How Iranians Dodge Sanctions

By Sabah Haider

This article was published in La Monde Diplomatique on December 2010

 

It’s no secret that the latest round of US sanctions on Iran, set this June, are further affecting the Iranians’ ability to access popular items such as electronics and foodstuffs.

But prohibition breeds ingenuity, and thousands of Iranians have managed to get the everyday goods they need — whether it’s tea, rice, a television or breakfast cereal — from merchants who are able to import goods from Iran’s small but significant neighbour, the United Arab Emirates.

Iran has had strong trade relations with the UAE, whose economy was rooted in trade, and pearl diving off its coast, long before oil was discovered less than 50 years ago. Hundreds of thousands of Iranians now live in the tiny Gulf state across the water from their homeland.

The UAE enjoys excellent trade relations with most of the world, and enterprising Iranian businessmen have set up successful import and export businesses through which they’re able to import goods into the UAE, and from there send them to Iran. That has been happening openly and legally for years through the UAE’s free zones. On a much smaller scale, though, scores of merchants and shopkeepers in Iran have been able to access every items such as rice, cooking oil, home appliances and other foodstuffs – much of which is American – and ship them over from the UAE on small wooden boats, known in Persian as kashtis.

In bustling Dubai, and many other small UAE ports such as in Sharjah and the northeastern emirate of Ras Al Khaimah (only 30 kms from Iran), small, modest wooden boats packed with foodstuffs and household items leave every day for the Iranian port of Bandar Abbas, where the goods are offloaded and transported to merchants across the country. Dubai’s Deira Creek is lined with tens of kashtis on any day of the week and workers mill about as they wait to receive deliveries of goods and load them on board.

The global financial crisis combined with the latest US sanctions on Iran have affected UAE and Iran trade which is forecast at $7-8 bn this year — almost $5bn less than it was in Dubai’s boom years of 2006-07.

The quantities the kashtis collectively transport to Iran are not enough to satisfy the appetite and needs of over 73 million people, but Morteza Masoumzadeh, vice president of the Iranian Business Council in Dubai, says Iranians are doing fine: they can get what they need from countries that, unlike the US, are happy to do business with them.

He says that although sanctions have affected Iranians, it’s mainly the banks that are affected. And the Americans are shooting themselves in their foot as they’re losing out on a very big market: Iran has a population of 73 million. Take as an example, office printers, in particular Hewlett-Packard: “HP’s office in Dubai was based there 10 years ago mainly to supply goods to Iranian users; it was one of the reasons for establishing an office there: the main demand in the region was from Iran. Now because of the sanctions they have lost the business.” Masoumzadeh adds: “If HP don’t ship a consignment of printers to Iran, users there will find a competitor who will sell it to them.”

Back in Dubai, I return to the Deira Creek. Hossein and Farhad, young Iranians from Bandar Abbas, are working on one of the ships that will soon be headed for their hometown. They explain that from Dubai, despite the tens of boats that line the creek, only a handful of kashtis go to Iran each week: most of the boats are docked, in the process of receiving and loading goods, which can take up to one month. Once the boats are ready to leave, they must clear UAE customs before they depart for Iran.

As Hossein and Farhad, unload a truckload of 20kg bags of basmati rice and hoist them into the lower storage of the boats alongside stacks of tins of ghee (clarified butter) and a few flatscreen televisions, they smile and say: “We eat a lot of rice in Iran.”