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Sanctions Pull Rug from Under Iran

by JASON REZAIAN in Tehran

20 Oct 2010 06:374 Comments

U.S. bar on Persian carpets will hit Iranian weavers and traders hard.
CarpetWeaving.jpg
[ business ] Iran's famed rug industry faces a serious threat from the latest sanctions imposed by the United States, the biggest market for Persian carpets.

The embargo came into force on September 29, coinciding with the final day of a week-long international carpet exhibition in Tehran at which insiders mulled the future of the trade.

Figures released by the Iranian government in early September painted a healthy picture, estimating that rug exports could reach a value of half a billion U.S. dollars in the current Iranian year, running from March to March. That was a reasonable enough projection given that data for the five months since March 2010 showed receipts of 207 million dollars, nearly 50 percent up on the figure for the same period last year.

However, what the estimate fails to into account is the U.S. ban on Iranian products including luxury items like handmade carpets, part of the latest sanctions that Washington authorised in July. U.S. purchases account for 20 percent of Persian carpet exports.

Speaking on September 20, the U.S. Treasury Department's undersecretary for terrorism and financial intelligence, Stuart Levey, said measures imposed by the United States and other governments were imposing "serious costs and constraints" on Iran.

Levey said the latest sanctions specifically targeted those doing business with the Islamic Revolutionary Guard Corps, but it is hard to see how this applies to carpet-weaving.

Around two million jobs in Iran are in some way connected to the production and trading of handmade rugs. Adding their dependents, this translates into one in ten of Iran's population. It is still too early to estimate what impact the loss of the U.S. market will have on the livelihoods of so many people, but many Iranians are understandably beginning to ask why they should lose out so badly if the sanctions are meant to be against their government.

"We're wondering why the American government would do this," Mohammad Mehdizadeh, who comes from the renowned carpet-weaving city of Kerman and was exhibiting his wares at the international fair in Tehran. "These sanctions will only affect people in the trade. What connection does the rug business have with politics?"

Persian carpet imports to the United States were banned for most of the 1980s and all of the 1990s -- with very limited success, according to a veteran merchant in the San Francisco Bay area.

"The last U.S. embargo spawned a great frenzy of attempting to circumvent the blockade, by importing rugs into the U.S. via the border with Canada. Some dealers were successful and made money; others were apprehended, arrested, tried, and served prison time," he said.

Mehdizadeh, too, recalled the contraband days. "I did sent rugs during [President Ronald] Reagan's time. We'd send them to Germany and then on to Canada, where they'd be loaded into small trucks and taken over the border at night," he said.

In its final months, President Bill Clinton's administration made an apparent goodwill gesture by introducing a special exemption for Persian carpets as well as caviar, pistachio nuts, and dried fruits.

The immediate result was a glut on the U.S. market, and even now there are large stocks of unsold Iranian rugs sitting in warehouses across America.

Nevertheless, sales have remained strong enough for the United States to remain the number one destination for this finely woven, colorful handicraft.

Those days are now numbered.

President Barack Obama has held out the promise of a better trade relationship if Tehran decides to cooperate with the international community on the long-running dispute over uranium enrichment.

But this time, the decision to lift sanctions may not be one that Obama can make. According to Jamal Abdi, policy director at the National Iranian American Council in Washington, "with the reinstated ban on rugs and pistachios, Congress intentionally reversed the 'goodwill gestures' of the Clinton administration. Under the new sanctions, the president has significantly less authority on these matters, meaning it will be far more difficult for President Obama or any U.S. president to offer similar gestures of goodwill in the future."

If rug exporters in Iran were taken by surprise, traders in America had in fact been anticipating the move for some time.

"This time dealers were aware this action was coming. Many had been expecting it for years," the San Francisco merchant said. "Some of them had been attempting to bring Persian rugs into the country legally before the embargo went into effect."

Thus, the true beneficiaries of the ban on Persian carpets may be those who sell them, as scarcity helps boost demand.

Jason Rezaian is a journalist based in Tehran, and formerly involved in the rug trade. This piece was originally published by Mianeh.

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4 Comments

Just proves that those who hold sway in the US regime want to hurt the livelihoods of ordinary Iranians. They are supporting the same policies in Gaza against the Palestinians. They seem to be following the same policy as Madeline Albright with her comment that the death of 500,000 Iraqi children as a result of US/UN imposed sanctions was 'a price worth paying'. Iranian opposition groups who support such sanctions, will if things deteriorate further, end up with blood on their hands. Are they therefore different to the current regime that they loath? or are they simply power hungry and want to use popular grievances and some failures on the part of the current regime to get into power after which they too will forget their promises and may turn out to be worse than the ancien regime in their brutality to their opponents?? Is there ever going to be an end to this cycle of brutality that one group of human beings inflict on another by virtue of their monopoly on power??

rezvan / October 20, 2010 4:26 PM

Yes, there will be an end Rezvan and this is how we are going to do it,

1- Replacement of the Barbaric Republic by a government of the 'Iranian' people and by the 'Iranian' people.

2- Implementation of a new and secular constitution. Total separation of religion from state. No more Mullah parasites.

3- A new government representative of the Iranian people and run by their true representatives.

4- Nullification of all contracts signed by the Barbaric Republic concerning the natural resources of Iran.

You will like this one.

5- Elimination of all funds directed to Lebanese, Palestinian and other terrorists. We are sure if they work for a living they will refrain from acts of terrorism. It’s called growing up.

These initial steps will save the Iranian people billions upon billions of dollars paving the way to their future prosperity they are very worthy of minus all the parasites.

Got it buddy?

Now, move on.

How do you say “GOODBYE” in Lebanese?

That is right, GOODBYE.

Niloofar / October 20, 2010 11:58 PM

Niloofar - R you a Greek??? Check out the original definition of a 'barbarian'. BTW are those who throw bombs from, in 'shock and awe', from the sky not 'terrorists'. What about those good neocons in the Bush administration who went shaking hands with the Taliban and Saddam and then attacked them? and those German companies who sold chemical weapons to Saddam which he used against his own people and against the Iranians, all of course to advance 'democracy' and 'freedom'.
BTW are you sure you are an Iranian? Most Iranians have a 'mullah' or two in their families including in the opposition. Even the Shah had his 'court' mullahs and Maryam Rajavi wears a proper hejab, when she could take it off since she is leaving in a 'mullah' free state!

Rezvan / October 22, 2010 3:42 AM

Rezvan, I have no idea what you are talking about but most Iranians do NOT have a mullah or even a half of a mullah in their immediate or extended family.

You talk about the "brutality that one group of human beings inflict on another". Is the systematic torture, public lynching, public executions, rape of prisinors, public stoning as well as other "barbaric" acts not considered brutality?

And please at least have this much courage to admit that these sorts of acts occur in Iran under the current tyrant regime. I hope that you have at least an inch of manhood left in you to admit that these acts do take place in Iran but you consider them to be necessary.

And talking about sanctions. I consider them to be a necessary evil. The alternative pathway to sanctions is war. Would your rather have war than sanctions? I personally would prefer sanctions to war as in war there are no winners just the dead and their grieving families.

Anonymous / October 22, 2010 9:14 PM