Iran: Sanction as you wish, but lay off carpets

The first phase of US sanctions against Iran were rolled out on August 6 and it includes sanctions on Iran buying or acquiring US dollars, trading gold and other precious metals, sale, supply or trade of metals such as aluminium and steel, as well as graphite, coal and certain software for "integrating industrial processes."

These also included sanctions on "significant" sales or purchases of Iranian rials, or the maintenance of significant funds or accounts outside the country using Iranian rials, sanctions on issuing Iranian debt and, for good measure, Iranian auto sanctions.

The US also revoked certain permissions, granted to Iran under the JCPOA deal. These include halting Iran's ability to export its carpets and foods into the US, as well as ending certain licensing-related transactions. The energy markets are also nervously awaiting the second phase on November 4, which aims to cut back on all Iran oil exports to zero. The likelihood that energy dependent countries like China, India and Turkey will fully comply on this is uncertain, given the current state of trade tariff spats and open animosity between some of them and the USA.

The Trump administration’s immediate objectives is to ensure maximum economic pressure and pain on the Iranian regime and starve it of much needed foreign currencies which the United States believes Iran has been using to sponsor its “malign activities” in the region and reign in its ballistic missile program.

However, the issue of sanctions on Iranian carpets has greater and far longer-term significance than energy sanctions. This involves art and culture and putting at risk the skills of ordinary weavers, passed down over generations to make Iranian carpets one of the most sought out possessions of the rich and the discerning buyers of hand weaved carpets all over the world. In homes and offices, whether in the Gulf, Europe, Asia and the USA, one of the most prized possessions is one or more Persian carpet. The most discerning collectors are spoilt with choice from amongst the many varieties such as Afshar, Heriz, Kerman, Shiraz, Isfahan, Hamadan, Bidjar and Mashad to name but a few.

Heritage and culture

The country's carpet making industry employs hundreds of thousands of skilled weavers and earns hundreds of millions of dollars in export revenue with funds mostly going to private individuals and companies, unlike oil revenues, which are state controlled. President Donald Trump's decision to quit the Iran nuclear deal and reimpose sanctions threatens to kill that carpet market. If no resolution on the nuclear deal is found, these weavers will have to find other means of earning a living, whether it's other handicraft or something entirely different, putting at risk the acquired and unique skills and knowledge of generations. The consequences will be felt across the Iranian economy and further afield. The Iranian carpet economy is important as historically it has been very strong and has a quite a large degree of local employment, whether in the cities or by nomadic women in rural areas. Putting pressure on governments and sanctioning state operations is one thing, but putting heritage and culture at risk is another.

The Iranian weavers and their families had gone through sanctions before and had hoped for a brighter future after the JCOPA nuclear agreement was signed. Following the lifting of sanctions on Iran by the Obama administration in 2016, carpet exports rose sharply. Between March 2017 and January 2018, carpets worth $336 million were sold for export — according to the Iran National Carpet Centre — with the United States being the leading destination. All this is now at risk.

For lovers of Persian carpets, irrespective of nationalities and political differences, the loss of this unique heritage would be a sad loss to the world, for as a saying by Rumer Godden goes, “If books were Persian carpets, one would not look only at the outer side, because it is the stitch that makes a carpet wear, gives it its life and bloom.”

In the short term, as every freshman economics student knows, the law of supply and demand will kick in and the price of existing Persian carpets will sky rocket whether in the official or black market, putting many carpets out of reach to those that want to own one, but making it a possession of the very rich and art connoisseurs.

The exquisite Persian carpet has seen many different rulers and governments come and go over the centuries in its homeland, and let us hope it continues to thrive and not go the way of others, as we have seen by the decimation of skilled Syrian copper and silver metal workers livelihood in the bazaars of Damascus in the on-going civil strife. It will be a pity if we end up with artificially manufactured mass-produced copycat Persian carpets.

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Dr. Mohamed Ramady is an energy economist and geo political expert on the GCC and former Professor at King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia and co author of 'OPEC in a Post Shale world – where to next?’ His latest book is on ‘Saudi Aramco 2030: Post IPO challenges.'