Iranian smugglers gather next to boats loaded with sheep at the Omani port of Khasab. The proximity of Iran to the UAE and Oman and their historic trade and finance links have supported thriving trade, which in recent years has undermined the impact of economic sanctions imposed by the United States and its allies on Tehran — until now. — Reuters KHASAB, Oman — The fibre-glass skiffs hurtle across the water at break-neck speed, skirting the rocky cliffs on the last leg of the perilous journey from Iran to the sleepy backwaters of Oman's Musandam peninsula. At the helm are Iran's fast-boat smugglers, an army of mostly teenagers who shuttle back and forth across the narrow Strait of Hormuz, smuggling all manner of goods into Iran's southern ports and evading import duties in the process. Until recently the Iranian boats and their fearless young skippers escorted several cargoes a day — loaded with everything from soft drinks to mobile phones and cosmetics - bought in the flourishing trading centers of the United Arab Emirates and sold to merchants in Iran. The proximity of Iran to the UAE and Oman and their historic trade and finance links have supported thriving trade, which in recent years has undermined the impact of economic sanctions imposed by the United States and its allies on Tehran - until now. Iran's economy appears to be finally succumbing under the pressure of trade embargoes imposed over the country's nuclear activities, bringing this profiteering to a standstill. The Iranian rial has lost nearly two-thirds of its value to the dollar over the last year, causing a massive hemorrhaging in the spending power of most Iranians. “We're not picking much up today,” shouted Ismael, a 17-year-old Iranian, over the sound of the 200 horsepower Yamaha outboard. The equipment costs thousands of dollars, an ostensible sign that this business has been well worth the risks posed by adverse weather, oil tankers and fierce Iranian patrols. “Before we used to come across three times a day . Now it's only once,” he said, before wheeling his craft with a hard rev, looking for a place to dock in Khasab port on the Musandam peninsula on Oman's northern tip. Boxes of cleaning products, fabric and clothes stacked on the dock await transportation to Iran's Qeshm island just 30 miles across the Strait of Hormuz, the vital tanker route through which a third of the world's seaborne oil exports pass. But traders, none of whom wished to be identified, say the number of boxes is substantially less than volumes seen last year. In Oman, at least some of the exports are registered through official customs channels, businessmen say, but not all. “There are the storms,” said Hossein, a 21-year-old Iranian, who has just made the journey from the Iranian port of Bandar Abbas in under two hours in a convoy of several boats. “And there are the Iranian police. They're so severe, so corrupt,” he claimed as he stood in the middle of his boat, gesticulating towards the open sea. Smugglers tell stories of bribery, coming under fire and having to dump their wares into the sea but Iran's growing economic plight now threatens to wipe out their risky ventures for good. The standoff between Tehran and the West has centered on the Strait of Hormuz. As tension over Tehran's nuclear program has escalated this year, an increasing presence of US naval ships in the strait has been matched by a corresponding build-up of Iranian military vessels monitoring their movements. Washington has not ruled out military action against Iran's nuclear activities, which it believes is part of a drive to produce a nuclear weapon. Iran has repeatedly denied this. Israel continues to threaten Iran with an attack and Tehran has said it will close the vital artery if it is subjected to any military strike. Western diplomats say they have no desire to use sanctions to stop trade in basic goods and cite oil embargoes as the most effective weapon in trying to bring Iran to the negotiating table. But life for Iranian people is increasingly tough: analysts say Iran's economy will shrink this year after rising 2 percent last year, inflation stands at 25 percent and unemployment could be above 20 percent. However, economists say they do not see a shortage of basic necessities in the country yet. The rial's losses have accelerated in the past week despite the government's attempts to stem the slide through establishing an “exchange centre” designed to supply dollars to importers of some basic goods at a special rate, slightly cheaper than the market rate. Instead of allaying fears about the availability of dollars, the centre seems to have intensified the race for hard currency which has resulted in the rial losing more than 30 percent of its value over the last week.
“My boss can't sell stuff in Iran at these prices,” said Nader, a 32-year-old Iranian boatman, sitting in the businessman's office in Khasab, his weather-beaten face making him look much older than his years. “I'm picking up nothing from here now,” he said. Oman's officially declared exports to Iran totaled $521 million in 2009, according to United Nations data. More recent data is not available because the governments do not regularly release statistics. At Khasab, the Iranians still operate from a dock inside the main port, which was closed off by a high security fence around a year ago, locals told Reuters. Unlike Khasab's fishing wharf, there is no access without permission from the Omani authorities. That doesn't stop Iranian boatmen freely entering the town during the day. But there is no intent to loiter. Despite the slump in smuggling there is another business to attend to: dropping goods off. “Look at my sheep,” boatman Ismael shouted, pointing to the 30 sheep and goats huddled in his boat. He is set to receive around 2 million rials for each one, or around $60, although the amount fluctuates because of the volatile exchange rate. “We're making good money from this.” — Reuters
