Late last month, Iran’s Foreign Minister Mohammad Javad Zarif had strong words for the United Arab Emirates (UAE). He accused Abu Dhabi of an “unacceptable approach” toward Iranian firms operating in the Emirates. Zarif also pointed to the Yemen War, saying that the UAE has made “strategic and political mistakes.” While at a summit in Amman on January 31 with his counterparts from other Arab states, the UAE’s Minister of State for Foreign Affairs Anwar Gargash condemned Tehran’s regional conduct. He praised the summit for advancing “Arab cooperation” and blasted Iran and Turkey’s “unacceptable regional interventions.”

These words from Iran and the UAE’s chief diplomats follow a series of incidents that have recently exacerbated tensions in Abu Dhabi-Tehran relations at a time in which the Trump administration is working to unite Arab states behind an anti-Iranian coalition. Abu Dhabi, the emirate which dictates the country’s foreign policy, has strongly supported the U.S. exit from the Joint Comprehensive Plan of Action (JCPOA) and Washington’s sanctions on Tehran and been a key advocate of establishing an Arab NATO alliance in line with the White House’s vision for pushing back against Iran’s influence. Moreover, with the so-called “anti-Iran summit” in Poland beginning today, the UAE’s participation underscores Abu Dhabi’s determination to continue positioning itself as a key pillar of the U.S. administration’s aggressive foreign policy against the Islamic Republic.

In 2017, the UAE’s exports/re-exports to Iran totaled $17 billion, with most of the trade taking place via Dubai (the emirate which, by far, trades the most with Iran and enjoys historic commercial links with Persia/Iran).

The slowing down of Emirati-Iranian trade is illustrative of how Abu Dhabi is changing the UAE’s multifaceted relationship with Iran in close coordination with the Trump administration. In 2017, the UAE’s exports/re-exports to Iran totaled $17 billion, with most of the trade taking place via Dubai (the emirate which, by far, trades the most with Iran and enjoys historic commercial links with Persia/Iran). Yet mainly due to the U.S. administration’s decision to reimpose sanctions on Iran, many Iranian firms have been forced out of Dubai.

Dubai Suffers from Abu Dhabi-Tehran Tensions

Consequently, Iran is taking its trade out of Dubai and going elsewhere such as Oman, Qatar, and Turkey. Such a development has significant potential to not only fuel tension between Abu Dhabi and Tehran, but also between Abu Dhabi and Dubai. The leadership in Dubai, which has long seen UAE-Iran relations through a commercial lens, is keener to accommodate Tehran for the purpose of capitalizing on trade opportunities in contrast to Abu Dhabi, which views Iran primarily as a security threat—much more like Riyadh’s perspective than Dubai’s.

With Dubai’s economy suffering from Abu Dhabi’s anti-Iran policies, as well as the blockade of Qatar, new geopolitical dynamics in the region are undermining Dubai’s interests. The policies against Qatar have contradicted a deeply rooted ethos of Dubai’s elite in which business interests always trump factors pertaining to politics and national identities. Looking ahead, such tensions have much potential to fuel greater intra-Emirate friction which was previously underscored by tweets from the UAE’s Vice President, Prime Minister, and ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum, which were understood as a gentle push back against the Al Nahyan rulers in Abu Dhabi.

His Highness Sheikh Mohammed voiced his rejection of “obscene” policies in several tweets that stressed how “commitment is about focusing only on the inside, the homeland, rather than the outside” and that history will decide whether Arab rulers have “great achievements that speak for themselves or only empty speeches with worthless pages and words.”

Nonetheless, despite Dubai’s concerns about the implications and outcomes of the UAE’s recent foreign policy decision-making, the authority to determine how the country conducts itself in the region rests in Abu Dhabi. Whereas these two emirates long competed with each other for influence and prestige, since oil wealthy Abu Dhabi bailed out Dubai after the 2008 financial crash, power has increasingly centralized in the hands of Abu Dhabi’s crown prince.

