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Iranian Ban On Luxury Imports To Drive Up Prices

Mobile phones and cosmetics are two of the types of goods covered by the ban on imports.
Iran has frozen the import of some 75 goods it considers "luxury" or "nonessential," ranging from cars and motorcycles to various brands of cosmetics, toilet paper, and gourmet food items in an effort to stop the outflow of foreign currency and protect domestic industries hard hit by Western sanctions.

Crippling U.S. and European sanctions on Iran over its controversial nuclear program have led to a sharp drop in Iran's oil exports, the country's main source of revenue and hard currency.

To counter the sanctions' effects, Iranian officials have said the country needs to switch to a "resistive economy" to wean it off its dependency on oil revenues and increase domestic output.

Iran's national currency has lost some 40 percent of its value and many Iranians have rushed to convert their savings into hard currency and gold.

Industry and Business Ministry official Sasan Khodaei was quoted by the state "Iran" newspaper on November 8 as saying that the reason for the ban was to keep Iran's foreign-currency holdings within its borders.

"Last year the amount of import of luxury goods was about $4 billion. By stopping permits on them there will be a remarkable saving of hard currency," Khodaei said.

Rise In Black-Market Prices

The paper said Industry and Business Minister Mehdi Ghazanfari had estimated that Iranians spend around $12 billion annually on imported luxury goods.

Jamshid Assadi, a Paris-based professor of economy, says that the move comes as Iran is in a state of crisis. He predicts that the ban will increase the price of luxury goods and boost smuggling.

"There will be increased smuggling through the borders and [black-market routes]," Assadi tells RFE/RL's Radio Farda. "As a result, luxury goods will still be available for those who have a lot of money, but at an even higher price."

The list of banned goods includes items that are produced domestically, including hair and face cosmetics, and chocolate and sweets. But many Iranians prefer the better-quality Western versions.

The move is not likely to leave showrooms and store shelves empty, though, because foreign parts will still be allowed to be shipped to local assembly plants, which make things like Peugeot cars, European-brand home appliances, laptops, and mobile phones.

Iranian officials have suggested that the ban on some of the goods is temporary.

Deputy Industry and Business Minister Hamid Safdel, who heads the Iranian trade-promotion agency, said that the ban on goods such as computers and cell phones could be lifted if Iranian industry can't manufacture them.

"These goods are either not being produced inside the country or the amount of domestic production does not cover the demand," Safdel was quoted as saying by Iranian news agencies on November 8.

Last month, Iran banned the export of some 50 items, including wheat, sugar, and aluminum.

With reporting by RFE/RL's Radio Farda and AP
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