UPDATE 1-Dubai will never sever trade ties with Iran – official

* Sees Dubai economy growing 3-3.5 pct in 2011

* Inflation to remain below 4 pct next year – official

(Adds detail, background)

By Martina Fuchs

DUBAI, Dec 1 (BestGrowthStock) – Dubai will never sever trade ties
with neighbour and major trade partner Iran, a senior Dubai
economy official said on Wednesday, as pressure on Tehran to
curb its uranium enrichment drive keeps mounting.

The United Arab Emirates, to which Dubai belongs, has
signalled it will rein back its role as a trading and financial
lifeline for Iran after the U.N. Security Council imposed a
fourth round of sanctions on Iran in June over accusations it is
developing a nuclear bomb.

“It’s never an option to end trade with Iran,” Sami
al-Qamzi, director general of Dubai’s Department of Economic
Development, told reporters on the sidelines of an event.

Asked what effect sanctions would have on Dubai’s economy,
he said: “There will be a weight, there will be an impact, but
we hope that through negotiations we’ll come to a solution to
reduce the negative impact.”

“This is a federal issue, the UAE will comply with all the
resolutions…,” he said.

Talks between Iran and a representative of the six major
powers — the United States, France, Russia, Britain, China and
Germany — are due to resume next week in Geneva in the first
such meeting in more than year.

Tehran rejects the charge it is seeking to develop nuclear
bombs.

Separately, Qamzi told reporters that Dubai’s economy was
expected to grow 3-3.5 percent in 2011, while inflation should
remain at or below 4 percent.

“We are forecasting 3 to 3.5 percent growth in 2011,” he
said, adding: “This year it is around 4 percent and we hope that
inflation will stay or be less than 4 percent.”
(Writing by Tamara Walid; Editing by Jon Boyle)

UPDATE 1-Dubai will never sever trade ties with Iran – official