Iranian smugglers squeezed out by currency in free fall

Reuters: Iran’s economy, bowing under the pressure of tough sanctions imposed over Tehran nuclear activities and the slumping of Iran’s currency is bringing the business of smuggling to a standstill.
Traders in the Omani city of Khasab say that business of smuggling goods to and from Iran has dropped up to 90 percent.
The fiber-glass skiffs hurtled across the water at break-neck speed, skirting the rocky cliffs on the last leg of the perilous journey from Iran to the sleepy backwaters of Oman’s Musandam peninsula.

Meet Iran’s fast-boat smugglers, an army of mostly teenagers who shuttle back and forth across the narrow Strait of Hormuz, bringing all manner of goods to Iran’s southern ports and evading import duties in the process.
“This is smuggling. It’s all about smuggling,” said one smuggler who asked not to be named.
Until recently the boats and their fearless young skippers escorted several cargoes a day – from soft drinks to mobile phones and cosmetics, all bought in the flourishing trade centers of the United Arab Emirates.
“It’s very intense, over there, on that side, it’s very intense. It’s really hurting the people. The authorities are really hurting everyone and everything,” he shouted over the sound of the 200 horsepower Yamaha outboard, an ostensible sign that this business was well worth the risks posed by adverse weather, oil tankers and fierce Iranian patrols.
The Iranian rial has lost nearly two-thirds of its value to the dollar over the last year, causing a massive hemorrhaging in the spending power of most Iranians.
Boxes of cleaning products, fabric and clothes awaited transportation to places in Iran including Qeshm island just 30 miles across the strategic waterway through which a third of the world’s seaborne oil exports pass.
“The situation in Iran is very bad…very bad,” said Hossein, a 21-year-old Iranian, who has just made the journey from the Iranian port of Bandar Abbas in under two hours in a convoy of several boats.
The smuggling has even withstood the spiraling tension between the United States and Iran over its nuclear program. Washington has not ruled out military action if Tehran fails to curb its activities.
The stand-off has centered on this narrow waterway that is vital to the oil trade. An increasing presence of U.S. naval ships has been matched by a corresponding build-up of Iranian military vessels monitoring their movements.
Israel continues to threaten Iran with an attack and Tehran has said it will close the vital artery if it is subjected to any military strike.
In Oman, at least some of the exports are registered through official customs channels, businessmen say, but not all.
The Iranians operate from a dock inside the main port which was closed off by a high security fence around a year ago, locals told Reuters. Unlike Khasab’s fishing wharf, there is no access without official permission.
That doesn’t stop Iranian boatmen freely entering the town during the day. But there was no intent to loiter. Despite the slump in smuggling there was another business to attend to: not picking up goods but dropping them off.
Along the harbor wall, hundreds of animals were being sheep and goats were being packed from the boats into waiting trucks.
Selling livestocks is a seasonal bonus for Iran’s smugglers in the run-up to the Muslim celebration of Eid al-Adha which is celebrated by symbolic sacrifice and the sharing of meat.
“We brought sheep today, small ones, around 60 of them,” said Hossein, as he stood in the middle of his boat, gesticulating towards the open sea.
Locals say the livestock is sent onwards to Oman and Saudi Arabia for Eid that is predicted to fall on October 27 this year.
With cattle unloaded, it was time for a swift return to Iran. Today the boatmen had jobs and the exporters were still in business but nobody knew about tomorrow.
Smugglers tell stories of bribery, coming under fire and dumping their wares into the sea but Iran’s growing economic plight now threatens to snuff out their risk-inherent work for good.
Western diplomats say they have no desire to stopping trade in basic goods and cite the oil embargoes as the most effective weapon in trying to bring Iran to the negotiating table.
Yet the proximity of Iran to the UAE and Oman and the historic trade and finance links shows just how difficult it has been in recent years for the U.S. and its allies to apply pressure on Iran through sanctions, that is until now.
In the old market of Khasab – known as the “Iranian souk” businessmen who declined to be filmed said they have lost some 90 percent of the business in the past year. Import-export businesses dependent on re-exports to Iran have been hit hard they added.
Before the slow-down the company boasted an average turnover of 130,000 U.S. dollars per week, selling predominantly food and electronics that end up in Iranian markets.
The Iran-based merchants who own the fast-boats and employ the drivers make their orders by telephone and often pay through exchange houses based in Dubai, the businessman told Reuters.
Official statistics show that trade between the United Arab Emirates roared throughout 2011 but took a distinct downturn at the beginning of this year when the U.S. and its allies imposed harsh new sanctions against Iran and has directly targeted Tehran’s oil exports.

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