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Iran tries luxury ban to aid economy



Date published: 11/9/2012

BY BRIAN MURPHY and NASSER KARIMI

Associated Press

TEHRAN, Iran

--Iran's sanctions-fighting "resistance economy" suddenly got a lot leaner, less flashy and perhaps a bit more uncomfortable.

The Islamic Republic announced Thursday a ban on imports of 75 so-called luxury products--ranging from high-end cars to coffee to toilet paper--part of efforts to promote domestic products and stem the outflow of dollars and other foreign currency as Western economic pressures increasingly choke off Iran's commerce and critical oil revenue.

It's the most sweeping measure so far to batten down the Iranian economy, although the move is not likely to leave showrooms and store shelves empty.

It allows for foreign parts to be shipped in for local assembly plants, which make cars such as Peugeots, European-brand home appliances, laptops and mobile phones--all covered by the new ban.

There also are many Iranian-made alternatives to the list of now-blocked toiletries and beauty products--toothpaste, soap, shampoo, cosmetics and even toilet paper--but many consumers strongly prefer often better-quality imports from Europe, Turkey and the Middle East.

"It seems the government is desperate to control the flow of money outside the country," said Mehrzad Boroujerdi, a Syracuse University professor who follows Iranian affairs. "If you want a clear signal about how the sanctions are hitting Iran, this is a good one."

Western sanctions have cut sharply into Iran's oil sales, which account for 80 percent of the country's foreign currency revenue. At the same time, Iran has been barred from the major international banking systems, which has helped push the Iranian currency to record lows and forced merchants to resort to hand-carrying gold and cash from the nearby commercial hubs of Istanbul or Dubai.

Last week, in an attempt to control the rush of capital out of its borders, Iran prohibited exports of gold without a license issued by the country's Central Bank.

Iranian officials, meanwhile, have floated proposals to roll back some of the country's uranium enrichment--the centerpiece of the battle over Tehran's nuclear program--if the U.S. and European allies remove some sanctions. Western leaders have given no clear response about the possibility of resuming nuclear talks with such proposals on the table.