- The Washington Times - Sunday, September 16, 2012

With its economy in free fall, Iran is turning to its porous borders with Iraq and other countries to skirt increasingly effective global economic sanctions, according to congressional staffers, local journalists and advocates for tough sanctions against Tehran.

Analysts say Iran’s government and citizens have become desperate, resorting to “cash transactions” on the black market with neighboring countries — principally Iraq, with which it shares a 910-mile border.

Iraq is a very hospitable place for Iran,” said Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a Washington think tank that advocates tougher sanctions against Tehran.

Mr. Dubowitz, who heads the foundation’s Iran Energy Project and has advised the White House on sanctions policy, said smuggling on the Iran-Iraq border consists most notably of “gas into Iran and oil out.”

A July report from the Congressional Research Service noted that the value of Iran’s currency, the rial, has dropped by about 50 percent in the past year and Iran is virtually cut off from the international banking system. It said the Islamic republic increasingly is forced to trade through “barter arrangements,” with many major international firms having left the market and many Iranian firms reported to be closing and laying off workers.

“The signs of economic pressure on Iran are multiplying,” the report said.

As a result, Iran, which sits on massive reserves of crude oil, lacks the capacity to refine petroleum, making it reliant on gasoline imported from other countries.

“Iranians need hard currency,” Mr. Dubowitz said, noting the effectiveness of sanctions imposed by the U.S. and the international community in an effort to force the country to stop its development of nuclear weapons.

Western nations have long suspected that Iran’s nuclear program is geared toward building an atomic bomb, and the U.S. and European Union have implemented sanctions against Iran’s central bank and oil industry to persuade Tehran to scrap its program. Iran has said repeatedly that its nuclear program is intended only for civilian uses, but it has not cooperated with international inspectors.

“We are starting to see the success of international sanctions,” said Mark D. Wallace, chief executive officer of United Against Nuclear Iran, a New York-based bipartisan advocacy group that has pushed for economic sanctions against Iran.

He said the economic squeeze on Iran has led to “much more secret trading taking place” on its borders with Iraq and Afghanistan.

“Iranians are taking rial by the truckload and exchanging them for hard currency or gold,” he said. “The governments in both Iraq and Afghanistan are turning a blind eye to the porous borders and trade.”

Mr. Wallace, a U.S. ambassador to the United Nations under President George W. Bush, also said it was important to urge Iraq and Afghanistan to clamp down on the illicit trade.

Iraqi Ambassador Jacob Habeeb told The Washington Times in an email that Baghdad already works to control its borders with Iran and other neighbors.

“Certainly, there are no governmental dealings with the Iranian side that involves smuggling of Iranian gas, but there are normal economic and commercial exchanges, particularly through the private sector,” Mr. Habeeb said. “In fact, the Iraqi government and Oil Ministry consider a priority preventing any type of smuggling and illegal activities across the borders as part of its policy to protect the natural resources of the country.”

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