Graphic by Zoe Hu/The Gazelle

In a historic deal, Iran recently committed to dramatically reducing nuclear enrichment and conforming to an array of new restrictions on nuclear material in exchange for a rolling back of UN and Western sanctions. The agreement forged between Iran and the P5 +1 — the US, the UK, Russia, China, France and Germany — was reached after 20 months of negotiations culminating in a recent 18 consecutive day arbitration marathon. The deal, being the first major positive agreement between Iran and the United States in decades, has been justifiably widely reported.

That noted, outside of Iran, and possibly Israel, nowhere in the world has the deal been more cautiously scrutinized than by the leaders of the GCC and His Highness Sheik Khalifa bin Zayed Al Nahyan. The Iran nuclear deal has the potential to affect the UAE dramatically and in a variety of ways, chiefly in regard to the UAE’s economic ties to Iran and the GCC’s geopolitical rivalry with their Shiite neighbor.

Prior to the deal, Iran’s economic relations with the UAE had been a mutually beneficial, albeit complicated, affair. The UAE had been Iran’s largest non-oil trading partner and served as Iran’s eighth largest export market in 2013. Indeed, despite a 30 percent reduction in exports to Iran in 2012 as part of the sanctions agreement, the UAE was still Iran's fourth largest trading partner and held 80 percent of GCC trade with Iran this past year.

Even under the sanctions, the UAE remained a vital trading partner of Iran. With the sanctions lifted, the UAE will be unfettered in pursuing expansive mutually beneficial trade agreements. Not to mention, Dubai specifically has the potential to make huge profits as the commercial center for new business ventures in Iran, adding to its role as the center of Middle Eastern commerce and host of scores of company headquarters for the MENASA region. Commercially, the UAE has plenty to gain from the sanctions deal.

However, from a geopolitical standpoint, the Iran nuclear deal creates a slew of new diplomatic quandaries for the UAE. Presently, in conjunction with the GCC, the UAE is in a regional showdown for power with Iran. The Emirati government opposes Iran’s support for Assad, Hezbollah and the Houthis, not to mention Iran’s support for Iraq’s new Shiite regime and the still simmering Shiite populace of Bahrain. By rolling back sanctions, the UAE stands to lose politically as Iran sees an influx of funds to put towards its regional battles.

The strengthening of Iran’s position is further critical in that not only does it begin to upend the relatively strong advantage the GCC holds against Iran, but also because it comes at a time when the GCC is already bogged down in Yemen as part of an increasingly costly war.

Indeed, the deal further complicates matters for the UAE as the US makes known its willingness to work with others in the region besides Israel and the GCC. The possibility that the States could begin to reduce its extensive support for the GCC would place the UAE in a position of military vulnerability that is almost unimaginable. This is far removed from talks in previous years when the GCC was earnestly hoping for a strong mutual defense pact with the United States on par with NATO.

Finally, the Iran deal puts stress on UAE’s relations with the rest of the GCC. For the past year the UAE has stood strongly with countries like Saudi Arabia and Kuwait, producing crude at an aggressively high rate in what some see as an attempt to punish Russia and Iran economically for meddling in the region. With Iran’s 1.2 million barrels per day opening soon to new export markets, depending mainly on Saudi Arabia, the UAE may be forced into further budget deficits as the country further increases or maintains oil production levels to restrict Iranian economic growth and preserve market share.

While the UAE and other GCC countries are hurting from present oil price levels, the prospect of continued suffering for the smaller GCC countries will certainly strain relations with Riyadh, the military and economic center of the coalition. No government likes to be in a situation of budget deficit, especially not after the Arab Spring reminded Arab rulers of their fragility in the face of domestic discontent. Iranian oil could force the GCC into a predicament where members must evaluate their real compatibility as an operation within OPEC.

Overall, the Iran nuclear deal is not going to upend the prosperity of the UAE. There will be sizable economic gains for the country’s commercial sector regardless of the deal’s political ramifications. Additionally, although the UAE is no friend of Iran’s regional motives, both countries are united in their fear of Daesh, commonly known as the Islamic State, which has appeared as the newest defining force of Middle East politics. In the end, things will be changing for the UAE’s economic and political place in the Middle East, but, so long as Riyadh remains with the House of Al Saud, the seven leaders of the UAE can rest calm.