Interesting Article on IRGC Smuggling

In March of 2007, there were a number of unofficial reports from our excellent maritime sources in Iran that the IRGC had set up a major smuggling operation from the northern tip of Oman to Bander Abbas. We were told the program is basically an export market that goes through the Oman export house, loads materials on fast speed boats from the northern peninsula of Musandam and crosses the Strait of Hormuz to Iran. Many of the items in the smuggling operation are blocked by UN sanctions.

We have seen very little evidence this actually existed, with an item popping up on Pat Dollards blog later that month and linked to by Eagle1. The article is no longer on Pat Dollard's blog, however the story did pop up again over the weekend, this time by Reuters. From the Washington Post:

Smugglers pile boxes high on their speedboats, covering them with tarpaulin before zipping off into the sunset on the short but dangerous journey across the strategic Strait of Hormuz from Oman to Iran.

They return in the early morning, their empty fiberglass boats ready to pick up more cargo at the small Gulf port of Khasab, in Oman's isolated northern peninsula of Musandam.

Trade with Iran is as ancient as the settlements overlooking the Strait of Hormuz, gateway for a third of the world's oil shipments. In 2005, Iran's police chief said some $6 billion worth of goods such as computer parts, tea or cigarettes were smuggled into the country each year from the Gulf.

The Reuters article does not mention the link to the IRGC, but the Senate Hearings last year that led to the vote of HR1400 did note the connection. The reason we trust the Senate as a good source for links to the IRGC is because they would know, in that case they were going after the money. Never get between a Senator and money. We see the Reuters story as confirmation to what we had originally been told, as many details fit exactly.

I admit I've never been a big fan of Pat Dollard's blog, I simply have different philosophies in approaching international challenges. He deserves credit here though, he had this story exactly right back then.

The Reuters article is a good read regarding how the people doing the work are really just hired help, with no perspective of the greater game at play with the smuggling operation. In that regards, it should be noted that is a sign of a well financed, sophisticated smuggling operation. When we read the article, we note the ending was very interesting, perhaps an unintended side effect of the global economic situation worldwide? The effects of a weakening dollar combined with incredible growth in wealth in the Middle East... outside of Iran, has not been good for the smuggling business. The article notes:

Inflation in the UAE and beyond has eroded profits and the global rise in food prices is also pinching.

Of three trucks that once sold tea, snacks and toiletries to the smugglers in Khasab, one remains. The other two are boarded up, having been priced out of business by inflation.

"Before, there were many Iranians. Now, it is less," said Jaafar Zelabzi, an Indian who runs the still-open truck and accepts Iranian currency. "Prices in the UAE are too high."

We think that is an interesting side effect in to the conditions being applied to the global markets.