| Kippreport.com

Sanctions no obstacle as Iranians get their iPads

January 20, 2011 10:52 by Reuters

UNAFFORDABLE LUXURIES

The government started to cut back fuel and food subsidies in December, aiming to save the state up to $100 billion a year and to make Iran less vulnerable to any sanctions on fuel imports.

As the cost of essential goods rises, some Iranians fear that they will no longer be able to splash out on luxuries — especially if inflation, currently around 10 percent, soars, as some economists predict.

“Sometimes I think we have more been suffering from our own economic mismanagement than the imposed sanctions,” said a university professor in Tehran who asked not to be identified because of the government’s reputation for reacting harshly to criticism.

“My children love digital gadgets, and I used to buy them for them,” he said. “But as the living costs are sharply rising, I should take more care about our basic needs.”

Molaie, a manager of a company importing computer and network equipment, who also did not want his full name used, said that imports would continue as long as there was market demand. “It is just the matter of people’s purchasing power.”

“We had no major obstacle so far in our businesses,” he added. “I have no idea about the government’s difficulties.”

Much of the trade in sanctions-busting goods comes through the United Arab Emirates and more particularly Dubai, which faces Iran across the Gulf. Both legal shipments and smuggled goods regularly cross the intervening stretch of water, which is only 54 kilometers, or 29 miles, at its narrowest point at the Strait of Hormuz.

Dubai’s close economic ties with Iran have attracted scrutiny from Washington. In response to that, the UAE signaled last year that it would rein back its longstanding role as a trading and financial lifeline.

In June, the UAE’s central bank, in a measure that could spell disaster for many Iranian banks and businesses that deal with Dubai, told financial institutions to freeze accounts belonging to dozens of firms and blacklisted dozens of entities.

As a consequence, said Mojtaba Esfehanian, a manager of a computer company in Tehran, many Iranian companies based in Dubai had started to think of moving elsewhere.

The 41-year-old manager said Turkey and Malaysia, with their large Muslim populations, could act like bridges connecting Iran to the markets in the West and the East.

As the UAE pulls back from its traditional relationship, “our neighbor Turkey seems more attractive for Iranians,” Esfehanian said.

Iran’s ambassador to Turkey, Bahman Huseyinpur, recently visited Turkey’s Black Sea coast as part of a fact-finding mission to assess the port facilities available there. The reason: Tehran wanted “to transfer a large portion of our trade from the Gulf” to Turkey, he said.

(Writing by Reza Derakhshi; Editing by Samia Nakhoul)

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