"UAE Considers Asset Freeze Retaliation After Iranian Drone Attacks"

Targeting Accounts Linked to the Islamic Revolutionary Guard Corps

The Wall Street Journal (WSJ), citing sources, reported that the United Arab Emirates (UAE) is considering freezing billions of dollars worth of Iranian assets as a retaliatory measure. This decision comes after Iran conducted attacks using drones and missiles. Until now, the UAE had maintained a neutral stance.

Quoting sources, the WSJ stated that UAE officials have unofficially warned Iran about the possibility of such actions. However, it remains unclear whether the UAE government will actually take action and, if so, when such action would occur.

On the 5th (local time), a projectile crossed the sky over Dubai, United Arab Emirates. Photo by AFP Yonhap News

According to officials familiar with the matter, the measures the UAE is considering include freezing the assets of UAE-based shell companies used to evade sanctions, as well as conducting a sweeping crackdown on local currency exchanges that move funds outside the official financial system. The officials noted that if the UAE targets Iran’s shadow finance, accounts linked to the Islamic Revolutionary Guard Corps (IRGC), which are at the core of the system, would become primary targets.

The WSJ noted that attempts to pressure Iranian assets would mark a significant departure from the UAE’s traditional course, which has been to maintain strategic alliances with the United States while also keeping close ties with Iran.

According to the U.S. Department of the Treasury and various experts, for years the UAE has served as a financial hub for Iranian companies and individuals seeking to circumvent Western sanctions. Iran has used the UAE as a route to evade sanctions and continue exporting oil overseas, with the proceeds used to fund weapons and support regional proxy forces.

Esfandyar Batmanghelidj, CEO of the Iran-focused think tank Bourse & Bazaar, said, "Moves by the UAE to restrict Iran’s financial activities would be highly significant," adding, "The UAE is the most important channel for Iran’s engagement with the global economy."

The UAE is considering the possibility that, if assets are frozen, Iran could seek long-term retaliation against UAE territory and critical energy facilities. Additionally, the decision to freeze assets could worsen trade and financial relations with Iran and negatively impact the UAE’s ability to attract capital from other politically sensitive countries such as Russia.

However, experts believe that even if the UAE proceeds with asset freezes, it is unlikely to freeze all accounts belonging to the hundreds of thousands of Iranian businesses and citizens residing in the country. Andreas Krieg, Senior Lecturer at the Department of Security Studies at King’s College London, noted that the UAE does not want to lose all business, and is therefore likely to adopt a more targeted approach, with IRGC-related accounts expected to be frozen first.

According to the U.S. Department of the Treasury, in 2024, it is estimated that USD 9 billion of the funds transferred through correspondent accounts managed by U.S. banks were related to Iran’s covert financial activities. The Treasury stated that 62% of these funds entered through UAE-based companies, many of which are linked to oil sales by Iran-affiliated firms in Dubai.

In addition to financial measures, two sources indicated that the UAE is also considering maritime actions, such as seizing Iranian vessels. The objective is to neutralize Iran’s secret oil tankers and intermediary fleets operating through UAE ports and shipping lanes.

This content was produced with the assistance of AI translation services.