Despite conflict, U.S. does business with Iran Commerce occurs amid on-again, off-again sanctions with lax enforcement
The Associated Press
updated 5:22 p.m. ET, Tues., July. 8, 2008



WASHINGTON - The rhetoric between the Bush administration and Iran may get tougher and tougher, but the trade marches on.
Terrorists
and nuclear ambitions aside, the United States sells Iran brassieres
and bull semen, cosmetics, cigarettes and a host of other goods,
possibly even rifles.
In the words of President Calvin Coolidge: “The chief business of the American people is business.”
So true!
U.S.
exports to Iran grew more than tenfold during President Bush’s years in
office even as he accused it of nuclear ambitions and sponsoring
terrorists. America sent more cigarettes to Iran, at least $158 million
worth under Bush, than any other product.
Other
surprising shipments to Iran during the Bush administration: fur
clothing, sculptures, perfume and musical instruments. Top states
shipping goods to Iran include California, Florida, Georgia, Louisiana,
Michigan, Mississippi, New Jersey, North Carolina, Ohio and Wisconsin,
according to an analysis by The Associated Press of seven years of U.S.
government trade data.
Despite increasingly
tough rhetoric toward Iran, which Bush has called part of an “axis of
evil,” U.S. trade in a range of goods survives on-again, off-again
sanctions originally imposed nearly three decades ago. The rules allow
sales of agricultural commodities, medicine and a few other categories
of goods. The exemptions are designed to help Iranian families even as
the United States pressures Iran’s leaders.
“I
understand that these exports have increased. However, we believe that
they are increasing to a segment of the population that we want to
reach out to, we want to know and understand that the U.S. government,
the U.S. people want to be friends with them, want to work with them to
integrate them into the world economy and become partners in the
future,” Gonzalo Gallegos, a State Department spokesman, said Tuesday
when asked by reporters about AP’s findings.
The
government tracks exports to Iran using details from shipping records,
but in some cases it’s unclear whether anyone pays attention.
Sanctions
are intended in part to frustrate Iran’s efforts to build its military,
but the U.S. government’s own figures showed at least $148,000 worth of
unspecified weapons and other military gear were exported from the
United States to Iran during Bush’s time in office. That included
$106,635 in military rifles and $8,760 in rifle parts and accessories
shipped in 2004.
The Bush administration
looked into those shipments after AP questioned whether the U.S. really
approved the export of military rifles to Iran. A review found the
rifles and parts actually went to Iraq; the wrong country was entered
on the shipping record, Treasury Department spokesman John Rankin said.
The government will correct the data, he said.
The
remaining military gear is likely $33,000 in military apparel shipped
to Iran under the humanitarian exemption to the trade sanctions, Rankin
said.
The government was also looking into
U.S. records showing the export of at least $13,000 in “aircraft
launching gear and/or deck arrestors,” equipment needed to launch jets
from aircraft carriers. Iran’s navy is not believed to have carriers.
It’s likely the wrong commodity code was entered in the shipping record
or the parts are for civilian aircraft and legal to export, Rankin said.
U.S.
law enforcement believes Iran is actively trying to acquire U.S.
military technology, including aircraft parts that can sell for pennies
on the dollar compared with what the Pentagon paid. Last year, federal
agents seized four F-14 fighter jets sold to domestic buyers by an
officer at Point Mugu Naval Air Station, Calif., for $2,000 to $4,000
each, with proceeds benefiting a squadron recreation fund. When F-14s
were new, they cost roughly $38 million each.
Bush
this year signed legislation prohibiting the Pentagon from selling
leftover F-14 parts. The law was prompted by AP reporting that buyers
for Iran, China and other countries exploited Pentagon surplus sales to
obtain sensitive military equipment that included parts for F-14
“Tomcats” and other aircraft and missile components. Two men were
indicted in Florida last week on charges they shipped U.S. military
aircraft parts to Iran, including Tomcat and attack-helicopter parts.
