WSJ-DUBAI—The United Arab Emirates is looking for ways to continue financing legitimate trade with Iran after the organization that handles world-wide banking transfers disconnected most Iranian banks from its systems over the weekend, according to U.A.E. Economy Minister Sultan Al Mansouri.
Mr. Al Mansouri said he met his Iranian counterpart, Sayyed Shamsuddine Huseini, last week in Dubai and discussed trade relations and how to help U.A.E. and Iranian businesses caught up in the recent ban on banking transfers implemented by the Belgium-based Society for Worldwide Interbank Financial Telecommunication, which is known as Swift.
"We discussed the issue of financial transfers, to safeguard the best interest of traders from both countries...most importantly we discussed the issue of the Swift system which has been shut down," Mr. Al Mansouri said in a telephone interview with Zawya Dow Jones.
Dubai is one of Iran's largest trading partners. Two-way trade between the two nations last year was valued at 50 billion U.A.E. dirhams ($13.6 billion).
Swift facilitates the flow of most electronic financial transactions. Virtually all major banks and finance firms use it to send financial data and messages.
Effective Saturday, Swift complied with a European Union ban on dealings with sanctioned Iranian institutions, including the country's central bank.
Mr. Al Mansouri said the United Arab Emirates will comply with international sanctions imposed on Iran for its nuclear program, but that the U.A.E. is seeking ways to ensure that legitimate trade can continue, including supplies of medicine and food, which are exempted from sanctions.
"Such a disruption in the financial transfers has had a large impact on the [U.A.E.] commercial sector and there has been injustice inflicted on some of the traders in this regard," Mr. Al Mansouri said.
He said that discussions are continuing with the U.A.E.'s central bank and with the country's commercial banks and exchange houses in order to find solutions on how to continue financing trade with Iran.
Once it has been barred from using Swift, Iran is expected to seek out other payment systems to continue conducting trade, such as IBAN, or International Bank Account Number.
However, financial experts said that such systems aren't used nearly as widely as Swift and, therefore, the cost of conducting transactions will increase significantly for Tehran.
The U.A.E. is located 56 kilometersjust 35 miles from Iran across the Strait of Hormuz.
The U.A.E. is home to hundreds of thousands of Iranian nationals and persons of Iranian origin.
Dubai has traditionally facilitated trade and imports for Iran, much as Hong Kong historically did for China.