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Iran: U.S. tries to plug gaps in sanctions

MANAMA, Bahrain, April 14 (UPI) -- China is showing signs of going along with economic sanctions against Iran, one of its main oil suppliers, and Russia energy giant Lukoil is to cut gasoline supplies to the Islamic Republic and has abandoned a major energy project there.

But that still leaves serious loopholes in the U.S. strategy of isolating Iran, and one in particular: the freewheeling Gulf emirate of Dubai, which is suspected of being the site of ran's illicit trading lifeline.

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Dubai, which until its recent meltdown was the financial powerhouse of the United Arab Emirates, has for years been the main gateway to Iran, particularly the port of Bandar Abbas 100 miles to the east across the Gulf.

Much of the contraband that flows to Iran is believed to go through Dubai. The volume of legitimate trade with Iran totaled an estimated $12 billion in 2009, making it easy to hide illegal goods bound for the Islamic Republic.

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Dubai is packed with Iranians and posses of shady characters from the demi-monde of global terrorism; organized crime and hard-nosed entrepreneurs of dubious repute, all busily intriguing and plotting.

Sanctions-busting is bread and butter for them. Corruption is rife and many cargoes leave the Creek, the center of Dubai's trading activity, for Iran without being checked.

Those include goods legitimately shipped by U.S. companies to Dubai – and then re-exported to Iran, sidestepping U.S. prohibitions.

Michael Jacobson of the Washington Institute for Near East Policy, a pro-Israel think tank, observed: "One of the primary means of evading these regimes is through re-exports.

"Generally export-control laws distinguish between different countries in determining the legality of a specific transaction. For example, dual-use goods, which can have commercial or military applications (including in the nuclear sector), may be sent to some countries, but not to others.

"Iran often takes advantage of this framework, evading U.S. laws and international sanctions by setting up front companies and middlemen in countries to which these types of items can be legally exported.

"In most cases, the sellers are not told that the goods will be re-exported to Iran -- though many other sellers are willing to turn a blind eye."

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Dubai is seen as one of these hubs, but there are others in Europe, Malaysia, Thailand, Hong Kong and Singapore, all extensively involved in re-exporting to Iran.

The Jan. 19 assassination in Dubai of Hamas arms procurer Mahmoud al-Mabhouh, allegedly by Israel's foreign intelligence service, underlined the emirate's links with Iran.

Tehran has become the main arms supplier to Hamas in the Gaza Strip and Mabhouh was reportedly in Dubai to acquire Iranian rockets.

There are an estimated 8,000 Iranian businessmen and 1,200 trading companies based in Dubai, Simon Henderson, a veteran British Middle East analyst who specializes in the Gulf, said.

"Dubai has a track record of eschewing bureaucratic obstacles to trade and downplaying international dangers," he noted. "Until late 2001, for example, it served as a financial center for al-Qaida."

The disgraced Pakistani nuclear scientist A.Q. Khan used Dubai as a trans-shipment hub for the nuclear arms black market he ran throughout the 1990s, helping Iran, North Korea and Libya set up clandestine nuclear weapons programs.

A week before Mabhouh was killed in a five-star Dubai hotel, Vanity Fair magazine reported that the CIA had tracked Khan to Dubai during one of his many visits to the emirate and had planned to assassinate him there. It said the operation was called off "because of a lack of political will in Washington."

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People in Dubai are also believed to be deeply involved in banking and financial deals that benefit Iran and help it keep the wheels of commerce and industry turning.

Western efforts to cripple Iran include restricting the activities of Iranian banks abroad and preventing Tehran from skirting a global crackdown on transactions by simply opening new banks in foreign countries.

Iran has been targeted in several earlier sanctions regimes and was able to circumvent them to a large degree. Freezing its assets, one of the mainstays of these efforts, hasn't been particularly effective.

The Wall Street Journal reported that under the current set of sanctions only $43 million in Iranian money has been frozen in the United States -- one-quarter of what the Islamic Republic earns in oil revenue in one day.

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