The Impact of Sanctions on Iranian Artists and the Persian Rug Trade

Crippling sanctions on Iran not only impact Iran’s arts and crafts industry, but also have a spillover impact on Iranian-American businesses in the United States. Sanctions have limited Iranian artists’ opportunities to display their works in U.S. galleries, and have impacted American-owned rug businesses in the U.S., as well as overall consumer tastes.

While the sale and exchange of Iranian art is legal under the sanctions, as art is classified as “informational material,” sanctions restrict international shipping services to/from Iran. Thus, some artists are forced to send their works to the U.S. with passengers. In an interview with the Iranian-American Chamber of Commerce, Sarah Barzmehri, the director and founder of Exhibit9 Gallery, stated that an obstacle that U.S. galleries have when purchasing works from Iran is that there is no proper way to bring the works to the U.S. When they are sent to the U.S. with passengers, the works are often damaged and unpresentable, leaving some collectors, such as herself, no longer able to purchase works from Iran.

Additionally, obtaining travel visas to the U.S. has become increasingly difficult for Iranian artists and curators, as Rebecca Proctor captured in her comprehensive 2019 piece on how sanctions impact the Iranian art world. Restricted in their ability to bring their artwork to the U.S. to be displayed or to even attend awards or exhibition openings in the U.S., the international exposure of Iranian artists is hindered, and American curators and collectors are left with limited clientele. As Sara Barzmehri observes, “the lack of cultural connections between the U.S. and Iran is a mutual artistic and cultural loss for both nations.”

Another artistic industry that suffers is that of Persian rugs. Renowned for their quality, intricacy, color, and design, sanctions have endangered the ancient craft of Persian carpet-making. Unlike artwork, Persian rugs are classified as a “good” and are prohibited from being exported to the U.S., which severely impacted Iranian-American businesses in this area. As the trade loses profitability, many Iranian weavers are finding new jobs and Persian rug stores in Iran are closing.

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Overdyed antique Persian Rug
Overdyed Antique Persian Rug

Nevertheless, the sale of Persian rugs in the U.S. persists, but not necessarily under circumstances that are beneficial to U.S. economic security. In an interview with the Iranian-American Chamber of Commerce, ABC Rug Outlet stated that in some cases, Persian rugs are purchased by countries such as Pakistan, where they get processed, acid-washed, and then dyed with another color, usually a non-traditional color, and transformed into a new product which is then exported to the U.S.

As Persian rug producers and businesses suffer under sanctions, other weaving countries have stepped up to the plate, seizing on the market gap that encouraged the production and imitation of Persian rug designs by other countries. While these imitations often are lower in quality, they have an attractive price tag, especially when considering that the price of Persian rugs in the U.S. has increased due to both scarcity and appreciation.

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Some Iranian-American Persian rug stores have been forced to shut their doors while others have decided to rebrand, offering rugs from other countries, imitation rugs, and contemporary rugs. According to ABC Rug Outlet, even if sanctions on Iranian carpets were removed, re-entering the market would be challenging because of not being up to date with the market and trends, and because consumers who have looked at alternative options to Persian rugs will be “convinced that alternative designs and colors would work best for their home.”

The future is uncertain; in the meantime, sanctions and their ineffectual exemptions have side effects that undermine artistic growth in Iran, hamper American-owned businesses and art collectors, and decrease awareness of the contributions Iranians make to the artistic world.

By Nikki Vafai

OFAC Issues General License No. 8, Reversing Sanctions Designation of Central Bank of Iran for Humanitarian Trade

On February 27, 2020, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) issued General License 8 “Authorizing Certain Humanitarian Trade Transactions Involving the Central Bank of Iran.”

This move comes as mounting humanitarian pressure demonstrates the harmful impacts of the September 20, 2019 designation of the Central Bank of Iran (CBI) as a terrorist entity (pursuant to Executive Order 13224). That designation meant that U.S. persons could not engage in any transaction or deal in the property or interests in property of the CBI. The problem is that the Iranian Government provides universal healthcare to Iranian citizens, and the CBI plays a significant role in humanitarian trade with Iran. When the September 20th CBI designation was announced, it did not replicate the exemptions for humanitarian trade, leaving many charity and aid organizations in limbo.

General License 8 now permits certain humanitarian transactions and activities involving the CBI that would have been allowed prior to the CBI’s designation last September. General License 8 does not permit humanitarian-related transactions with financial institutions that are listed as terrorist entities by the U.S. other than the CBI.

