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Iran finds Afghan solution to counter sanctions imposed by West

Afghanistan.ru - 25.1.2013
By Dmitry Verkhoturov

Iran finds Afghan solution to counter sanctions imposed by West

The illegal import of oil products from Iran has seriously worried Afghan businessmen in recent times. Since the imposition of international economic sanctions on Iran, the country has started developing its own production of oil products, especially patrol and diesel. Earlier, Iran bought patrol from other countries but it started exporting oil products in September 2010. Basically, oil products were supplied to the neighbouring countries, Afghanistan, Armenia, Iraq and UAE. According to Iranian official statistics, in 2011, 50,800 tons of oil products worth $51.6 million were sold to Afghanistan.

However, According to Afghan businessmen, the volume of illegal supply of oil products from Iran to Afghanistan was much more than the amount stated in Iranian official figures. “A lion’s share of Iranian oil products is smuggled to Afghanistan,” says owner of the Afghan National Petroleum Kamaluddin Nabizada. According to him Iranian oil products find their way to the Afghan market through three routes: through Islam-Kala (Herat), Farah and Nemroz. The overall volume of oil products of Iranian origin, according to the owner of Afghan National Petroleum, consists of over 300 tanker lorries a day. If the volume of a tanker lorry is 24 cubic meters, then the volume of supply is at least 5,000 tons a day or about 1.8 million tons a year. In the late 2011, an Iranian-Afghan agreement on the supply of one million tons of oil products was signed, and this means that about 40% of Iranian fuel is illegally supplied to Afghanistan. 
 
In January 2013, the Iranian authorities have for the first time admitted that economic sanctions against Iran have caused serious damage to the economy. However, as we see, Iran is successfully breaking the economic blockade by smuggling oil products to cash money. According to estimations by Kamaluddin Nabizada, the overall volume of such trade is over $1.8 billion a year.

Late last year, the Afghan Chamber of Commerce and Industry said that the U.S. embassy in Kabul demanded that Afghan businessmen ceased to do business with Iran. However, some Afghan businessmen cast doubt on the sincerity of American diplomats who want to jeopardize trade between Afghanistan and Iran. “Every month, hundreds of millions of dollars are spent to buy Iranian oil and this money goes to Iran. And I don’t think that Washington is unaware of this,” Kamaluddin Nabizade said. He believes that it’s impossible to take such a sum out of the country unnoticeably.  

Other Afghan businessmen say that it is impossible to smuggle oil products and deliver such a huge sum of money from the sale of oil products to Iran.

“Several neighbouring countries that are getting benefits from the Afghan market by using corrupted schemes have created a lobbying system,” says general director of the KazIndustria Company Mohammad Daud who is working in Kazakhstan. According to him, it is almost impossible to send money outside the country without the assistance of corrupted officials in Afghan provinces. It is also impossible to exclude the involvement of Europeans and Americans working in Afghanistan in these schemes because reportedly, there were incidents of buying oil products for NATO forces in Afghanistan.

Other countries, especially, Russia have started suffering from the smuggling of oil products from Iran. In 2011, the volume of trade between Russia and Afghanistan reached for the first time closed to one billion dollar-level, and its lion’s share consisted of oil products supplied to the Afghan market. The Afghan market helps Iran to counter economic sanctions imposed by Western countries, of course. Most likely, this meets Russia’s political interests.

However, cheaper Iranian fuel has forced out Russian oil products that were bought by Afghan businessmen in large quantities. The prices of Russian products are higher than that of Iranian fuel by 20-25%. “After a rise in the supply of Iranian oil products to the Afghan market, Russian companies have almost ceased to supply oil products to Afghanistan. At present, hundreds of thousands of tons of Russian oil products are standing idle,” Kamaluddin Nabizada said. Eventually this has posed a serious threat to the development of economic ties between Russia and Afghanistan.

It seems that cheaper oil products should be advantageous for Afghanistan. But cheaper petrol and diesel cost Afghans their health. 

Despite assurances by the Iranian authorities, the quality of Iranian fuel is very low and it contains a large amount of harmful additives. Iranian oil refineries did not produce high quality oil products even before. And the quality of fuel fell even low after Iran stopped buying catalysts because of sanction. According to Iran’s Sharif University of Technology, the content of sulphur in petrol and diesel is 180 grams and 8,000 grams per mile respectively, while other reports say these figures are 1000 grams and 7,000 grams per mile respectively. The content of sulphur in Iranian oil products is ten times higher than the amount allowed by Euro-4 European emission standard. When fuel is burning, toxic sulphur compounds, such as sulphur anhydrate are formed. High content of sulphur compounds in the atmosphere not only seriously harms the people’s health but also leads to acid rains (sulphur anhydrate reacts with water and form sulphuric acid). Moreover, toxic compounds, lead tetraethyl and methyl-tret-butyl ether, are used to increase the octane number of Iranian diesel. Lead tetraethyl is banned in the majority of countries in the world because it might hit nervous system and cause death.

On January 19, Iran started supplying the internal market with patrol and diesel of Euro-4 and Euro-5 standards. The supply is restricted to Teheran. According to general director of the Iranian National Oil Refining and Distribution Company Alireza Zeighami, a large volume of oil products will be produced according to these standards in 2013. But a few people believe in this assurance because in 2010, Iranian officials said that they had produced high quality fuel. Most likely, high quality oil products will be supplied to the internal market, while the low quality products will be exported to Afghanistan and other countries. In 2010, a director of the company Said Mahjubi said Iranian fuel meets the Euro-3 standard. But this standard allows the content of sulphur in diesel up to 350 gram per mile but in reality this figure was 22 times higher. When this was the quality of official supplies there is nothing to say about the quality of illegal supplies.

The Afghan Health Ministry officials have recently released a report on the healthcare situation. The report shows a growth in various illnesses, including those linked to the poor quality of fuel. Clearly, as long as smuggling of oil products is continued, and according to reports it is gaining momentum, the Afghan people’s health will worsen further.



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