UAE Weighs Freezing Billions in Iranian Assets

The United Arab Emirates is considering freezing billions of dollars in Iranian assets, marking a departure from its long-standing financial neutrality in the U.S.-Iran conflict.

The Wall Street Journal reported Sunday that the UAE is reviewing plans to freeze billions of dollars in Iranian assets held in Gulf states. "If the UAE proceeds with this plan, it would further damage Iran's economy, which is already struggling with inflation," the Journal said.

The UAE has served as a financial hub for Iranian companies and individuals for years. Iran has used this access to sell oil abroad and channel proceeds to weapons development programs and regional proxy forces. While the U.S. and others have pressured the UAE to monitor fund flows and crack down on sanctions evasion, the Emirates had maintained its previous stance.

The situation changed after Iran recently attacked Dubai's airport, the Burj Al Arab hotel area, and the Palm Jumeirah artificial island with drones and missiles. The Journal noted that "the UAE's move to pressure Iranian assets represents a departure from its policy of balancing relations between its strategic alliance with the U.S. and Iran."

Esfandyar Batmanghelidj, CEO of Bourse & Bazaar, an Iran-focused think tank, said the UAE's move to restrict Iran's financial activities is "very significant because the UAE is the most important gateway for Iran to engage with the global economy."

Measures under consideration include freezing funds held by shell companies and cracking down on money exchange operations. Maritime measures such as seizing Iranian vessels are also being considered to neutralize Iran's covert tanker fleet and brokerage vessels operating through UAE ports and shipping lanes.

However, asset freezes would likely prompt Iranian retaliation against UAE territory and energy infrastructure. The move could also negatively affect the UAE's ability to attract capital from politically sensitive countries such as Russia.

Andreas Krieg, senior lecturer at King's College London's School of Security Studies, said accounts linked to Iran's Islamic Revolutionary Guard Corps would likely be frozen first. "This is the most important non-military tool the UAE can use against Iran," he said.