Iran
received at least $620,000 in aircraft parts and $19,600 worth of
aircraft during Bush’s terms. Iran relies on spare parts from other
countries to keep its commercial and military aircraft flying. In some
cases, U.S. sanctions allow shipments of aircraft parts for safety
upgrades for Iran’s commercial passenger jets.
Iran
is a hot issue in Washington. The House plans a hearing Wednesday on
U.S. policy toward Iran, and the Bush administration announced Tuesday
it was freezing the U.S. assets of several people and entities accused
of helping Iran develop nuclear weapons.
But the U.S. government seems uncoordinated on efforts to limit trade with Iran.
The
Securities and Exchange Commission sought to shine a light on companies
active in Iran but stopped after business groups complained. The
Treasury Department allowed some companies and individuals suspected of
illegal trading with Iran to escape punishment. Yet the Bush
administration also has collected millions of dollars in fines from
trade-rule violators and pressed Congress without success to pass laws
to strengthen enforcement.
The fact that the United States sells anything to Iran is news to some.
“Until
you just told me that about Iran I’m not sure I knew we did any
business with Iran,” said Fred Wetherington, a tobacco grower in
Hahira, Ga., and chairman of Georgia’s tobacco commission. “I thought
because of the situation between our two governments, I didn’t think we
traded with them at all, so I certainly didn’t know they were getting
any cigarettes.”
The United States sent
Iran $546 million in goods from 2001 through last year, government
figures show. It exported roughly $146 million worth last year,
compared with $8.3 million in 2001, Bush’s first year in office. Even
adjusted for inflation, that is more than a tenfold increase.
Exports
to Iran are a politically loaded but tiny part of U.S. trade. The
United States counted more than $1 trillion in world exports last year.
The value of U.S. shipments last year to Canada — America’s top trading
partner — was more than 1,000 times the value of shipments to Iran.
Top
U.S. exports to Iran over Bush’s years in office include corn, $68
million; chemical wood pulp, soda or sulphate, $64 million; soybeans,
$43 million; medical equipment, $27 million; vitamins, $18 million;
bull semen, $12.6 million; and vegetable seeds, $12 million, according
to the AP’s analysis of government trade data compiled by the World
Institute for Strategic Economic Research in Holyoke, Mass. The value
of cigarettes sold to Iran was more than twice that of the No. 2
category on the export list, vaccines, serums and blood products, $73
million.
Iran
is a top customer of Alta Genetics Inc., a Canadian company with an
office in Watertown, Wis., that sells bull semen, used to produce
healthier, more profitable cattle. “The animals we’re working with are
genetically superior to those in many parts of the world,” said Kevin
Muxlow, Alta’s global marketing manager.
Also
getting Bush administration approval for export to Iran were at least
$101,000 worth of bras; $175,000 in sculptures; nearly $96,000 worth of
cosmetics; $8,900 in perfume; $30,000 in musical instruments and parts;
$21,000 in golf carts and/or snowmobiles; $4,000 worth of movie film;
and $3,300 in fur clothing.
Few people or
companies asking U.S. permission to trade with Iran are turned down by
the Treasury Department, the lead agency for licensing exports to
sanctioned countries. During Bush’s terms, the office has received at
least 4,523 license applications for Iran exports, issued at least
2,821 licenses and 213 license amendments and denied at least 178,
Treasury Department data shows.
Neither
the Treasury data nor trade data compiled by the Census Bureau identify
exporters or specify what they shipped. The AP requested those details
under the Freedom of Information Act in 2005 and still is waiting for
the Treasury Department to provide them.
Though some trade with Iran is legal, some businesses prefer that people not know about it.
Citing
corporate financial reports, the SEC published a list online last year
of companies that said they had done business in Iran or four other
countries the State Department considers state sponsors of terrorism.
The SEC withdrew the list after business groups complained but is
considering releasing one again.
“There’s
no question that people are looking for that kind of information,” SEC
spokesman John Nester said. “But under the current disclosure regime,
it’s beyond most people’s abilities and time to slog through every
corporate report and find companies that make reference to one of those
nations.”
