The UAE is Iran’s second-largest trading partner and also home to roughly half a million Iranians. Why, then, has it absorbed more fire than any other Gulf state?
According to the latest statistics released by the UAE Ministry of Defence, the country’s air defences have engaged 457 ballistic missiles, 19 cruise missiles, and 2,038 drones launched by Iran. This makes the UAE the biggest targetof Iran since the joint US-Israel war on it began on February 28. In fact, on the very first day, Dubai airport, the city’s famed Burj Al-Arab hotel, the landmark Palm Jumeirah, and Jebel Ali port were hit by missiles.
Exasperated by these attacks, the UAE, reports say, has asked the US to continue the war in Iran and complete the job there. In the latest update, however, it has ruled out putting boots on the ground in Iran but has signalled its willingness to join any multi-nation endeavour to open up the Strait of Hormuz to international shipping.
These developments spotlight a complex relationship between the two neighbouring states that share waterways, communities, and extensive trade links.
The UAE is Iran’s second-largest trading partner, with bilateral trade amounting to around $25-27 billion annually. In 2024, Iran imported over $20 billion worth of goods from the UAE, making it Iran’s largest single source of imports. At the same time, Iranian non-oil exports to the UAE were more than $6 billion. Around half a million Iranians live and work in the UAE, with the community having stayed there for decades, preceding the birth of the Islamic Republic in 1979.
A Tense History
Yet, tensions have persisted – territorially since the UAE’s birth in 1971, and ideologically since the Iranian Islamic revolution in 1979, spilling over into wider geo-strategic considerations.
Territorially, Iran and the UAE are locked in a dispute over three tiny islands – Abu Musa, Greater Tunb and Lesser Tunb. The largest, Abu Musa, has a population of only around 2,000 people. But they occupy an extremely strategic location – sitting as they are at the entrance to the Strait of Hormuz, whose importance by now needs no further explanation. These islands serve as useful bases to monitor maritime traffic through the Strait and are critical to Iran’s naval defence architecture.
Britain had occupied the islands in 1908. When the UAE gained freedom from the British in 1971, the British withdrew from these islands. Iran, under Shah Reza Pahlavi, occupied the islands, citing old maps, including those by the British. The UAE, however, maintained that they are the rightful owner. Given Iran’s size and its military muscle, the UAE has been restrained, relying mostly on diplomatic tools to manage the tensions. The UAE’s size – 83,600 sq. km in total – and its population – the local Emirati population is only 1.33 million out of a total population of 11.57 million, comprising expatriates – has shaped its approach towards Iran, as also towards the region as a whole.
The Revolution And The American Turn
The 1979 Islamic revolution in Iran, which overthrew the Shah and established a Republic, added another layer of complexity to regional politics. All five Gulf Sheikhdoms, along with the Kingdom of Saudi Arabia, are hereditary monarchies, with some, like the UAE, also representing a federative union with a constitution, to give it some semblance of a democratic polity. But they all remain absolute monarchies.
Furthermore, as Iran began exporting its revolutionary ideology, small sheikhdoms sought to hedge themselves and their enormous oil wealth by constituting the Gulf Cooperation Council and investing in American security and defence procurement.
Today, all GCC states house US air bases. Of them, the UAE hosts the Al Dhafra Air Base, which hosts American, French, and Emirati air forces, while the Jebel Ali port in Dubai hosts US Navy ships, making the UAE a key logistical hub. There are, besides the US, UK and French military bases as well, all of which have been a cause of tensions between Iran and the UAE. The UAE also closely aligned itself with Saudi Arabia, though that alliance has recently come under strain.
Over the years, the invasion of Kuwait by Saddam Hussein’s Iraq, the Arab Spring, and the rise of radical Sunni forces both as state power – as seen in Turkey and in Afghanistan with the return of the Taliban there – and through the emergence of non-state actors such as the ISIS in Iraq and Syria, created another set of dynamics in the region.
The UAE’s Unique Vulnerability
The UAE, given its territory and population, was particularly vulnerable and sought to counter both Shiite and Sunni radicalism. When it took the unprecedented step of intervening militarily, together with Saudi Arabia, in the Yemen civil war of 2015, it was as much to prop up the legitimate government of President Abdul Hadi Mansour as it was to push back against Iran, which was liberally training, arming, and financing the Houthi rebels there. The same logic made the UAE support anti-Assad groups during the Syrian Civil War: to contain Iranian influence in the region. But the intervention in Yemen produced only a stalemate, with the Houthis targeting both Saudi Arabia and the UAE. The latter has since withdrawn from Yemen, but it pursued other efforts to counter the twin threats of Sunni and Shiite radicalism.
One was to follow policies for increasing tolerance and pluralism in UAE society, such as building temples, restoring churches in post-conflict Iraq, initiating inter-faith dialogues, and easing social activities and norms for expatriates. This is only practical given that almost 80% of the UAE’s population comprises expatriates, most of whom belong to different faiths and cultures.
The Deal That Changed Everything
The other was to diversify its strategic partnerships with players like Russia, China, South Korea and India. But the most pathbreaking step was the normalisation of relations with Israel, through the Abraham Accords. The UAE became the third Arab country and the first GCC member to establish diplomatic relations with Israel, known for its intelligence-gathering and military prowess. This rang alarm bells in Tehran, which had fought a shadow war with Israel for decades by then. Even a moderate like the then-Iranian President, Hassan Rouhani, condemned the move in strong terms as a “betrayal” of the Palestinian people.
The issue of Palestine has placed the Gulf monarchies in an awkward position. On one hand, they continued their aid and pledges to the Palestinian people, yet, despite their close alignment with the US, they have been unable to find any meaningful resolution. A Palestinian state has never seemed more elusive than now.
In contrast, Iran was arming Hamas – even when it is a Sunni group – in Gaza. The Hamas was the only force seen to be countering Israel’s occupation and penalising it for its actions against the Palestinians. The GCC states seemed helpless. Amidst this, the Abraham Accords, from Iran’s point of view, were another instance of Israel prevailing over the Arabs. Following in the footsteps of the UAE was Bahrain. The former, therefore, in a way opened up the process of normalisation between Israel and the Gulf states. Doing so, it also brought Israeli presence closer to Iran, geographically.
Can’t Beat Money
Yet, geography dictates that the UAE and Iran remain connected through trade, financial and other economic linkages. Like Indians, many Iranians helped make the Emirates what it is today. Western sanctions on Iran also made the UAE the primary gateway for Iran’s trade and financial dealings with the outside world. The country’s ports, such as Dubai, and logistics networks made it an important re-export hub for goods entering Iranian markets, providing Iran access to global supply chains.
That is why it remains inexplicable why the majority of Iran’s projectiles have been aimed at the UAE. The latter has responded with remarkable restraint, even as it has condemned Iran’s attacks as well as the joint US-Israel assault on Iran. The closure of the Strait of Hormuz has meant that the UAE, along with other Gulf countries that use the Strait, has been unable to transport its energy exports as well as other critical commodities like fertilizers.
