General dynamics and pre-independence period

General developments in the 1960s pointed to an Arab-Persian convergence and harmonization with the Arab Gulf monarchic entities before British withdrawal, although border issues elicited tensions. Especially in the early statehood years, border delimitation was not just a problem of interstate Gulf relations but also a major issue inside the UAE when each emirate had a border dispute of some kind with another emirate or a neighbor, such as Oman. Although these disputes rarely escalated to violence, they influenced intra-UAE relations and therefore also the federation’s foreign policy. With state consolidation came the consolidation of foreign policy. Following independence, the UAE foreign ministry took over the dispute from the emirate of Sharjah (Gargash 1996, 152).

The federal nature of the UAE compounded the difficulties of forging a national foreign policy, as the individual emirates had wide autonomy. Iranian ties were of different intensity and a different nature to different emirates: the closest ties and the best working relationship were traditionally with the second-largest emirate of the federation, Dubai. Historically, a substantial proportion of Dubai's population is of Iranian origin, so the trade with Iran is intensive and the personal relationship between Shah Reza Pahlavi and Shaikh Rashid of Dubai was especially close (Alkim 1989, 149-150). Mainly because of Iran-Dubai ties, Iran and the UAE were each other's largest trading partner until 2009 (Al-Nahyan 2013, 67).

Regional dynamics mattered especially because of the politics on the Arabian Peninsula, but also in the broader Gulf, and were shaped by the asymmetry of power, size, military capabilities, and historical development. The larger states -Iran, Saudi Arabia, and Iraq - would often use or pressure the smaller emirates to achieve their ambitions. Iran used veiled military threats but especially economic pressure on the Trucial Coast states and would remind them of its opposition to the idea of federation as long as the territorial claims were not settled. When the British announced their withdrawal. Iran saw the opportunity to expand its influence at the expense of the smaller not-yet-independent states and reaffirmed its claim to Bahrain and then to the three islands ruled by the emirates Sharjah and

Ras al-Khaimah. Independent larger neighbor Saudi Arabia triggered a different approach of cooperation and coordination. The starting point of a closer relationship between the two monarchies was launched with a state visit by the shah in 1968 to Saudi Arabia, which ultimately resulted in his abolishment of the claim to Bahrain (Alkim 1989, 138).

The claim to Bahrain initially had priority (Sirriyeh 1984, 74-75), but good relations with the conservative monarchies in the Gulf were vital for the shah, so he eventually relented. When redrawing provincial boundaries in 1957, Iran designated Bahrain as the 14th province, but with Saudi-Iranian rapprochement, it lost its importance. In 1965, Iran amiounced it had no intention of using force to resolve the dispute, and the shah considered Bahrain not essential strategically, economically, or politically. It was small, its oil reserves were modest, and it was far from the Strait of Hormuz, the shah's primary geostrategic locus of interest. Also, an invasion would trigger violence and civil conflict (Alvandi 2010,162). In contrast to the islands dispute, the Bahrain affair was eventually settled agreeably in 1970, followed by reciprocal state visits by the prime minister of Bahrain on May 24, 1975, and the Iranian prime minister, Amir Abbas Hoveida, on November 29, 1975. Hoveida used to opportunity to express that there were no difficulties in relations between Iran and Bahrain and that cooperation between them was being fostered by a joint ministerial commission (Calvert and Alcock 2004, 452).

In contrast, the shah refused to budge on the issue of the smaller islands. While initially in favor of a united Arab federation to include the emirates, but possibly also Bahrain and Qatar, he would later block and threaten such a creation before the island dispute was not resolved. He began to publicly threaten to take the islands, emboldened by the upcoming British withdrawal announced in 1968 (Mobley 2003, 630). Alvandi cites popular opinion as the main reason for the shah's initial reluctance to give up the claim to Bahrain, having once confided that he feared going down “in history as the man who lightly abandoned his country’s ‘14th province'” (Alvandi 2010 164,171). Apopular interpretation of the contrast to the islands claim is therefore compensation: the shah occupied the islands to save face because of Bahrain (Alkim 1989, 141).14

Although the claim to the Tunbs and Abu Musa was not withdrawn, cooperation between Tehran and Riyadh did not cease but instead expanded to Saudi Arabia’s neighbors. In 1968, the shah invited UAE rulers for a state visit and the shaikh of Ras al-Khaimah came for ten days in August, a major success for Iran and perceived as rapprochement between the two monarchies. Over the years, eventually all of the Gulf rulers paid a visit to Iran, even Bahrain after the outstanding territorial claim was abandoned (Alkim 1989, 139-140).

The islands were claimed by two emirates: Abu Musa by Sharjah under Shaikh Khalid bin Muhammad Al Qasimi and the two Tunbs by Ras al-Khaimah under the leadership of Shaikh Saqr bin Muhammad Al Qasimi. The British supported Arab ownership of the islands and were optimistic that this would be the result of an independent legal review, but the shah claimed the islands for Iran and refused to submit the dispute to international arbitration (Mobley 2003, 629). The shah achieved an agreement with the shaikh of Sharjah, but not with the ruler of Ras al-Khaimah.

However, he did not initially intend to use violence. One British proposal included awarding the Sirri island to Iran while enabling a purchase of the Tunbs. Abu Musa would remain with Sharjah. The shah was open to the possibility of purchase, but possible Arab opposition hindered the progression of the plan, although the Emirati shaikhs entertained the possibility. In an August 1968 meeting between Shaikh Saqr Al Qasimi and Iranian Prime Minister Hoveida and Foreign Minister Ardeshir Zahedi, the Iranian representatives offered “compensation” and access to any mineral wealth discovered or the establishment of an Iranian naval base in exchange for anything that the Ras al-Khaimah leader wanted in return. He in turn offered the renting out of the islands while retaining sovereignty, a suggestion that the Iranian representatives refused. By July 1970, Iran had updated its position. It would not abolish its sovereignty claim over the islands but would not demand its recognition by the Arabs; it would garrison the islands, and mineral rights would be shared between Iran and Sharjah. Neither Iran, Sharjah, nor Ras al-Khaimah were ready to relinquish the sovereignty claim to the islands, and Iran resorted to open threats of occupation if diplomatic means came to naught. In 1971, it anchored warships in the vicinity of the Tunbs. Libya offered to send troops for protection, but the emirates refused the offer (Mobley 2003, 634-636).

Proposals and counter-proposals followed. On November 24, Foreign Secretary Alec Douglas-Home forwarded a letter with a memorandum of understanding (MoU) by Shaikh Khalid to Iran's Abbas Ali Khalatbari that stated that while neither side would abandon its sovereignty claim, the matter would proceed with the arrival of Iranian troops on Abu Musa that would occupy the areas previously assigned. On this area, Iran would have jurisdiction, fly the Iranian flag, and have the right to station troops (Alkim 1989, 142; Mobley 2003, 642). Sharjah would retain its sovereignty on the rest of the territory; its police post would fly the Sharjah flag; the oil revenues would be split equally between the two; and nationals of both countries would have equal fishing rights (Mobley 2003, 643). Also, an assistance agreement would be signed providing up to £1.5 million per year from Iran to Sharjah until the emirate's annual receipts from oil reached 3 million. Both Iran and Sharjah would also recognize a 12-mile limit of territorial waters around the island (Alkim 1989, 142).

Khalatbari accepted the terms of the letter but added that Iranian freedom of action to safeguard the security of the island or Iranian forces would not be restricted (which later served as the reference point for Iran in the 1992 escalation). Khalid announced the final accord on November 29 (Mobley 2003, 643).

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