Economic Security Police Launch Anti-Smuggling Drive

EghtesadOnline: The Economic Security Police Department of the Islamic Republic of Iran Law Enforcement Force started anti-smuggling operations at nine sea border crossings, one air border and three land border crossings of the country on Monday.

News ID: ۷۴۸۴۰۱

11 September 2019

The sea border crossings include Genaveh, Bushehr, Shahid Rajaee Port, Qeshm, Deylam and Khorramshahr. The land border crossings include Bazargan, Bashmaq and Parviz Khan.

Imam Khomeini International Airport is the only air border where the newly-formed police department will make its presence felt to curb smuggling, in cooperation with Interior Ministry, the Islamic Republic of Iran Customs Administration, Ports and Maritime Organization and Iran Road Maintenance and Transportation Organization, IRNA reported.

Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei says one of the main obstacles to boosting domestic production is smuggling, calling on police forces to step up efforts to counter the movement of contraband goods across the borders, Financial Tribune reported.

“Promotion of security is a prerequisite to economic activity and prosperity. And one of the main roadblocks in the way of bolstering production is smuggling,” the Leader said in a meeting with police commanders in Tehran in August.

Ayatollah Khamenei also said police must address another aspect of smuggling that has recently emerged, which is the fact that the scourge has become a double-edged sword, as some of the goods needed by the people, including agricultural products, are being smuggled out of the country and causing serious problems for ordinary people.

Main Smuggled Goods

The sharp depreciation of rial over the past year has prompted smugglers to transport cheap consumer goods, farm products and even livestock in large quantities to neighboring countries where they are sold at much higher prices.

Close to 74.3 trillion rials (more than $646 million) worth of smuggled goods were confiscated in Iran during the last Iranian year (March 2018-19), which shows a 73.1% upsurge in the value of seizures compared with the year before, according to data provided by the Headquarters to Combat Smuggling of Goods and Foreign Exchanges, the Organization for Collection and Sales of State-Owned Properties of Iran and Tazirat Organization (a judiciary-affiliated oversight body dealing with trading offences).

Topping the list of confiscations were household appliances worth $67.29 (indicating a 127.4% compared to the year before), automotives worth $52.36 million (up 323%) and foodstuff worth $27 million (down 10.7%).

Other contraband goods confiscated during the period were cosmetics and toiletries ($24.68 million), oil products ($18.27 million), livestock and poultry ($17.02 million), auto spare parts ($16.45 million), mobile phones ($15.68 million), satellite equipment ($13.05 million), apparel ($13.04 million), computer equipment ($12.9 million), rice ($12.04 million), textiles ($12.18 million), armament and ammunition ($11.15 million) and cigarettes ($10.51 million).

Out of the aforementioned items, oil products (especially fuel), livestock and poultry were major goods being smuggled out of the country.

Data on the value of smuggling, as part of Iran's underground economy, are scant. Latest data show the total value of smuggled goods during the three fiscal years, March 2013-14, 2014-15 and March 2015-16, stood at $25 billion, $19.8 billion and $15 billion respectively.

In the fiscal 2016-17, the number reportedly shrank to $12-13 billion, according to the Headquarters to Combat Smuggling of Goods and Foreign Exchange.  There is no available data past the fiscal 2015-16.

Subsidized Imports Give Rise to Smuggling

One major factor giving rise to smuggling of goods out of Iran lately has been the allocation of foreign currency by the government for the import of "essential goods".

Iranian sugar cubes, tomato paste, rice, fish, eggs and many other products have been popping up in the shops of neighboring countries.

A report by the Persian daily Iran in January said countries that were once the sources of smuggled goods to Iran are now the destinations of large volumes of products, a majority of which were imported to Iran in the first place.

"Iraqis are buying in large quantity rice, fish and chicken to the point that the increasing scarcity of some of these products in Iran has led to inflationary pressure," the report read.

"The 4,200-rial dollar is the deadly poison for the economy," secretary of Iran Foodstuff Wholesalers Union, Qasem Ali-Hassani, said. “We have time and again asked the government to stop the allocation of cheap foreign currency, but the government prefers this policy to control prices.”

The government needs to discontinue the allotment of cheap foreign currency instead of patrolling the borders, an informed source at Iran Chamber of Guilds, who wished to remain anonymous, told the Persian daily.

“Saved resources can be spent on low-income households’ subsidies. Current policy would only promote outbound smuggling. Smuggling would not go away unless the prices become real,” he said.

Hefty subsidies on fuel in Iran are the chief reason for its smuggling across borders into neighboring countries where prices are considerably cheaper.