US embassy cable - 09BAKU178

"DO US A FAVOR": IRANIAN EXPORTER DISCUSSES REGIME PRESSURES, SMUGGLING ROUTES, AND IRAN NARCOTICS PROBLEM

Identifier: 09BAKU178
Wikileaks: View 09BAKU178 at Wikileaks.org
Origin: Embassy Baku
Created: 2009-03-06 10:49:00
Classification: SECRET
Tags: PREL ETTC SNAR ETRD AM RU AJ IR
Redacted: This cable was not redacted by Wikileaks.
VZCZCXRO1980
RR RUEHBC RUEHDE RUEHDIR RUEHKUK
DE RUEHKB #0178/01 0651049
ZNY SSSSS ZZH
R 061049Z MAR 09
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC 0870
INFO RUCNIRA/IRAN COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 3275
RUEHMO/AMEMBASSY MOSCOW 0809
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RHMFISS/CDR USEUCOM VAIHINGEN GE
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEKDIA/DIA WASHDC
RUEKJCS/JOINT STAFF WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
S E C R E T SECTION 01 OF 02 BAKU 000178 
 
SIPDIS 
 
E.O. 12958: DECL: 03/05/2019 
TAGS: PREL, ETTC, SNAR, ETRD, AM, RU, AJ, IR 
SUBJECT: "DO US A FAVOR": IRANIAN EXPORTER DISCUSSES REGIME 
PRESSURES, SMUGGLING ROUTES, AND IRAN NARCOTICS PROBLEM 
 
REF: A) BAKU 175 B) 2008 BAKU 982 
 
Classified By: ROB GARVERICK, POLECON COUNSELOR, REASON 1.5 (B and D) 
 
Summary 
-------- 
 
1.  (S) A Tehran-based Iranian shoe manufacturer and 
agricultural exporter told Baku Iran Watcher that he and 
other  export/importers utilizing the Russia-Azerbaijan-Iran 
route and reverse are occasionally approached by known regime 
insiders or representatives of Iranian security for "help" in 
bringing in mis-labeled shipments into and out of Iran. 
Reasons for these shipments range from sanctions-busting to 
tax/tariff avoidance and/or financial fraudulence within 
Iran.  He asserted that the Azerbaijani enclave of Nakhchivan 
is commonly utilized for bringing sensitive and 
sanction-busting items into Iran.  The manufacturer also 
commented on narcotics problems in Iran, relating that his 
Tehran factory provides workers daily "narcotics" breaks 
every morning "otherwise they can't work for the rest of the 
day."  End Summary. 
 
Iranian Exporter-Importers... 
----------------------------- 
 
2.  (S) Shahzad is an Iranian shoe manufacturer and 
agricultural commodities exporter with a factory in the 
southern part of Tehran.  Shahzad does considerable exporting 
to Azerbaijan, Russia, and Ukraine and visits Baku on 
business every six weeks or so.  In a lunch meeting with Baku 
Iran watcher and a mutual friend he commented at length about 
aspects of Iranian export-import through Azerbaijan, 
outlining some "tricks of the trade."  He also related 
approaches by Iranian regime-affiliated organizations and 
individuals to himself and other established Iranian traders 
for various "favors," including assistance in transporting 
falsely-labeled goods either into or out of Iran. 
 
Are Pressed to Do Favors 
------------------------ 
 
3.  (S) Shahzad said that many well-established Iranian 
traders are occasionally asked to assist in the hidden export 
of certain materials from Iran that are either illicit, 
export-restricted, or simply not entitled to any form of 
export credit.  He said that it is very difficult to overtly 
refuse doing these "favors," as "everybody has something to 
hide" that may be used against them if they do not cooperate. 
 (Note: Other Iranian contacts have noted that many Iranian 
commercial and export-import laws are routinely ignored.  See 
ref B for an example of how this may be exploited by Iranian 
intelligence or well-connected individuals to target a 
specific company.  End Note). 
 
Fraudulent Labeling 
------------------- 
 
4.  (S) He said that the items are transported in falsely 
labeled boxes which are accompanied by false bills of lading. 
  The fraudulent documents indicate that what is being 
exported are low or no-tariff items that also enable the 
exporter to earn tax credits or export subsidies from the 
Iranian government.  Shahzad asserted that persons tied to 
the Revolutionary Guard or other elements of the regime are 
commonly partners/instigators in such frauds.  Shahzad said 
that Jabrail Naveed "Azerbaijani" (ref A), whom he claimed to 
know well, is frequent a go-between with the Azerbaijani 
authorities in this business, which he called "a common 
game."  (Note: According to other sources, Naveed has close 
relations with the Iranian authorities.  He was the head of 
the Iran Trader's Association in Azerbaijan until its closing 
in the late 1990's.  End Note.) 
 
Sanctions-Busting Via Nakhchivan 
-------------------------------- 
 
5.  (S) Shahzad also described practices often followed in 
bringing sensitive or sanctioned items into (as opposed to 
out of) Iran.  According to Shahzad, these materials are 
commonly procured in third countries, falsely labeled, and 
 
BAKU 00000178  002 OF 002 
 
 
brought into Azerbaijan as imports to that country.  Once in 
Azerbaijan, they are airlifted to the Azerbaijani enclave of 
Nakhchivan (which borders Iran), and subsequently moved 
across the border.  Shahzad said that sometimes the items are 
moved through the Iran border crossing at night during times 
when it is officially closed.  He said that last year he was 
dragooned into cooperating in one such venture, and never 
knew what it was he was actually "importing."  Shahzad 
claimed that this particular smuggling job was canceled at 
the last moment, as "they decided to bring the stuff in via 
Pakistan." 
 
Routes Through Occupied Territories Usable - But Why Bother? 
--------------------------------------------- -------------- 
 
6.  (S) Shahzad noted that a large swatch of Azerbaijan's 
"Occupied Territory" (i.e., territory currently controlled by 
the so-called "Republic of Nagorno-Karabagh") borders Iran. 
He confirmed that roads entering this area from Iran exist, 
though it was previously never the site of official border 
crossings.  While speculating that some illicit items are 
likely being transported from or into Iran along these 
routes, Shahzad stressed that he has no personal knowledge 
about it.  He also questioned the likelihood of substantial 
use of this notional route, "since moving items across the 
legal (i.e. Azerbaijan-occupied) border is already quite 
easy." 
 
Daily "Narcotics Break" 
----------------------- 
 
7.  (C) In addition to exporting agricultural commodities and 
seeds (including cotton seeds) from Iran, Shahzad and a 
partner own a shoe factory in south Tehran with about sixty 
workers.  Shahzad said that the factory is in a bad district, 
and asserted that "90 percent" of the adults in that area use 
narcotics.  He said that the situation is so bad that at ten 
o'clock every morning his factory has a "narcotics break" so 
that his employees can take time to shoot up.  "Otherwise 
they won't be able to work for the rest of the day," he 
claimed. 
 
8.  (C) Shahzad observed that heroin, crystal meth, opium, 
and crack are easily available, and said that they are often 
offered (euphemistically) by waiters at tea houses.  He 
accused the Iranian government of pursuing a double standard 
in combating drug addiction, focusing its attention and funds 
on ethnic Persians while "ignoring" drug addiction problems 
among Kurds, Lurs, Baluchis, and other minorities. 
DERSE 

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