A common lesson of warfare is that measures to defeat an enemy spur countermeasures by that enemy. Iran is America's most deadly adversary and its leaders have boasted about their desire to bring down the United States. Iran is not only funneling weapons into Iraq and Afghanistan that kill Americans, it not only supports Hezbollah and is the number one state sponsor of terror in the world, but it is clearly on a path to making nuclear weapons.
The United States is mobilizing financial power to fight the mullahs, provoking countermeasures.
On the federal level, the government has responded by initiating a series of financial sanctions through the United Nations (feckless and limited), through domestic legislation, and through pressure and moral suasion around the world designed to persuade Iran to give up its quest for nuclear weapons.
State governments (Missouri, Florida, Ohio and California among them) are increasingly active in the area of divestment: requiring state pension funds to divest from companies doing business in Iran's energy sector, the money fount for its nuclear and terror programs.
Iran has responded by using newly organized front companies to avoid UN sanctions and, as this BBC report makes clear, the wealthy statelet of Dubai (which has a large Iranian population and which was used to funnel money for the 9/11 attacks) is being used to evade the reach of US laws. Doing business in Dubai in euros or yen to avoid restrictions on businesses using US dollars for banned activities, Iranian companies passing themselves off as local Dubai businesses, often having a local, passive Dubai investor. This enables the Iranians to get loans and letters of credit from international banks and avoid US pressure.
One local Iranian boasts that
".... nobody is taking 'American pressure' seriously yet," she says. "In fact, I see more investment from foreign companies in Iran. I've never had so many requests for media campaigns in Iran as I've had during the last two months."
Dubai has hired several prominent lobbying and public relations firms in America. Despite the failure of the Dubai ports deal, the nation still controls a vast number of ports overseas. Dubai has also been investing in companies involved in military technology in the United States, such as Doncasters, which makes precision components used in engines for military aircraft and tanks, and which has nine military plants in America. The Carlye group,an influential investment firm very active in the military industry, has opened a Dubai office, while Halliburton recently moved parts of its headquarters operation there.
The New York Mercantile Exchange (NYMEX) is part owner of the Dubai Mercantile Exchange and Dubai is relying on the expertise of NYMEX to build and operate their own exchange.
This partnership can al be a lever to prod Dubai to restrict the use of its nation by Iran to evade efforts to restrict its nuclear program. Dubai's sudden rise as an international commercial hub is substantially altering the ability of the United States to use its financial power as an instrument.
Dubai wants to make itself a key player in international business. They are relying on partnerships with US firms to accomplish this goal, and are hard-wiring connections with us. This reliance can be used to help persuade Dubai to crack down on efforts by Iranians and their sympathizers and partners to avoid and evade US laws and international sanctions. But there are always risks to interdependence. Skilful navigation is called for.