Changes in E-Visa Investment Law for Iranian Investors

On October 3, 2018, the Trump Administration announced the U.S. would withdraw from the 1955 Treaty of Amity, Economic Relations, and Consular Rights with Iran. On January 23, 2020, the U.S. Customs and Immigration Service (USCIS) announced that due to the treaty’s termination, Iranian nationals are no longer eligible for E-1 treaty trader and E-2 treaty investor changes or extensions of status based on the treaty.  

E-1 and E-2 nonimmigrant visas are based on trade and investment treaties (or in some cases, specific legislation). These classifications allow an alien of a treaty country to be admitted to the U.S. for engaging in international trade or investing a substantial amount of capital into a U.S. business. The existence of a treaty or appropriate legislation is a threshold requirement for issuing an E visa. USCIS will send Notices of Intent to Deny to those who filed applications after the October 3, 2018 treaty withdrawal. Iranians currently in the U.S. on E-1 or E-2 status may remain in the U.S. until their current status expires.

The decision has limited practical impact in the short-to-medium term. In 2018, only one E-2 visa was issued to an Iranian, compared to 20 in 2017. In 2016, no E-1 visas were issued to Iranians, and only 15 E-2 visas were issued, according to government data. In 2015, 25 E-2 visas were issued to Iranians. However, the decision is impactful in the long run. Reversing it would require a degree of confidence, resources and communication in U.S.-Iran trade relations that at the moment seems too far on the horizon to be worth considering.

Did You Know? Spotlight on Iranian-American Student Organizations: Texas A&M University

This month’s “Did You Know?” is part of a series highlighting Iranian-American student organizations across the United States. The Chamber invites you to get to know these students and groups, who represent the next generation of rising Iranian-American stars.

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All around the nation, young Iranian-Americans have created their own tight-knit communities to help bring their home nation everywhere they go. Whether it is the corners of California or the mountains of Vermont, this special solidarity found in college communities is evident. This is especially seen at Texas A&M University (TAMU) in College Station, Texas and its Persian Student Association (PSA).

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TAMU PSA, founded in 2001, is a recognized non-profit organization and is built on the mission of bringing the Persian community together. Leading the organization is the current president, Mohammad Aghajani Delavar, who is a PhD student from Mazandaran, Iran, and is studying Structural Engineering. Aghajani leads the PSA’s members to bond through activities such as community service and cultural ceremonies, ranging from large scale cultural events to movie nights and hiking.

Like many Iranian-heritage student groups, TAMU PSA holds annual Yalda and Nowruz events where there are live music performances, Hafez-khani (readings of Hafez poetry), and dances from both students and Iranian-heritage residents of College Station. In January of this year, the organization also held a charity food fundraiser for flood victims in the Sistan-Baluchestan region of Iran. Events like these highlight the solidarity that many young Iranian-Americans feel towards Iran and its travesties.

TAMU PSA is special in how it interacts with its local community. Because College Station is a small city, the PSA is a hub for Iranian-American growth, community, and gathering; Aghajani explains that the organization is built to be open to the city’s Iranian-American population. For instance, the Nowruz and Yalda events, along with other cultural gatherings, create a space for community. For many Iranian student clubs in smaller towns, the young population of Iranian-Americans serves as a source of new inspiration where a growing community is creating new traditions. Similarly, TAMU PSA connects with the Iranian-American community in hopes of fundraising; recently, the Chamber had a chance to discuss with Aghajani, who explained the challenges his organization faces: “the huge difference I see in our association than other Iranian student clubs is not having any predetermined budget from University, and we need to find sponsors for our events, which pushes us to search more for the sponsorships.” By looking for sponsors and fundraising, TAMU PSA works within the Iranian-American community to help foster its initiatives and invest in its role as an organization for students of Iranian heritage.

By Ariane Sharifi

Did You Know? Introducing the Iranian Cultural Society at Johns Hopkins University

This article is part of a series highlighting community-building efforts by Iranian American students across the U.S.

Iranian-American student groups at universities around the country are connected by a common goal of creating more passionate, resilient, and tight-knit Iranian-American communities. This pursuit for unity is seen at Johns Hopkins University in Baltimore, Maryland, through its flourishing Iranian Cultural Society, known as the ICS. Leading the organization as President is Sami Ahmad, a recent graduate with a degree in History of Science and a minor in Islamic Studies. Since his junior year of college, Ahmad has guided the organization’s large scale events – Mehregan, Yalda, and Nowruz – as well as their smaller events.

