Iranians attend the first contemporary art auction in the dinning hall of the Hotel Azadi on June 22, 2012 in Tehran, Iran. All 73 lots were sold, hitting the top end of the pre-sale estimate of $1.2m-$1.7m. (Photo by Kaveh Kazemi/Getty Images)

Iran And The Fine Art Of Evading Sanctions

Islamic Republic looks to art market and other illicit sources of income in response to U.S. financial penalties

As Iran continues to bear the brunt of punishing economic sanctions imposed by the United States, the regime is exploring creative new ways to raise much-needed capital. Among the strategies: exporting art.

“The international sanctions against Iran exclude cultural products,” Minister of Culture and Islamic Guidance Seyyed Abbas Salehi was quoted by Jordanian media as saying last week during a festival in Tehran. “We should take the export of art products seriously and use this opportunity.”

Salehi added that the Islamic Republic is seeking to expand its pool of buyers and that regulations would be eased to facilitate art exports.

Notably, Iranian art last year outperformed comparable works from other Middle Eastern nations at global auctions, generating millions in sales.

“The Iranian regime will do anything as it is quite cash-strapped,” Reza Parchizadeh, an Iranian-born political activist, told The Media Line. “That includes exporting artwork. The major artists in Iran are either sponsored by the regime or have to do its bidding from time to time to be able to work or even worse, to survive.”

Parchizadeh argues that Tehran not only relies on art for financial reasons but also uses culture to further its ideological agenda while legitimizing itself both domestically and on the world stage. For example, he says, authorities promote Iranian films at international events with a view to dispelling the notion that censorship is used as a tool of repression.

“There has always been popular resistance against the regime’s attempts to monopolize culture,” Parchizadeh said. “[Nevertheless], the majority of the cultural products that are given the green-light and are publicized in Iran have the endorsement of the regime, albeit to different degrees and with different shades of significance.”

The U.S. Department of the Treasury website states that the import into America of all Iranian goods and services is prohibited, with the following notable exceptions: “Gifts valued at $100 or less; information and informational materials; household and personal effects of persons arriving in the United States…and accompanied baggage for personal use.”

According to Beau Barnes, a U.S. attorney at the Kobre & Kim law firm, “informational materials” include items such as books, films and art.  However, he qualified to The Media Line, “it’s actually a fairly narrow exception that isn’t likely to have a significant effect [especially given declining oil exports].

“The exception for informational materials is part of other U.S. embargos, including on Cuba and North Korea,” Barnes added, “but the exception is narrowly defined and none of those countries have been able to prop up their economies by exporting art or literature. And any transactions would require Iranian sellers to find both [purchasers] and financial intermediaries willing to process those payments.”

Others similarly argue that it is difficult to ascertain the impact art exports could have on the Iranian economy, but nevertheless note that the art market has long been a global conduit for illicit financial dealings.

“American unilateral sanctions have been much more effective than anticipated,” Behnam Ben Taleblu, Senior Fellow and an Iran expert at the Washington-based Foundation for Defense of Democracies, told The Media Line. “The art world, however, has always been rife with [money laundering]: you can over-inflate the value of something because it’s subjective and you can change currencies when you move art across borders.”

The Islamic Republic has over the past decades also developed other methods to evade sanctions, including creating alternative money transfer systems; importing tens of billions of dollars in gold from Turkey; and bartering its oil for others goods and services. For this reason, some believe sanctions are not enough to curb Iran’s alleged nuclear ambitions.

“When you do have a sanctions-heavy strategy it’s not just about levying them it’s also about enforcing them,” Ben Taleblu said. “In countries where there are various Iranian networks, Iranian-owned or -controlled businesses, those would be prime targets for sanctions evasion.”

Parchizadeh notes that the Iranian regime since the 1979 Islamic Revolution has used methods to circumvent financial penalties such as “multinational umbrella corporations to conduct its businesses; doing wide-ranging money laundering; trafficking narcotics, etc. In order to completely stop the…regime in Iran, it must be eventually overthrown and replaced with a democratic system that is friendly to Western values.”

The Media Line reached out to Iran’s Ministry of Culture and Islamic Guidance for comment but did not receive a response.

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