Biden’s ‘Jerusalem Declaration’ could slash UAE-Iran trade

July 14, 2022, 2:23 PM

US president Joe Biden and Israeli prime minister Yair Lapid are delighted to have signed the security pledge at Waldorf Astoria Hotel in Jerusalem

The US and Israel pledged today to deny Iran nuclear weapons – a move that could dissuade global trade partners from dealing with Tehran, experts have said.

The freshly united stance from US president Joe Biden and Israeli prime minister Yair Lapid represents a rare show of unity by allies long divided over Iran diplomacy.

The announcement, part of a “Jerusalem Declaration” during Biden’s first visit to Israel as president, followed his telling a local TV station that he was open to “last resort” use of force against Iran – a nod towards accommodating Israel’s calls for a “credible military threat”.

“The United States stresses that integral to this pledge is the commitment never to allow Iran to acquire a nuclear weapon, and that it is prepared to use all elements of its national power to ensure that outcome,” the statement added.

The Biden administration had previously backed negotiations to persuade Iran to freeze its nuclear enrichment in exchange for sanctions relief.

However, Israel posited that a new deal would do too little to restrict both the nuclear programme and Iran’s other military activity in the Middle East.

In 2015 Iran signed an international deal capping nuclear projects with bomb-making potential. In 2018 then-US President Donald Trump quit the pact, deeming it insufficient – a move welcomed by Israel.

Against this fraught backdrop talks have since languished in a no-man’s land, with Biden facing criticism – at home and overseas – for his slow handling of the Iran nuclear impasse.

Alex Vatanka, director of the Iran Programme at the Washington DC-based Middle East Institute (MEI), cautioned that today’s pledge represents “symbolism more than action”.

“I’ve been studying Iranian relations for over 25 years and, as of today, this deal doesn’t signal anything new in practical terms,” Vatanka told AGBI.

“But what is important is the timing of the announcement – it comes as the Iran nuclear talks are in stand-off.”

The pact sends a strong message that the US and Tel Aviv are “on the same page”, effectively removing the threat of a unilateral Israeli attack on Iran, the MEI expert said.

“The pledge highlights the importance of Israel’s security to the US. It’s an attempt to shake out Tehran,” Vatanka said, adding that it would take more than Biden’s sabre-rattling for Iran to consider weaponising or adjust its policies.

“I don’t think Iran takes the threat of US military action seriously,” Vatanka said. “It will take more than a Biden visit to change its stance on being a nuclear threshold state.

“Plus, anyone that thinks the US would invade yet another Middle Eastern country doesn’t know the reality of American politics right now.”

A more pressing challenge for Tehran is the looming prospect of US sanctions being policed.

“The economic consequences of US sanctions being enforced internationally would hurt Iran and cost the country billions of dollars,” Vatanka said, adding that the UAE is one of Iran’s largest trading partners.

“Currently Iran is doing a brisk trade with the UAE, the Middle East, China and parts of Europe as the US sanctions are not globally mandated or inspected.

“It’s more a case of the countries choosing who their friends are. In the case of smaller countries such as the UAE, more rigorous enforcement of sanctions could cause businesses to drop Iranian business.”

Smaller countries are more likely to yield to US pressure, he said.

Simon Henderson, Baker fellow and director of the Bernstein Program on Gulf and Energy Policy at The Washington Institute, believes Washington could “quietly pressure Gulf states, which currently turn a blind eye to relatively small Iranian illegal exports” to get their own houses in order.

The UAE has traditionally been one of Iran’s main links to the outside world, but the reinstation of sanctions by Trump in 2018 halved bilateral trade to $7 billion in 2019 according to World Bank data.

Non-oil trade between Abu Dhabi and Tehran in the first nine months of 2021 stood at about $4.9 billion, the UAE’s Federal Competitiveness and Statistics Centre reports.

Further UAE government data showed that Iran topped the list of the country’s re-export partners in 2017 ($14.2 billion) and was its fifth-biggest non-oil trade partner ($17.1 billion). 

In February more than 120 Iranian companies and 40 firms from the Emirates participated in a UAE-Iran trade conference in Dubai.

Karen E. Young, senior fellow and founding director of the Program on Economics and Energy at the Middle East Institute, said Biden’s meetings this week in Israel and Saudi Arabia will be “more about a security summit and an Iran response coalition than energy markets or thinking about longer term energy security.”

“This will put US partners and new Abraham Accord signatories in a delicate position of taking a more confrontational approach vis-a-vis Iran, something for the UAE, for example, that they have tried to avoid,” Young said.