The Treasury Department announced on Monday that Under Secretary David Cohen is traveling to Turkey and the UAE this week to discuss the implementation of the U.S. sanctions relief under the Iranian nuclear pact.  As important as the trip itself, the message to be delivered, according to the Treasury Department, will include a focus on “the limited and temporary sanctions relief provided under the [pact] and continued enforcement of existing international economic sanctions against Iran.”

Both Turkey and the UAE are critical to Iran’s foreign trade.  Turkey is Iran’s third-largest export and import partner, and Iran imports more from the UAE than anywhere else, accounting for approximately a third of Iran’s total imports.  Almost six years ago, we reported on Iran’s reliance on trade with the UAE and, respectively, the UAE’s apparent complicity to trade with Iran in ways that would be in violation of U.S. law.  In fact, Sheikh Mohammed Bin Rashid al-Maktoum, crown prince of Dubai and prime minister of the UAE, told the BBC earlier this month, that international sanctions against Iran should be lifted.  He added that “Iran is our neighbor and we don’t want any problem” and, if international sanctions are lifted, “everybody will benefit.”  Not exactly on point with U.S. sanctions policy.

As the Treasury Department appropriately describes, the U.S. sanctions relief under the nuclear pact is “limited” and is rather more of a U.S. pledge that sanctions will not be imposed against non-U.S. persons engaging in certain activities vis-à-vis Iran.  The emphasis to Turkey and the UAE, therefore, must be that U.S. sanctions are, in effect, at status quo in order to stem off any impression in the Middle East that U.S. sanctions against Iran are softening.

The challenge remains as it always has been: getting Turkish, UAE and other Middle Eastern buy-in to U.S. sanctions policy against Iran.  While Under Secretary Cohen may present some carrots on his trip, the stick to wield was announced along with his trip in highlighting “continued enforcement of existing international sanctions.”  The message, of course, would be that U.S. sanctions enforcement of Iran-related activities taking place in Turkey and the UAE will be bad for business in both countries.

Our advice to exporters remains the same as it was almost six years ago: know your customers especially well in Turkey and the UAE to ensure as best as possible that your business does not involve dealings with Iran.

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