The sixmember Gulf
Cooperation Council (gcc) has broadly
testy relations with Iran. But political ten
sions coexist with deep economic ties,
which have become increasingly vital as
world powers seek to revive the agreement
of 2015 that imposed limits on Iran’s nuc
lear work in exchange for easing sanctions.
In 2018 Donald Trump withdrew Ameri
ca from the deal, which is now largely de
funct. On March 11th, after almost a year of
talks, negotiators in Vienna put their work
on “pause”. They had been close to an
agreement until Russia demanded that its
trade with Iran be exempted from Western
sanctions. That was a patent ploy to create
a way around the tough sanctions imposed
on Russia after it invaded Ukraine. Russia’s demand threatened to derail
the whole process—or perhaps not. Rus
sian diplomats now say they never sought
loopholes, merely a promise that their ob
ligations under the deal, such as taking
custody of Iran’s excess enriched uranium,
would not be affected by sanctions.
On March 15th Sergei Lavrov, Russia’s
foreign minister, met Hossein Amirabdol
lahian, his Iranian counterpart, in Tehran.
Both said Russia was no obstacle to a deal.
Barring another aboutface, that leaves
America and Iran to resolve a few glitches,
mostly about sanctions relief. Iran’s re
lease of two BritishIranians hinted at its
desire to mollify Britain. One of them was
Nazanin ZaghariRatcliffe, who was held
for six years in prison and under house ar
rest. Her case was not connected to the nu
clear deal (see Britain section).
An agreement would prompt mixed
emotions in the gcc. Oman, on friendly
terms with Iran, is an outlier in the bloc.
The uaeis closer to the mean. It sees Iran
as a threat; they have a territorial dispute
over three islands in the Persian Gulf. But
they also have the tightest economic ties of
any Gulf states, thanks in part to a large
community of Iranian émigrés in Dubai.
The two countries are big trading partners:
Iran takes around 3% of the uae’s annual
exports. There is talk of doubling bilateral
trade to $30bn in 2025. Billions of dollars of
Iranian assets sit in Emirati banks.
Initially happy with Mr Trump’s with
drawal from the nuclear deal, the uaesoon
changed its mind. In 2018 and 2019 Iran andK HASAB
With or without a nuclear deal, the Gulf states are vital to Iran’s economy→Alsointhissection
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