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

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LONDON FOR GAYLE, PARIS FOR WALLER, BERLIN FOR PAETZOLD, BAKU
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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

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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