US sanctions stomp on Persian carpets
By Jason Rezaian
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 US$500 million 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
$207 million, nearly 50% up on figure for the same period last year.
However, what the estimate fails to take into account is the US ban on Iranian
products including luxury items such as handmade carpets, part of the latest
sanctions that Washington authorized in July. US purchases account for 20% of
Persian carpet exports.
Speaking on September 20, the US Treasury Department's Under Secretary for
Terrorism and Financial Intelligence, Stuart Levey, said measures imposed by
the US and other governments were imposing "serious costs and constraints" on
Levey said the latest sanctions specifically targeted those doing business with
the Islamic Revolutionary Guards Corps, but it was hard to see how this applied
Around 2 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
10 of Iran's population. It is still too early to estimate what impact the loss
of the US 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," said 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
Persian carpet exports to the US 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 US embargo spawned a great frenzy of attempting to circumvent the
blockade, by importing rugs into the US via 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 for caviar, pistachio nuts and dried fruits.
The immediate result was a glut on the US 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 US to remain the number
one destination for this finely-woven, colorful handicraft. Those days are now
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 US 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.