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In comments on the first day of the Iranian year in March 2017, Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei called for efforts to combat smuggling and contraband goods as part of plans to stimulate domestic production and combat unemployment.

The consequences of smuggling are as follows: non-payment of public salaries and burdens, collapse of competitive market interaction, high profitability and financial and moral corruption, disturbance of the country's production of corruption and corruption in the administrative system, failure to properly manage the state of affairs Economic and social risks of healthy business competition, negative impact on the functioning of business and economic policies and cultural and health problems.

In order to achieve a desirable criminal policy in the fight against smuggling, there is a need for cohesiveness and the identification and careful examination of the causes and factors in the fight against smuggling. The smuggling of goods has transformed smuggling of goods into economic constraints in recent years in the form of organized informal imports and smuggling of consumer goods through illegal and unauthorized ways by smuggling gangs and power perpetrators who have inflicted severe damage on the country's economic system.

Contraband accounts for 63% of all cosmetics in the Iranian market, an official with the Headquarters to Combat Smuggling of Goods and Foreign Exchange said 06 February 2018. “An estimated $1.5 billion worth of cosmetics are smuggled into the country annually due to the highly profitable market,” ISNA also quoted Reza Mousazadeh as saying. Some 75% of the Iranian chewing gum market is dominated by foreign brands, most of which have been smuggled into the country while only 25% of the market is supplied by domestic brands, the managing director of Master Foodeh Company, which produces the ‘Biodent’ brand of chewing gum, said 13 May 2018. Mohammad Karimi added that Iran’s chewing gum market has an annual turnover of between 12 trillion rials ($285.71 million) and 15 trillion rials ($357.14 million).

Iran is subject to a new regime for inspection of suspicious cargo to detect and stop Iran's smuggling. States can inspect any vessel on their territory suspected of carrying prohibited cargo, including banned conventional arms or sensitive nuclear or missile items.

Tobacco taxes generate high revenues because they target a good with large sales volumes, few producers, inelastic demand, easy definability and a lack of close substitutes. Such goods provide for a relatively consistent, stable and profitable revenue stream. Tobacco makes big profits selling its goods in a market where as much as 24% of the population smokes. Cigarettes have historically been a cheap commodity in Iran, because of high volumes and low average quality. To keep costs low, American and British tobacco consortiums took to smuggling their own products into Iran, thus avoiding cost additive tariffs levied by the Iranian Government. After 2012 the Iranian Government eased importation restrictions in order to stem smuggling and recoup some revenues. But estimates place the proportion of illicit cigarettes in the Iranian market at between 14% and 22.5%.

Cigarette imports fell to zero over the first two months of the Iranian year March 21-May 21, 2018 compared with the import of 503 million cigarettes year-on-year, Ali Asghar Ramzi, the head of Iranian Tobacco Planning and Supervision Center said on 28 May 2018. The import halt does not mean no foreign cigarette entered Iran, as tobacco smuggling is rife. Ramzi estimated that 2.7 billion cigarettes were smuggled into the country last year (March 2017-18), indicating a 55% decline YOY.

Contraband, such as firearms, alcohol, or cigarettes, is frequently concealed in shipping containers or packaging for seemingly legitimate goods. Nondrug contraband smuggling across international borders - including illegal import and export of legitimate goods such as alcohol, cigarettes, textiles, and manufactured products - is a highly profitable criminal activity that typically carries lighter criminal penalties than narcotics trafficking. The evasion of tariffs and taxes on commodities can reap sizable illicit profits for criminal organizations or companies engaged in illegal trade, both by saving tax payments and by undercutting the market price of legitimate sales.

Afghanistan produces some 90 percent of the world’s illicit opium, much of which is trafficked through Iran to the rest of the world. Tehran blames Kabul for failing to curb opium production and prevent cross-border drug smuggling. Iran claims to have lost nearly 4,000 security forces fighting drug traffickers between 1979 and 2009. The US Department of the Treasury has placed Quds Force Commander Esmail Baghbani on the US sanctions list for his role in drug trafficking on 07 March 2012. General Baghbani allowed Afghan narcotics traffickers to smuggle opiates through Iran in return for assistance. For example, Afghan narcotics traffickers moved weapons to the Taliban on behalf of Baghbani. In return, General Baghbani has helped facilitate the smuggling of heroin precursor chemicals through the Iranian border. He also helped facilitate shipments of opium into Iran.

The domestic telephone system consisted of 38 per 100 for fixed-line and 106 per 100 for mobile-cellular subscriptions; heavy investment by Iran's state-owned telecom company had greatly improved and expanded both the fixed-line and mobile cellular networks; a huge percentage of the cell phones in the market have been smuggled into the country. Following the launch of the Mobile Registry Scheme in December 2017, close to 250,000 smuggled cellphones have been detected and disconnected from local operators’ networks by mid-June 2018.

Iran is a source, transit, and destination country for men, women, and children subjected to sex trafficking and forced labor; organized groups sex traffic Iranian women and children in Iran and to the UAE and Europe; the transport of girls from and through Iran en route to the Gulf for sexual exploitation or forced marriages is on the rise; Iranian children are also forced to work as beggars, street vendors, and in domestic workshops; Afghan boys forced to work in construction or agriculture are vulnerable to sexual abuse by their employers; Pakistani and Afghan migrants being smuggled to Europe often are subjected to forced labor, including debt bondage.

Fuel smuggling has been a way to circumvent oil export sanctions. Gasoline and other fossil fuel smuggling takes place in various forms and in many ways, The astonishingly low gasoline price in Iran is because the government subsidizes more than 90 percent of the cost; just the opposite of what many other countries do when they heavily tax fuels to reduce consumption. Ali Adyani, a member of the Iranian Parliament's Energy Committee has quoted various sources as putting the gasoline smuggling figure at ten, 15 and even 20 million liters a day.

About 74.3 trillion rials ($526 million) worth of smuggled goods were confiscated in the Iranian year March 2018-19, which showed a 73.1% surge in the value of seizures compared with the year before. The above figures have been released 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), Mehr News Agency reported. Topping the list of confiscations were household appliances worth $67.29 (indicating a rise of 127.4% compared to the year before), automotives worth $52.36 million (up 323%) and food products worth $27 million (down 10.7%).

Sugar cubes, tomato paste, rice, fish, eggs and many other products categorized by the government as “essential goods”, importers of which get subsidized foreign currency, are now popping up in shops of neighboring countries. Countries that were once 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. Iranian products are in demand in Iraq.

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Page last modified: 11-07-2019 11:06:44 ZULU