Tuesday , 7 February 2023

Iran’s supreme leader issues ban on Samsung, LG appliances

Al-Monitor – Iran’s Supreme Leader Ayatollah Ali Khamenei ordered a strict ban on the imports of South Korean-made home appliances, a directive that has renewed debates on his micromanagement of the Iranian economy.

In his brief note to President Ebrahim Raisi, the Iranian supreme leader ordered the hard-line cleric to “firmly block” such imports. Without naming Samsung and LG, Khamenei said the renewal of imports from “the two [South] Korean companies … will break the back of domestic manufacturers, which have just started to stand on their own feet.”

Both Samsung and LG have enjoyed a booming market in Iran in the past two decades as domestic producers have largely failed to compete due to multiple issues, including state intervention, international sanctions and corruption. Skyrocketing inflation in Iran has almost tripled prices of home appliances, both domestic and imported, in the past two years, further causing turbulence in the already struggling market.

Prior to their recent attempts for a reentry, the two South Korean giants walked away from the Iranian market in early 2020, at a time when the US “maximum pressure” policy was being exercised full swing by former US president Donald Trump. The strategy was meant to scare away international companies from any dealings with Iran. Upon their departure, then-Iranian deputy foreign minister Abbas Araghchi reminded Samsung and LG that companies leaving Iran might not find it easy to return.

In his public statements, Khamenei has been a vocal supporter of domestic production, and has named consecutive Persian new years after economic slogans, with the current one focused on “production, support, removal of hurdles.”

Bans on specific companies, however, have been rare for Iran’s ally, China. Chinese products continue to dominate the Iranian market, imposing bankruptcy upon Iranian enterprises almost on a daily basis. Despite protests, well-connected importers, which are directly or indirectly linked to the financial empires of the supreme leader, maintain a robust monopoly, effectively rendering some domestic manufacturers irrelevant.

It was not immediately clear if Khamenei’s ban on the two South Korea firms was politically motivated or if he would apply the same argument for Chinese companies. But to the Iranian leadership, South Korea, as an ally of the United States, is advancing the interests of the “enemy” in east Asia, and is thus hardly a reliable partner in the first place.

While triggering criticism against direct interference and micromanagement, the Iranian leader’s ban also drew another backlash on social media platforms. It dug up recent memories of his ban on US and UK vaccines in January, despite growing calls for imports to curb a deadly wave of the coronavirus pandemic.

Later in August, Khamenei slightly modified the stance and called for some vaccine imports to be accelerated. But over 39,000 Iranians lost their lives to the virus during the seven-month span between Khamenei’s initial ban and his change of heart.