Strait of Hormuz

Assessing the threat to oil flows through the Strait

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Iran understands it needs to foster better relations with its regional neighbors. As political and economic interests have become more central in Iran's regional relationships, economic ties have mitigated at least some of the religious divides between Iran and its Persian Gulf neighbors.

Over the past decade, Iran made conscious efforts to reach out to Saudi Arabia, indicating "genuine pragmatism on the part of Iran."[iv] The two countries increased trade, collaborated on OPEC policy, and signed security agreements related to money laundering, border surveillance, and the administration of water and territorial matters.[v]

Iran also dramatically increased its economic ties with the UAE, its largest trade partner. Despite ongoing disputes over islands in the Strait of Hormuz, Iran and the UAE have developed intimate economic ties vital to each other's economies. Bilateral Iranian-UAE trade was estimated at $14 billion at the end of 2007[vi], and Iranians living in the UAE reportedly have accrued assets worth more than $300 billion in Iran.[vii] These increased economic relations have formed deep regional economic ties despite existing religious differences.

[i] U.S. Department of State, Country Background Notes: Iran. Online. Available: http://www.state.gov/r/pa/ei/bgn/5314.htm. Accessed: December 4, 2007.

[ii] For a comprehensive account of Islamic history, see Ira M. Lapidus, A History of Islamic Societies, (Cambridge, NY: Cambridge University Press, 1988).

[iii] Daniel Byman, Shahram Chubin, Anoushiravan Ehteshami, and Jerrold D. Green, Iran's Security Policy in the Post-Revolutionary Era, (Santa Monica: RAND, 2001), p 40.

[iv] Daniel Byman, Shahram Chubin, Anoushiravan Ehteshami, and Jerrold D. Green, Iran's Security Policy in the Post-Revolutionary Era, (Santa Monica: RAND, 2001), p 74.

[v] Gwen Okruhlik, "Saudi Arabian-Iranian Relations: External Rapprochement and Internal Consolidation," Middle East Policy, vol. 10, no. 2 (Summer 2003), p 118.

[vi] "Iran/United Arab Emirates: U.S. Fails to Scuttle Emerging Ties," International Press Service (February 25, 2008).

[vii] "UAE Open for Iran Business as U.S. Seeks to Choke Tehran," Agence France Presse (February 11, 2008).

This page last modified in August 2008

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