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Monday, July 6, 2009

March 06, 2007

U.S. Cigarette Profits Fill Iran Coffers

If sanctions don't work, maybe we can just smoke the Iranians to death. That seems to be a key strategy in the U.S. embargo on Iran these days.

Middle Eastern countries have raised concerns about the dangers of smoking, as in this poster from the Qatar Ministry of Public Health.

To punish Tehran for backing terrorism and going nuclear, Washington has slapped on trade sanctions and gone after its banking industry. But in one area, at least, business between the two nations is booming: cigarettes. Allowed into Iran as agricultural products, U.S. tobacco exports to Iran have grown to $142 million since 2002 and now dwarf those of other American goods shipped there.

The shipments stem from a 2000 U.S. law that eased up on embargoes against Iran, Libya, and Sudan, allowing exports of medicine and agricultural goods. Ironically, the law – the Trade Sanctions Reform and Export Enhancement Act – was pushed by interests from food-farming states, not the tobacco industry, but cigarette-makers appear the big winner. While shipments of U.S. smokes to Libya and Sudan never amounted to much, exports to Iran – considered a prize market by tobacco exporters – have ballooned.

From 2002 to 2005, tobacco made up nearly half of the value of all U.S. exports to Iran, according to U.S. Census data. The $50 million worth of tobacco products shipped there in 2005 – the last year for which data are available – is nearly three times that of the next largest category, pharmaceuticals, and over six times the amount of all other farm products.

"It's obviously not what was intended," says Rep. Brad Sherman, a California Democrat who chairs the House Terrorism, Nonproliferation, and Trade Subcommittee. Sherman, who has pushed for tougher sanctions on Iran, says the embargo was eased because of concern over deprivation. "That's why it was about food and medicine. It would have been ironic to put in medicine and cigarettes."

Iran is not short of cash – as a top oil producer, the regime makes billions of dollars off its petroleum sales, enough to amply fund the nuclear and missile programs that have Washington on edge. But its leaders are nonetheless making a killing off the tobacco trade, as sales are run by a government monopoly (although many cigarettes are smuggled in). According to Iran's IRNA news service, 50 billion cigarettes are consumed there annually, resulting in some 50,000 deaths each year.

"Maybe we're trying to stop the Iranians by giving them lung cancer," quips one terrorism expert.

Top U.S. Exports to Iran, 2005 (in thousands of dollars)

Tobacco, manufactured 50,317
Pharmaceutical preparations 18,463
Agricultural farming–unmanufactured   8,131
Pulpwood and wood pulp   7,389
Medical equipment   5,444

Source: U.S. Census Bureau

Photo: Middle Eastern countries have raised concerns about the dangers of smoking, as in this poster from the Qatar Ministry of Public Health.

Posted at 06:00 PM

Bad Guys
David E. Kaplan is chief investigative correspondent at U.S. News & World Report. His work includes cover stories on intelligence agencies, police spying, Saudi financing of jihad groups, and the growing use of organized crime by terrorists. Among Kaplan's books are Yakuza and The Cult at the End of the World, on the doomsday sect that nerve gassed Tokyo's subway. You can reach Kaplan at badguys@usnews.com.

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