IRANIANS COMPLAIN INTERNATIONAL FINANCIAL MEASURES IMPACTING

C O N F I D E N T I A L SECTION 01 OF 02 IRAN RPO DUBAI 000033 SIPDIS SIPDIS LONDON FOR GAYLE, PARIS FOR WALLER, BERLIN FOR PAETZOLD, BAKU FOR HAUGEN E.O. 12958: DECL: 5/10/2017 TAGS: PREL IR ECON EFIN ETRD SUBJECT: IRANIANS COMPLAIN INTERNATIONAL FINANCIAL MEASURES IMPACTING ORDINARY PEOPLE REF: RPO DUBAI 0030 RPO DUBAI 00000033 001.2 OF 002 CLASSIFIED BY: Jillian L. Burns, Director, Iran Regional Presence Office, Dubai, UAE. REASON: 1.4 (d) 1.(C) Summary. Iranians are complaining to IRPO that international pressure to isolate Iran is hurting the people more than the government. According to anecdotal information, Iranians reportedly have difficulty opening letters of credit to import goods, including non-sensitive goods not covered by sanctions. One former Iranian official told us that Arabs tell him the US wants to shut down all Arab-Iran trade, including foodstuffs, as well as contact with Iranian society. Iranian businesses, as well as Emirati, are allegedly halting major construction projects in Iran, laying off thousands of employees from companies, and slowing business decisions due to political uncertainty. An Iranian claimed she recently lost her job working for an American company in Dubai after a new "company policy" came out against employing Iranians. An Iranian-American complains he cannot pay his US bills on-line as his US-based bank no longer allows Internet access to accounts from an Iranian internet service provider. While it is not possible to assess the authenticity of all these claims -- and the roots of these problems are doubtless more complex than the causes cited -- the complaints are becoming common enough to document as a factor influencing Iranian public opinion. End Summary. 2.(C) Over the last two months, IRPO contacts have repeatedly claimed that new sanctions and financial restrictions on Iran, as well as increased pressure on countries to stop "business as usual" with Iran, have had a greater negative impact on the Iranian people and "legitimate" business than on the government. (Comment: Reftel details how Iranians also blame their economic problems on domestic policy as well as external pressure. End comment.) A former high level Iranian official claimed Arabs have told him they believe the US is pushing their countries not to have any trade, business, and interaction with Iranian society -- not just with the Iranian government -- and not only asking to stop sales of sophisticated material to Iran, but also "chocolates and dry milk." An Iranian student said his government benefits from this period of political uncertainty as it drives up oil prices, but that ordinary Iranian nationals -- both inside and outside Iran -- are suffering the consequences of new measures against Iran. Letters of credit -------------- 3.(C) A Dubai-based Iranian financial advisor relayed a second-hand account of a Dubai-based Iranian businessman who had to fly to Taiwan to meet with banking officials after they stopped a letter of credit (LC) he had opened to export toothbrushes from China to Iran. Reportedly, the businessman was eventually able to re-open his LC after spending "unneeded" time and money to clear up the matter. The financial advisor also claimed that on a recent trip to Iran, she noticed that the quality of medicines and basic foodstuffs has declined as Iranian merchants turn to the black market and to "cheap Chinese knockoffs" to secure basic needs. In her opinion, merchants are turning to the black market because it is increasingly difficult to find banks that will support letters of credit, even for legitimate trade. One businessman in Dubai alleged in February that the cost of LCs increased on average by 3-5%. A major Dubai-based tea trader told IRPoff that his company lowered the quality of tea exported to Iran to offset increased operating costs triggered by financial measures on Iran. Stalled projects and lay-offs -------------- 4.(C) Contacts report that the stalled business climate in this period of political uncertainty is triggering higher unemployment. Over the past year, Iranian business owners have told IRPoffs that they have had to lay off large numbers of employees and were holding off on new investment during this period of rising international tensions. A hotel owner complained that foreigner tourists were no longer coming to Iran, only a few foreign businesspeople, and he has had to lay off large numbers of staff. The Iranian-American cited above said an American-educated Iranian friend of hers recently had to sell his house in Iran to buy a car to use as a taxi in order to make ends meet. She also claimed a young US-educated family RPO DUBAI 00000033 002.2 OF 002 friend recently overdosed on heroin after returning to Iran and not finding work. 5.(C) An Iranian-American said her brother-in-law recently had to lay off 2,000 employees in Iran after financing to develop a LNG conversion facility on Kharg Island -- northwest of the port of Bushehr -- "dried up." She said the Iranian government was not able to finance the project. (Note. The contact did not indicate whether the original financing had come from a foreign source. Endnote.) The Iranian-American claimed that according to her relative, the private construction sector in Iran is only operating at 20% capacity and that public companies are only operating at 10% capacity. Separately, an employee of Dubai-based Al-Futtaim Group said that the company recently suspended plans to build several branches of the French hypermarket Carrefour in Iran due to political uncertainty. 6.(C) Expat Iranians also blame USG pressure against Iran for problems they are experiencing. An Iranian contact claimed to IRPoff that US-headquartered Emerson in Dubai terminated the employment of an Iranian friend because a new company policy did not allow it to employ Iranians. (Note: this claim is unconfirmed. Endnote) An Iranian working in Dubai complained that his real estate project in Abu Dhabi was stalled after an American company refused to sell him construction materials because he is Iranian, despite the fact that the final destination for the goods was the UAE. (Comment: The contact appears to come from a reputable company with a long history in the UAE; however, there could, of course, be other reasons that the US company is refraining from doing business with him. End comment) Impacts on Iranian account holders in US banks -------------- -------------- 7.(C) Several Iranians have complained that Bank of America reportedly no longer allows electronic bank transfers when account holders access their accounts from an Iran-based internet service provider. An Iranian-American who travels back and forth to Tehran complained that he could not pay his California phone and water bills while in Iran. An Iranian student at a US university told IRPoff that he fears he could default on his credit card bill while home in Iran over the summer since he will not be able to transfer funds from his Bank of America checking account to pay his US credit card. 8.(C) Comment: We stress that these reports are anecdotal; Iranians may also be blaming outside factors for problems of bad luck, poor business practices, and bad macroeconomic policies. Nonetheless, these comments are also an indicator of the kind of "common wisdom" circulating in Iranian business circles and beyond about the impact of US-led financial measures efforts. Most of the complaints appear to center around increasing reluctance from the international community to do business with Iran rather than any concrete measure from UNSCR 1737 and 1747. Iranians also tend to lump all measures together as "sanctions," which would indicate we have more work to do on the public diplomacy front, particularly regarding what actions we are asking of other countries regarding trade with Iran, to offset the notion that we are targeting the Iranian people. President Ahmadi-Nejad will reportedly meet with the Iranian Business Council in Dubai while in the UAE May 13-14; presumably, such business concerns will also be raised with him. End comment. BURNS