The Islands Dispute and Terror Threats

Another sign of rising tension between Abu Dhabi and Tehran was the statement made late last month by an Islamic Revolutionary Guard Corps (IRGC) commander regarding the two countries’ territorial dispute. Major General Mohammad Ali Jafari declared Iran’s determination to hold every inch of the islands in dispute, labeling them as an “integral part of Iran’s territory.” He asserted that Abu Musa serves as the heart of Iran in the Gulf and that the IRGC is committed to beefing up its military presence on the disputed island. From Abu Dhabi’s perspective, such language is inflammatory given the UAE’s stance that Abu Musa and Greater and Lesser Tunbs are occupied by Iran, despite the UAE having sovereignty over the islands.

Late last month, the Emirati media reported that the Saudi-UAE-led coalition in Yemen shot down a Houthi-launched “Iranian specification” drone in Abha, located in southwestern Saudi Arabia.

Recent developments in Yemen that serve to derail the country’s fragile peace process also contribute to the dangerous collision course pitting Abu Dhabi against Tehran. Late last month, the Emirati media reported that the Saudi-UAE-led coalition in Yemen shot down a Houthi-launched “Iranian specification” drone in Abha, located in southwestern Saudi Arabia. The incident followed a similar one in April in which the coalition shot down two unmanned aircraft north of the Saudi-Yemeni border. The Houthi drone threat is not limited to Saudi Arabia, highlighted by Ansar Allah’s alleged drone attack against Abu Dhabi’s international airport in mid-2018, which the Houthis took credit for but the UAE denies. In any event, the continuation of actions on the part of the Yemeni Houthis that directly threaten the UAE’s national security will result in Abu Dhabi placing virtually full responsibility on Iran’s doorstep.

From the Islamic Republic’s perspective, the UAE poses a grave threat largely due to its alleged sponsorship of terrorism on Iranian soil. For years, Tehran has pointed its finger at Abu Dhabi, Riyadh, and other capitals after Sunni extremist and/or Arab/Kurdish separatist groups have waged deadly attacks in Iran’s restive peripheral provinces such as Khuzestan, Sistan and Baluchistan, and Iranian Kurdistan. Last year’s attack targeting an Iranian military parade in Ahvaz, which resulted in 29 deaths, fueled a diplomatic spat between Tehran and Abu Dhabi after a prominent Emirati political scientist declared that the episode did not amount to terrorism. Zarif also used social media to directly blame a “foreign regime” for sponsoring the attack.

The Uncertain Road Ahead

With all this trouble brewing, what lies ahead for Emirati-Iranian relations? As Abu Dhabi reacts to regional instability by asserting a muscular foreign policy aimed at erasing perceptions of the UAE as a passive Gulf state, could the Emiratis be dragged into a direct military confrontation with Iran?

Despite the mounting friction, military intervention appears unlikely, as both sides would likely assess a potential military confrontation as too costly. Given the fact that Iranian investment in Abu Dhabi and Dubai amounts to hundreds of millions (possibly billions according to some sources), the odds are good that Iran will remain strongly disincentivized to wage direct military operations against the UAE or direct any terror campaign on Emirati soil given what would be at stake for Iran from a financial standpoint to say nothing about how Washington would likely respond in the UAE’s defense.

For the UAE, which finds itself in a quagmire in Yemen, waging a war against a formidable military power would be a catastrophic blunder. The Arab coalition’s inability to achieve a decisive military victory over the Houthi rebels is indicative of just how difficult it is to contemplate the idea of the UAE triumphing over Iran in a direct war.

Most likely, the possible scenario that serves to increase the risks of a war involving Iran and its regional adversaries would entail a grander conflict in which the U.S. administration’s “maximum pressure” campaign leads to the U.S. taking military action against Iran, probably with support from Abu Dhabi, Riyadh, Manama, and Tel Aviv. While it appears that Trump is keen to avoid starting a new war in the Middle East, the influence of Secretary of State Mike Pompeo and National Security Advisor John Bolton is pushing Washington’s Iran policy in a direction that increases the risk of a military confrontation involving Iran.

Nonetheless, if the U.S. and Iran avoid entering a military confrontation, which would spare the region from a conflict that would be a multiplier of violent instability on a massive scale, the UAE and Iran’s militaries would probably not directly confront each other. Yet with tensions in the Gulf ratcheting up, the possibilities of miscalculations and misunderstandings between Abu Dhabi and Tehran raise the stakes.