The ICS is committed to strengthening the ties within its Iranian-American community through special meetings for the student body, as well as more prominent events like Nowruz picnics, evening banquets, and weekend mehmoonis (“mehmooni” in Farsi means gathering of friends/family). Ahmad sees this relatively smaller community as representative of a tight-knit core. “The benefit of a smaller-scale organization is that we are often able to regularly bring together the majority of the undergraduate Iranian student community and can readily foster relationships between our membership. Because of this, our organization often feels more like a group of friends than a formal student group,” Ahmad explains. The ICS’s focus of creating a group of friends through membership signifies the young Iranian-American pursuit of community and unity that extends beyond group meetings.

The ICS’s largest event of the 2019-2020 year was Mehregan, the Persian Festival of Autumn. The famous Persian and Zoroastrian festival is renowned as a celebration of friendship, love, and kindness. Ahmad highlights the success of Mehregan, explaining, “it was planned in coordination with the Iranian American Cultural Society of Maryland, the Towson University Iranian Student Union, and the University of Maryland Baltimore County Persian Students Association. This event was unique in that it was the first of its kind to bring together Iranian student and non-student communities associated with multiple universities and the DC-Maryland-Virginia area. We sold over 200 tickets, and provided our guests with a night of live performance, delicious food, and ended the evening with DJ’d music and dancing.”

The ICS is a testament to desire of the next Iranian-American generation to build and strengthen its community. Whether through a Mehregan program that brings together students from around the local area, or more casual mehmoonis, the community found at the Johns Hopkins University’s Iranian Cultural Society highlights the beauty and unity that stems from a common love and pride in Iranian heritage.

Pictures courtesy of the ICS.

By Ariane Sharifi

Coronavirus and the Global Economy

Two months have passed since an outbreak of coronavirus was reported in the city of Wuhan in China. As of the end of February 2020, over 85,000 cases have been confirmed. The number of deaths attributable to the disease already has surpassed the number of deaths that resulted from the 2003 SARS outbreak (about 800 fatalities). The reports of the past couple of weeks have indicated a surge of new cases outside of China, including in South Korea, Italy and Iran. At the moment, it appears we may be on the brink of a global pandemic, with new cases being reported among people who have not traveled to countries hit by the outbreak or been in contact with anyone known to have the disease, which public health officials refer to as “community transmission.” This article considers the impacts of the coronavirus contagion on business and international trade.

Coronavirus outbreak: workers in Guangdong, which is the second worst-hit province. Photograph: Alex Plavevski/EPA
(Photo: from The Guardian: Coronavirus outbreak: workers in Guangdong, which is the second worst-hit province. Photograph: Alex Plavevski/EPA)

Coronavirus initially led to a virtual shutdown of the world’s second largest economy and most important manufacturing hub. When Chinese factories started to reopen this month, many were operating below capacity and safety measures mandated by the government have slowed down production even further.

The SARS outbreak, which began around February of 2003, seems to be the best point of reference to try to form an estimate of the possible eventual impact of this contagion on the global economy. During that episode, it was estimated that China lost more than one percentage point of its annual economic growth. The biggest fall in economic growth took place between the first and second quarters of 2003, going from 11.1% to 9.1%. The Chinese economy went on to recover some of that loss by the third quarter and bounced back to a growth rate of 10%.

There are two main differences between the current coronavirus situation and the SARS case from 17 years ago, which point to a more significant impact this time around. First, China’s economy is much larger now. In 2003, China accounted for 4% of global economic output. Today, China’s GDP comprises 17% of the global total. Moreover, the SARS outbreak happened approximately one year after China became a member of the WTO. China is much more integrated in the global economy now, and the nation serves as an artery for the global supply chain. Hence, the impact from any slump in Chinese economy is much more consequential for the world now than in 2003.

Second, as the Chinese economy has matured in recent years, it simultaneously has become more vulnerable to such a disruption. Services and internal demand now account for a bigger share of the Chinese economy than manufacturing and exports. These changes have translated into lower growth rates in the recent years. Add in the impact of the ongoing trade war with the United States, which spurred many companies to flee their Chinese manufacturing bases in favor of countries like Vietnam, and one can see why China reported about 6% growth last year, its lowest since 1990. China will not be able to rely as heavily on its manufacturing sector as an engine for quick recovery after the spread of the virus is contained.

Photo from Putnam Investments
(Photo: from Putnam Investments)

Many global firms rely on factories in China to manufacture goods. China’s network of factories accounts for a fourth of the world’s manufacturing output. Several large companies, chief amongst them Apple, have indicated that production may be hurt because of the coronavirus outbreak. In the wake of the trade war between the two countries, some observers believe that the spread of coronavirus might accelerate the decoupling between the U.S. and Chinese economies.

