Saturday , 4 December 2021

Khamenei Declares War on South Korean Fridges

Iranwire – “Imports should be banned.”

These four words were, ostensibly, meant to demonstrate a commitment to supporting Iranian business. They surfaced in a recent order by President Ebrahim Raisi to the Minister of Industry, Mines and Trade, following a decree from the Supreme Leader, and were specifically aimed at products finding their way into Iran from South Korea. White goods from that country were recently said to be flooding the market in a manner which, Raisi and the Supreme Leader said, was “breaking the backs of domestic home appliance companies”.

Khamenei’s Lethal Bans on Imports

Ali Khamenei has a long history of railing against imported foreign goods. His public addresses on the topic are often streaked through with warnings about the “import mafia” and the “religious and legal sanctity” of protecting domestic goods from similar imported ones, while extolling the virtue of the mythical “resistance economy”. Recently, he has said: “The import of goods that are already sufficiently produced domestically should be prohibited in law. And what we produce in this country should not be imported.”

The latest move against South Korean products comes after of Ayatollah Khamenei’s more recent attacks on imported goods contributed to the deaths of thousands of people in Iran. The ban on the import of American and British Covid-19 vaccines he imposed in January was a key factor in Iran’s catastrophic vaccine roll-out. Today, still just 18.6 of the population is fully protected against severe Covid-19.

There’s also a substantial precedent for Khamenei interfering in the activities of Iran’s executive branch of government. Often, the Supreme Leader has taken it upon himself to rule on the tiniest of details. In 2019, Iranian media reported Khamenei’s special order to revive the Arian Chicken Project, informing the public that a delegation consisting of the Supreme Security Council, the Resistance Economy Headquarters, the General Staff of the Armed Forces, the Vice President for Science and Technology, the Kowsar Economic Organization (Affiliated with the Martyr Foundation), the Ministry of Defense, the National Inspection Agency, the Research Center, and several other institutions, had been set up to save poultry farms from dependance on foreign hens.

White Goods Spokesman Stokes Panic

In fact, there has been an informal ban on the import of South Korean-made products to Iran since 2018, when Samsung and LG phones, branded goods and accessories were collected from shops and stores and replaced with Iranian alternatives. So, why the latest vitriol?

It’s likely a response to recent reports that South Korean-produced home appliances could again be entering the Iranian market. In mid-September, media outlets amplified a rumor that the US had authorized the partial removal of sanctions against Iran to make it possible for South Korean and Japanese goods to be imported anew.

In fact, the source of the story was none other than Hamid Reza Ghaznavi, spokesman for Iran’s Home Appliance Manufacturers Association, who has form when it comes to flights of fancy. At interviews, Ghaznavi regularly compares the import of home appliances to the so-called “oil for food program” in Iraq, and lashes out against what he describes as a “conspiracy” by “the import mafia” aiming to derail Iran’s independence.

The latest claim has yet to be confirmed or refuted. Clearly, the Home Appliance Manufacturers Association is seeking to benefit from fresh enforcement of the import ban. But would this be in the public interest?

Who Will Benefit From Enforcement?

Experience has shown that when it comes to banning imports, almost everyone loses out save for an elite, select few. Forty years of car monopoly production, at the cost of billions of dollars’ worth of Iranian national resources, resulted in nothing but absolute failure, creating corrupt, inflexible, and eventually bankrupt super-companies, the sole output of which is cheap, low-quality cars with no customer base anywhere but Iran.

Further, cutting off imports does not even benefit the producers of the regime-favored Iranian goods. The fate of any market starved of competition is recession. A market without any foreign rivals has no criteria against which to set its prices, meaning producers are forced to sell their wares at whatever price the government sets – often one that in turn harms the business.

At the same time, the influence of powerful individuals and institutions cannot be ignored. Banning imports is a losing game, but the business of smuggling and money laundering is certain to flourish in such a situation.

So far, there has been no analysis of or investigation into a possible relationship between the Home Appliance Manufacturers Association and influential, corrupt institutions such as the Revolutionary Guards. But what is known is that the association’s months-long efforts to secure a ban on home appliance imports have resulted in huge profits for the IRGC and other groups with a well-evidenced history of goods smuggling goods and money laundering.

Banning the import of South Korean goods will also destroy any chances of releasing blocked Iranian funds. But worse, it produces deep socio-economic frustration. Although the government primarily needs cash, not goods, imports could provide a basis for reviving the sluggish flow of relatively prosperous trade. The revival of Samsung and LG billboards on the streets of Tehran and other cities might at least be a sign of a gradual opening-up to the world, and be effective in reducing the economic crisis and anxiety over inflation.

It is also obvious that banning the import of South Korean goods will not persuade the United States or any other countries honoring the sanctions to back down. South Korea and Japan have also said they will not release blocked Iranian funds until the US gives the green light. The US can keep up this situation forever, but how long can the Islamic Republic sustain such pressure? With a bankrupt government devoid of any funds to pay its current and retired employees, how can it go on?