Analysis: Goods Smuggling Highlights Economic Problems In Iran

By Bill Samii

The chief of Iran's national police force, Mohammad Baqer Qalibaf, said on 2 January that the problem of smuggling is mounting in the country, according to RFE/RL's Radio Farda.

Iran's confrontation with narcotics smuggling is well known, but Qalibaf, who heads Iran's headquarters against contraband and currency smuggling, was referring to more common items, such as automobiles, household equipment, and computer parts, as well as tea and cigarettes. He said the total value of smuggled goods is $5.5 billion-$6 billion annually and that up to 80 percent of these goods enter the country through unregistered ports and jetties in the Persian Gulf. Qalibaf attributed the prevalence of smuggling in Iran to the country's overall economic situation.

Qalibaf described these economic issues in the 9 September "Sharq." First, he said, the large state enterprises and parastatal foundations that dominate the economy must have greater coordination. Second, he added, tariffs and other trade barriers must be re-evaluated. Qalibaf noted that public needs are not met by overpriced, low-quality domestic goods. Imports should fill the gap between domestic demand and domestic supply, he said, and if the tariffs do not allow sufficient imports then there will be smuggling. This will only worsen the situation and undercut domestic production further. Qalibaf went on to say, according to "Sharq," that domestic producers need more government support, and he added that the current situation creates incentives for merchants to import goods. Qalibaf criticized Dubai for not observing international trade regulations and said the Iranian government is pursuing this issue.

In the 9 September interview with "Sharq," Qalibaf denied that any state enterprises are involved with smuggling. Accusations of this, he said, relate to factional and political disputes.

The apparent smuggling at Payam Airport serves as a case study of the problems that can emerge in a country with a state-run economy and an administrative system that depends more on personal connections than on justice and the rule of law.

The case of smuggling at Payam Airport, which is south of Karaj, suggests otherwise. In that case, according to Radio Farda, some customs officials were implicated.

An individual identified only by the initials "A.T." arranged for four or five flights a day and up to eight flights on holidays to transport goods from other countries to Payam Airport, judicial official Hamid Reza Movahedi said on 27 October, "Toseh" reported the next day. Most of the goods allegedly came via Dubai, and the accused used illegal connections and paid bribes to bypass normal administrative and customs procedures. Accomplices in the Customs Department reportedly helped the main defendant falsify claims, get bills of lading that understated the amount and value of goods, and operate outside of normal business hours. Movahedi went on to say that the main defendant imported more than 300 tons of goods over two years, but he did not know the exact value of everything.

The main defendant, A.T., was arrested after an investigation by the Intelligence and Security Ministry, the customs department, and the judiciary's intelligence unit, judicial official Movahedi said, according to "Toseh." Twelve people were arrested initially, although some were released after posting bail. The authorities seized an 18-ton shipment that arrived at Payam Airport after the arrests.

This was not the main defendant's first run-in with the law, but his financial power is believed to have protected him. "The first time he was fined more than 1 billion tomans [$1.265 million], it took him less than five minutes to deposit the fine," police chief Qalibaf said, according to "Sharq."

The names of the smugglers were turned over to the judiciary on 14 December, state television reported. Presumably this indicates that preparation of a court case against them could begin. At a 14 December ceremony at Payam Airport, however, Information and Communications Technology Minister Ahmad Motamedi rejected allegations that airport employees were involved in smuggling, "Etemad" reported on 15 December.

Judiciary spokesman Jamal Karimirad threw cold water on the denial of official involvement in smuggling at Payam Airport. Karimirad said 20 people are being detained, including the head of southern Tehran customs, ILNA reported on 4 January. The Sony company's warehouse at the airport has been sealed, he said, and 10 customs experts are analyzing the related documentation.

This is not the first corruption case in Iran, and the presumption of innocence applies, of course. Nevertheless, the apparent smuggling at Payam Airport serves as a case study of the problems that can emerge in a country with a state-run economy and an administrative system that depends more on personal connections than on justice and the rule of law. Earlier corruption cases, such as the ones involving Shahram Jazayeri and various aghazadehs, or officials' offspring (see "RFE/RL Iran Report," 25 November 2002 and 4 October and 1 November 2004), attracted more attention because they were used in factional infighting. It is doubtful the Payam Airport case will receive as much attention.

Bill Samii is a regional analysis coordinator with RFE/RL Online and editor of the "RFE/RL Iran Report." He earned his Ph.D. at the University of Cambridge. His research articles have appeared in the "Middle East Journal," "Middle East Policy," and the "Middle East Review of International Affairs (MERIA) Journal." He has contributed to several books about the Middle East.