Additionally, the impact from the spread of the virus on the global economy cannot be isolated to China. As of the time of this writing, multiple countries had taken emergency measures to contain a local outbreak of the virus. It is impossible to predict to what extent the virus will spread globally before the situation is contained. More countries may take emergency measures and impose travel restrictions. What already is certain is that apart from the slow-down in China, the direct negative impact of the contagion on the global economy will be significant.

It took 20 months for researchers to find the needed SARS vaccine after the outbreak in 2003. Some observers believe that the accumulated body of research into similar viruses since 2003 might lead to a faster medical response in this case. However, statistics also point to a faster spread rate for this virus compared to SARS in 2003, even though its fatality rate remains low. Hopefully, this will not turn into a full-blown global pandemic. But it is hard to doubt that the scale of the global economic impact will be greater than the one seen in 2003.

By Amin Bahrami, Legal Fellow

Millennial Iranian-American Responses to Rising Tensions and Conflict

It would be an understatement to say that the past few weeks have been stressful for Iranians around the world. For many young Iranian-Americans throughout the U.S., the recent events have sparked a new yet familiar anxiety about their country of origin.  

Among these young Iranian-Americans is Saman Jabari, a senior at the University of Maryland College Park and the president of the university’s Iranian Students’ Foundation. Jabari explains that many young Iranian-Americans worry about their home country and the U.S. alike, and that “for citizens of Iran, sanctions prove to be difficult…for the Iranian community in the U.S., immigration statuses and travel to Iran may be threatened. Additionally, there is an increased chance of discrimination in all areas of life.”

Similarly, Nikki Vafai is a junior at the George Washington University in D.C., where she studies International Affairs and Art History; like Jabari, she is the president of her university’s Iranian Students Association. Vafai sees the recent tensions as uniquely challenging for young Iranian-Americans: “I think it impacts the younger Iranian-American community differently than it does our parents, because most of us were born in the U.S. and we feel connected to both identities, but at the same time we see that we are being treated differently when we travel, apply for government positions etc. or even how we are represented in the media.” Vafai also notes that the rise of social media and technology has enabled easy misrepresentations of Iranians in the media, explaining that “everyone always expects Iranians to fit a certain category but Iranians are so diverse not only in terms of looks, but there is also so much religious diversity in Iran.”

A separate technological issue impacting Iranian-Americans is the use of internet platforms to fundraise for charity or engage in online sales. A recent GoFundMe fundraiser created to help families and friends of passengers of the Ukraine International Airlines plane crash was shut down, in a classic example of sanctions overcompliance. Although GoFundMe reversed course and later allowed the campaign to proceed, the initial delay still bears the prick of a psychological setback for many Iranian-Americans. The Iranian-American Chamber of Commerce also is looking into reports that online retailers may have delisted U.S.-made products described with the label “Persian,” despite bearing no relation to trade with Iran.

Additionally, young Iranian-Americans, especially students from Iran, are worried about problems with deportations and traveling. Iranian-born students with valid student visas have been detained, questioned, and deported upon arriving at U.S. airports. There are other travel concerns such as Iranian-Americans, including U.S. citizens of Iranian heritage, being held at the U.S.-Canada border for hours. Allegations also have surfaced that U.S. Border Protection officials at the Canadian border were instructed to target Iranian-born persons entering the country. For many young Iranian-Americans, this instability creates real problems for members of their Iranian-American community. Jabari notes that Iranian-Americans “are people who have done nothing wrong and are simply trying to live their lives. A conflict between the two governments, which is completely out of their hands, is routinely affecting their livelihood.”

Both Jabari and Vafai believe that the current tensions and tragedies have brought to light the solidarity non-Iranians have with the Iranian-American community. Jabari, who was in Iran during the height of the conflict, expressed that “friends from high school and college reached out to me regarding the recent tensions” and that “they do realize the gravity of the situation and wish for the best.” Edward Rastgoo, a junior at the George Washington University studying International Affairs and Middle East Studies and a member of the Iranian Students Association’s executive board, highlighted similar ideas: “Many of my friends, both of Iranian descent and not, reached out about the recent events with questions and concerns.” Similarly, Vafai notes that many of her friends and acquaintances approach her to ask about the situation; she believes that “in light of everything that’s going on today and the media’s ongoing misrepresentation of Iran/Iranians, it’s nice having the opportunity to let people know more about Iran and hear how surprised they are about Iran’s rich culture.”

