ABU DHABI The UAE is not seeking to ease new financial sanctions on Iran despite the pain inflicted on local firms that have seen financing for Iranian trade deals dry up, a senior U.S. official said on Tuesday.
"There's a real recognition on our part of the special challenge that UAE faces in implementing sanctions on Iran, perhaps more so than any other country," the official, travelling with U.S. Treasury Secretary Timothy Geithner, told reporters.
Geithner stopped over in Abu Dhabi as part of a week-long Asian trip to meet with the emirate's leader, Crown Prince Sheikh Mohammed bin Zayed al-Nahayan.
Geithner expressed his thanks to the United Arab Emirates for its efforts in implementing the sanctions and heard about difficulties they have caused, the official said.
"The UAE has a long tradition of trade, of cultural exchange, of familial ties, of geography, to Iran," the official added.
New United Nations sanctions implemented over the summer to curb Iran's nuclear weapons ambitions have dramatically curbed links between Iranian banks and their foreign counterparts. This has curtailed the ability of many UAE trading firms to do business with their traditional trading partners in Iran.
While the United States has blacklisted many Iranian banks for several years, the UN sanctions prompted the European Union to blacklist some 17 Iranian institutions. Japan and South Korea made similar moves, the official said.
"The financial sector as a whole has recoiled from Iranian financial institutions which have become financial pariahs," the official added.
Separated by a narrow section of the Arabian Gulf, the UAE and Iran by various estimates did between $8 billion and $15 billion in bilateral trade in 2009.
The U.S. official, speaking on condition of anonymity, said that despite difficulties for individual firms, the UAE recognised the threat from a nuclear-armed Iran and does not want its firms to be used in aiding Iran's "illicit activities".
Geithner and Abu Dhabi's Sheikh Mohammed also discussed the pace of economic recovery in both America and the UAE, which also suffered the bursting of a property bubble, the official said.
The U.S. Treasury chief later travelled to Singapore, where he will meet on Wednesday with Singapore Prime Minister Lee Hsien Loong and Finance Minister Tharman Shanmugaratnam to discuss the Group of 20 Seoul summit agenda.
(Reporting by David Lawder; Editing by Michael Roddy)
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