UAE mulls freezing Iranian assets as Middle East conflict escalates: WSJ

The United Arab Emirates is considering cutting off Iranian access to billions of dollars held in the Gulf state, the Wall Street Journal reported Thursday.

The move could undermine Tehran’s access to foreign currency and global trade networks at a moment when its economy is deteriorating and the military conflict with the US and Israel has added further pressure.

Emirati officials have warned Iranian officials that such a move is under consideration, the newspaper said, citing people familiar with the discussions, although no decision has been reached on whether or when to act.

The UAE has long sought to balance its strategic alliance with the US and its neighbor Iran, but Tehran’s strikes against the Gulf nation appear to be prompting a rethink in policy.

The UAE’s capital, Dubai, is a critical financial corridor for Iranian businesses and individuals seeking to bypass Western sanctions, channeling oil sales and revenues abroad to military programs and regional proxies, according to the Atlantic Council, a US-based think tank.

Shell companies registered in Dubai’s sprawling free zones have hidden the source of Iranian oil and commodities for years. Informal currency exchanges transfer money across borders outside the reach of traditional banking supervision.

The US is putting pressure on the Gulf nation to dismantle those networks. While the US Treasury has approved UAE-based entities in recent years, officials have reiterated that enforcement in the UAE falls short of the country’s stated commitments.

As part of retaliation against the joint US-Israeli attack, Iran has fired more than 1,000 drones and missiles at targets in the UAE, damaging infrastructure including Dubai International Airport and the popular Fairmont Hotel, as well as residential and tourist areas.

Earlier this week, UAE officials reaffirmed their stance of sticking to a defensive posture without resorting to military action against Iran. The decision is consistent with its “longstanding policy of good neighbourliness, de-escalation and its firm commitment to the United Nations Charter,” the Ministry of External Affairs said in a statement.

The Iranian strikes have rattled the expatriate business community and international investors, which Dubai has cultivated for decades by demonstrating stability in a volatile neighborhood.

According to the Journal, Emirati authorities are now examining a range of potential countermeasures, including targeted asset freezes on UAE-based shell companies and a broader financial crackdown on local currency exchanges in Iran’s financial plumbing.