Iranian-Americans are one of the most educated and successful immigrant communities in the United States; when tensions rise, a wide range of policies may be impacted, from immigration to sanctions. Companies are not immune from political tension, and may mistakenly put their compliance teams in overdrive on Iran-related issues, leading to errors in sanctions overcompliance. These decisions can have huge ramifications for Iranian-American-owned businesses. Likewise, changes in immigration policy can leave a dampening effect on Iranian student applications and admissions for years to come, a loss to the U.S., where foreign-born immigrants make up over a quarter of the STEM workforce. Despite recent challenges, young Iranian-Americans still feel hope for the future, and represent the next generation of rising Iranian-American entrepreneurs, professionals and civic leaders.

By Ariane Sharifi

January 2020 Executive Order Imposing Additional Sanctions on Iran

On January 10, 2020, President Trump issued an Executive Order titled, “Imposing Sanctions with Respect to Additional Sectors of Iran.” This Executive Order explicitly targets the construction, mining, manufacturing, and textiles sectors of Iran’s economy, and leaves the door open for the addition of new sectors. The Order authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to impose sanctions on foreign financial institutions that conduct or facilitate any significant financial transaction in connection with these sectors.

The Order also targets any person determined to operate in these sectors, or engage in a significant transaction of goods or services used in connection with these sectors. The Order further extends sanctions to those persons who have assisted, sponsored, or supported such a person. The Order suspends the entry privileges of such persons into the United States, whether as immigrants or nonimmigrants (except where the Secretary of State determines the person’s entry would not be contrary to U.S. interests).

In acknowledgment of the humanitarian sanctions exemptions that exist on paper, the Order’s states that it shall not apply with respect to any person for conducting or facilitating a transaction or sale of agricultural commodities, food, medicine, or medical devices to Iran.

By Amin Bahrami, Legal Fellow

U.S. House of Representatives Passes “No War Against Iran Act” By Vote of 228-175

On January 30, 2020, the U.S. House of Representatives passed H.R.5543, known as the “No War Against Iran Act.” The measure was introduced by Representative Ro Khanna of California’s 17th congressional district, which covers the San Francisco Bay area, and passed by a vote of 228-175. The legislation blocks funding for military force in or against Iran without congressional approval, except in self-defense, and as such, is designed to curtail President Trump’s ability to take military action unilaterally. Congressional observers view the legislation as a rebuke of Trump’s recent military actions in Iraq against Iran and Iran-linked targets, which were carried out without congressional authorization.

However, the No War Against Iran Act is largely symbolic. The Republican-led Senate is unlikely to take up the legislation, and even if it did pass the Senate with a majority, the White House has signaled that President Trump would veto the bill. Nevertheless, the House measure is a welcome symbol for most Iranian-Americans, the vast majority of whom have relatives in Iran.

By Chamber Staff

Rare OFAC Litigation Defeat: U.S. District Court Rules in Favor of Exxon Mobil and Vacates a $2 Million OFAC Penalty

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Photo : Richard Drew, AP  

In July 2017, the U.S. Department of Treasury Office of Foreign Assets Control (OFAC), which oversees U.S. sanctions programs, imposed a $2 million penalty on the oil giant Exxon Mobil Corporation (Exxon). The fine was levied for violations of Ukraine-related sanctions on Russia, which were imposed after Russia’s effective annexation of Ukraine’s Crimea region. The imposition of the penalty related to contracts between Exxon and the Russian oil company Rosneft. Rosneft was not on OFAC’s list of Specially Designated Nationals and Blocked Persons (SDN List) at the time the contracts were signed. However, Rosneft’s President was on the List, and it was he, Igor Sechin, who had signed the contracts on behalf of Rosneft.

In a rare decision, Exxon challenged OFAC’s decision in federal court in Texas. Even rarer was the court’s December 31, 2019 decision ruling in favor of Exxon’s motion for summary judgment and vacating OFAC’s $2 million penalty. The U.S. District Court for the Northern District of Texas found that the OFAC penalty violated the Due Process Clause of the Fifth Amendment, because OFAC had not given Exxon fair notice that its conduct with Rosneft would violate Ukraine-related sanctions. While OFAC had given informal guidance in the past that dealing with SDN-listed persons acting in a representative capacity like Sechin could run afoul of sanctions, this informal guidance related to a different sanctions program.

Legal observers speculate that this decision may encourage OFAC to issue informal guidance more consistently across its various sanctions programs in the future to avoid similar litigation outcomes.

By Amin Bahrami, Legal Fellow