Tehran’s back alley bankers flourishing under sanctions (THE GLOBE AND MAIL) PAUL KORING TEHRAN, IRAN 05/29/12)
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Sanctions aimed at crippling Iran have been “very good for business,”
at least on the shady side of informal banking, says a grey-market
currency trader in Tehran.
“A few thousand dollars is easy, even a few million dollars is no
problem,” Sattar, the trader, smilingly confirms.
“Fifty million? For that I would need some help but it could be
done,” he adds.
A wide range of sanctions, imposed by an array of countries, range
from blackballing individuals so they can’t travel to blocking big
Iranian banks linked to the government from international transfers.
But, at least when it comes to shifting money, sanctions-busting or
finding a workaround isn’t too hard.
Iranians seeking a few thousand dollars for a shopping spree in
Dubai, or a few million to backstop an import deal, find their way to
traders like Sattar. Wise to the risks of flouting Iran’s laws and
fixed exchange rates, he laughingly gives the Persian name for “the
concealer” to a visiting journalist.
“I’ve friends in the Philippines, in Dubai, even in Europe,” he says
of an ad hoc network in international-currency traders operating on
the margins of the law. “We can move a lot of money and it isn’t just
coming and going in suitcases,” he said over milky coffee not far
from Tehran’s historic bazaar, where a tradition of untraceable
commerce and deals done with handshakes stretches back centuries.
Relaxed and dapper, in a pressed shirt and vest, Sattar said the
informal market can handle deals in the tens of millions. That, of
course, is far short of the multibillion-dollar deals needed to cover
long-term oil exports or major infrastructure projects. But Tehran is
playing on the margins too. There are widespread reports of oil-
export deals denominated in rupees or done in barter.
An array of sanctions, some stretching back decades, have distorted,
but hardly crippled Iran’s economy. There’s a building boom in
Tehran; cranes crowd the downtown skyline. By some measures – 562
Porches and 60 Maseratis sold last year, according to urban legend,
and a burgeoning market in multimillion-dollar apartments – Iran’s
wealthy seem unscathed.
Iran’s oddly distorted economy – fuelled by vast oil wealth, curbed
by sanctions and twisted by decades of government subsidies on food
and fuel, which are now being steadily lifted – presents a confusing
study in contrasts. It’s almost impossible to unravel the
consequences – both good and bad – of the interleaved and artificial
For instance, a decade ago, Tehran’s air was polluted. A brownish
haze, mostly from vehicles exhausts, all but blotted out the view of
the snow-capped Alborz Mountains. Iran’s chronic shortage of refining
capacity, coupled with artificially low, subsidized gasoline prices
(still only 50 cents a litre), forced the government to import and
lose money on vast amounts of gasoline.
Today, all of Tehran’s taxis, most of its buses and an increasing
share of the millions of cars that jam the city daily, run on
compressed natural gas, vastly reducing the need to import expensive,
foreign-refined gasoline. Tehran’s air is far cleaner, a perhaps
unintended “green” consequence of sanctions.
But a new threat looms: the pledge by the European Union to end all
oil imports from Iran on July 1. That ban could slash Tehran’s
exports by 20 per cent.
In recent weeks, fear has spooked the currency markets, with the
value of the Iranian rial dropping nearly 50 per cent and then
bouncing back in a wild swing depending on whether the mood about
nuclear talks is upbeat or not.
Turkey and India, both major importers, are facing heavy pressure
from Washington to cut their Iranian oil buys.
Even Iranians are divided over whether to blame sanctions or economic
mismanagement for their financial woes.
The pain of existing sanctions, and worries about further damage, are
widely considered to be behind Tehran’s new-found willingness to
resume negotiations with world powers on opening its controversial
nuclear program to international inspections. That there was no
breakthrough last week at talks in Baghdad was tempered by the
willingness of both sides to meet again in Moscow.
“The Iranian government keeps pretending that sanctions don’t hurt
but we, the people, know better,” said Pirouz Mojtahed-Zadeh, a
professor of geopolitics at the University of Tehran. He regards the
orchestrated U.S.-led effort to throttle Iran’s exports as an attempt
by “Iran’s adversaries to cut its jugular vein.”
This spring, Iran’s oil production was at a 10-year low. And the oil
was, according to some analysts, being sold at a substantial discount
from the market price. With the EU ban looming, international
analysts and traders expect further declines in both production and
“There’s big swings between gloom and relief, every time there’s
another meeting over the nuclear issue,” Sattar, the grey-market
currency trader, said.
And there is mounting evidence that Tehran is preparing for
a “sanctions shock” as the EU oil ban looms. At least six of Iran’s
largest supertankers – filled to bursting with an estimated 35-
million-plus barrels of oil – are anchored in the Gulf, going nowhere.
“I was given three months off and told there would be no work until
summer,” says a Russian maritime engineer headed home for an
unscheduled and extended holiday. (© Copyright 2012 CTVglobemedia
Publishing Inc. 05/29/12)
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