Persian Gulf Arab states have agreed to start negotiations with Iran on a trade agreement in the hope that this could help to ease diplomatic tensions in the region, The Financial Times said.

The Persian Gulf Cooperation Council (PGCC) has begun a review of trade statistics between the two sides before launching the formal negotiations, requested by the Iranian government, an official told the Financial Times.
The PGCC, comprising Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman, and Bahrain, was formed in 1981 in the wake of the Islamic revolution in Iran and the outbreak of the Iran-Iraq war, in which the Persian Gulf states backed the Sunni regime in Baghdad. They maintain close military ties with the U.S.
The U.S. has called on its allies, notably Dubai and the UAE, to isolate Iran economically, but Dubai officials, while pledging to follow United Nations directives, generally defend business links with Iran.
The Persian Gulf leaders’ balancing act comes amid strengthening economic ties between the PGCC, especially the trade hub of Dubai, and Iran. Iran imported 10 billion dollars (€7 billion, £5 billion) of goods from Dubai last year, mainly re-exports from the trade hub’s ports.
“Because of their own inclinations and the influence of the U.S., the PGCC’s desire is to engage with the Iranians but to put limits on any
[perceived] Iranian diplomatic victory over the U.S.,” says Neil Partrick, Dubai-based Persian Gulf analyst for the International Crisis Group.
The PGCC has yet to conclude long-running negotiations on trade agreements with economic blocs such as the European Union, as well as trade powerhouses such as China.
Some analysts therefore doubt that the trade pact proposal with Iran will progress beyond the drawing board. But the Iranian request and the PGCC response are significant, given the history of tension between both sides.
Iran in April called for the formation of a security co-operation group with the PGCC states to counter U.S. influence in the Persian Gulf.
A Tehran-based business daily last week reported that Iranians had invested 120 billion dollars in Dubai, equivalent to about half the country’s budget, this year