http://www.ft.com/cms/s/fb923f30-d65d-11db-99b7-000b5df10621.htmlThe Bush administration appears to have backed away from a threat to impose stricter controls on US exporters to the United Arab Emirates in response to its ally’s efforts to clamp down on the diversion of dual-use items to Iran.
Industry sources told the Financial Times on Monday that the US Department of Commerce had put pressure on the UAE, an important trans-shipment centre, to step up scrutiny of its exports as part of a broader effort to isolate Iran over its nuclear programme.
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A UAE official said Sheikha Lubna al-Qassimi, the UAE economy minister, had been assured in talks in Washington that the UAE was not the intended target of a newly established country group ‘C’ designation that would require tighter US controls over exports to trans-shipment hubs suspected of being conduits for military-related and other sensitive items.
The commerce department announced in the federal register on February 26 its intention to designate “country group C: destinations of diversion concern” that would require strengthening of US export controls. It named no countries and gave an unusually short two-week period for industry to comment.
Some industry analysts saw the move as a heavy-handed attempt to put pressure on the UAE when the US is trying to tighten all available economic measures against Iran.
Last December, a US official spoke of growing concern in the Bush administration over an increasing number of controlled items being diverted from ports in the UAE, particularly Dubai, to Iran and Syria. He threatened unspecified steps if action was not taken.
On Monday a US official said it was premature to say which countries, if any, would be listed as category C’ He said a proposed UAE export control law, approved by the UAE cabinet this month, was a positive and welcome development and that the US hoped it would be enforced.
One industry source cited a senior commerce department official as saying the US would not go forward with its threat to impose category C status on the UAE. However, another source suggested that the warning made in December did not represent the Bush administration’s official position and that the implied threat carried in the federal register notice was not aimed at the UAE.
The sensitive dual-use goods that the US wants to stop reaching Iran include chemicals, oil production equipment and computer technology. US exporters to countries designated under category C would be re-quired to obtain export licences for a range of goods that have not been specified.
Industry analysts said the apparent reprieve for the UAE would be welcomed by Halliburton, the US oil ser-vices and construction company, which announced last week it would move its chief executive and corporate headquarters to Dubai.
The UAE has remained an important trans-shipment hub for Iran despite a long-running territorial dispute.
Responding to US pressure, the UAE has intercepted dozens of ships bearing suspect goods and closed down more than 24 trading companies.
Copyright The Financial Times Limited 2007
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