Business groups oppose publishing
such lists. It “could inappropriately label companies with legitimate
activities as supporters of terrorism,” the European Association of
Listed Companies told the commission earlier this year.
An
AP photographer strolling through shops in Tehran had no problem
finding American brands on the shelves. An AP review of corporate SEC
filings found dozens of companies that have done business in Iran in
recent years or said their products or services may have made it there
through other channels. Some are household names: PepsiCo, Tyson Foods,
Canon, BP Amoco, Exxon Mobil, GE Healthcare, the Wells Fargo financial
services company, Visa, Mastercard and the Cadbury Schweppes candy and
beverage maker.
Georgia
led states in exports to Iran over the past seven years, with
cigarettes representing $154 million of the $201 million in goods it
exported there. Cigarette shipments to Iran peaked in 2006, apparently
from a Brown & Williamson cigarette factory in Macon, Ga.
When
the plant closed, tobacco shipments to Iran fell dramatically. No U.S.
tobacco shipments to Iran were reported for 2007 or the first quarter
of this year, the most recent figures available.
British
American Tobacco began operating in Iran in 2002, producing most of its
cigarettes under a contract with the Iranian tobacco monopoly, company
spokesman David Betteridge said. B.A.T. shipped Kent cigarettes from
the United States to Iran until 2006, he said.
The
factory in Macon closed after B.A.T.’s Brown & Williamson Tobacco
Corp. and R.J. Reynolds Tobacco Holdings merged their U.S. tobacco and
cigarette businesses. B.A.T. said it now makes cigarettes for export to
Iran in Turkey. It declined to say how much tobacco the company
previously shipped from the U.S. to Iran, but said the U.S. government
approved the shipments.
The Bush
administration’s record enforcing export laws is mixed. The Office of
Foreign Assets Control let the statute of limitations expire in at
least 25 cases involving trade with Iran from 2002 to 2005, according
to one internal department audit. The companies involved, disclosed to
the AP under the Freedom of Information Act, include Acterna Corp.,
American Export Lines, Parvizian Masterpieces, Protrade International
Corp., Rex of New York, Shinhan Bank, Phoenix Biomedical Corp., World
Cargo Alliance and World Fuel Services.
Abdi
Parvizian of the Parvizian Masterpieces rug gallery in Chevy Chase,
Md., said his case was dropped because his business proved everything
was imported from Iran legally. He bristled over current congressional
proposals to ban imports from Iran, including carpets.
“The
problem with the rugs is it has nothing to do with the government of
Iran,” Parvizian said. “This is something that is made by the very
unfortunate people in the country, and those people are going to get
hurt more than anybody else.”
World Fuel
Services said an employee fueled a ship out of Singapore that turned
out to be Iranian-owned, and the U.S. government spotted it from a wire
transfer. The company explained the mistake to Treasury with no
repercussions, said Kevin Welber, general counsel of the company’s
marine business. It has since put in place techniques to identify
Iranian-owned ships, which Welber said can be difficult because some
Iranian ships sail under Cyprus flags.
Phoenix
Biomedical acknowledged it shipped surgical shunts to Iran without a
license. It previously was allowed during the Clinton administration to
send them to Iran and sent replacement shunts without a new license,
which was required, said Charles Hokanson, who sold Phoenix Biomedical
to French-based Vygon and is now chief executive of Vygon USA. He said
that was the last business it did with Iran.
The other companies did not respond to requests by the AP for explanations.
Failure to obtain export licenses has caused trouble for some companies whose products can legally be sold to Iran.
Months
after Zimmer Dental of Carlsbad, Calif., acquired Centerpulse Dental in
late 2003, it learned Centerpulse had sold dental implants and related
items to Iran without necessary export licenses, Zimmer spokesman Brad
Bishop said. It voluntarily reported the violations to the Treasury
Department, which announced in January that Zimmer Dental had paid an
$82,850 penalty.
Bishop said the company has since trained employees and also took the easiest solution to avoid such problems:
It stopped doing any business with Iran.Copyright
2008 The Associated Press. All rights reserved. This material may not
be published, broadcast, rewritten or redistributed.
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