Iran buying more from US in spite of tensions

[June 22, 2009]  WASHINGTON (AP) -- Iran spent nearly twice as much on U.S. imports during President Barack Obama's first months in office as it did during the same period in 2008, showing that despite trade penalties and tense relations, the two countries are still doing business.

The U.S. exported $96 million in goods to Iran from January through April, according to an Associated Press analysis of U.S. government trade data compiled by the World Institute for Strategic Economic Research in Holyoke, Mass. U.S. exports to Iran totaled $51 million during the same period in 2008 and $27 million over those months in 2007.

Soybeans, wheat and medical supplies -- all considered humanitarian items exempt from U.S. trade sanctions -- are among the top exports this year.

The latest trade figures reflect an increase in Iran's agricultural imports over the past year due to poor harvests there, said Bill Reinsch, president of the National Foreign Trade Council, a business group in Washington.

"I wouldn't read too much into it as far as trends are concerned," Reinsch said.

Reinsch said he is hearing from more businesses interested in Iran. But beyond an effort by the Obama administration to encourage talks with Iran, he hasn't seen any policy changes that would lead to more opportunities for U.S. businesses.

Humanitarian shipments are an example of the tricky line the United States has walked in dealing with Iran -- even more so during Iran's election protests.

Obama has proceeded carefully when commenting on uprisings in Iran over President Mahmoud Ahmadinejad's disputed re-election, saying he shared the world's "deep concerns" but that it wouldn't be productive "to be seen as meddling."

In allowing exports of necessities such as grain and medical supplies, the U.S. has tried to send a message to the Iranian people that it is a friend to them and has no interest in punishing them for their government's policies. At the same time, by helping Iran feed and provide medical care to its population, Washington can't help but provide an unintentional benefit to the Tehran government.

U.S. penalties seek to undermine that government far more than aid it, by withholding technology, equipment and money that would allow it to build its military and industrial base, particularly the oil industry.

There is a long-running debate in Congress and among trade experts over the degree to which sanctions work. The U.S. has tried both the carrot and the stick approaches over the years.

Last year, pleased when North Korea finally produced an accounting of its plutonium production for nuclear weapons, President George W. Bush lifted trade penalties. That gesture didn't stop North Korea from pursuing its nuclear ambitions. Last month it conducted its second nuclear test.

On the other hand, penalties against South Africa are credited with helping to lead it to eliminate apartheid, a policy of racial segregation.

Several countries have been more than willing to do business with Iran. Those exporting more than $1 billion in goods to Iran last year included China, $8 billion; Germany, $5.7 billion; Italy, $3.2 billion; France, $2.6 billion; and Japan, $1.9 billion.

That compares with about $747 million in exports to Iran by Britain, $689 million by Belgium, about $685 million by Spain and $683 million by the U.S.

It can be difficult to stop even sensitive goods and technology from making their way to another country. It is common for Iran and other sanctioned countries to use transshipment points such as the United Arab Emirates to try to obtain U.S. goods undetected.

The value of U.S. exports to Iran rose exponentially under Bush, even as he called the country part of an "axis of evil." In 2001, Bush's first year in office, they totaled just $8.3 million, a tiny fraction of last year's number.

Exports during the Bush years included a range of agricultural products and medical supplies, but some more surprising items also made it to Iran: brassieres, fur clothing, sculptures, perfume, musical instruments and military apparel.

This year, besides medical and dental supplies and agricultural products such as grain and bull semen, U.S. exports to Iran included about $154,000 worth of dead horses, pigs and related products, possibly for bone meal; $87,000 worth of household and toilet articles; about $25,000 in instant print film; $8,790 in newspapers; and about $2,800 in books. The sanctions exempt certain cultural items.

The publicly available government trade data doesn't identify exporters or say exactly what they shipped. The AP requested that information under the Freedom of Information Act in 2005 and still is waiting for the Treasury Department to provide it.

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On the Net:

World Institute for Strategic Economic Research: http://www.wisertrade.org/

National Foreign Trade Council: http://www.nftc.org/

[Associated Press; By SHARON THEIMER]

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