VZCZCXRO1408
PP RUEHBC RUEHDE RUEHKUK
DE RUEHDIR #0033/01 1301535
ZNY CCCCC ZZH
P R 101535Z MAY 07
FM IRAN RPO DUBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0118
INFO RUCNIRA/IRAN COLLECTIVE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHAD/AMEMBASSY ABU DHABI 0070
RUEHAD/USDAO ABU DHABI TC
RUEHDIR/IRAN RPO DUBAI 0111

C O N F I D E N T I A L SECTION 01 OF 02 IRAN RPO DUBAI 000033 
 
SIPDIS 
 
SIPDIS 
 
LONDON FOR GAYLE, PARIS FOR WALLER, BERLIN FOR PAETZOLD, BAKU 
FOR HAUGEN 
 
E.O. 12958: DECL:  5/10/2017 
TAGS: PREL IR ECON EFIN ETRD
SUBJECT: IRANIANS COMPLAIN INTERNATIONAL FINANCIAL MEASURES IMPACTING 
ORDINARY PEOPLE 
 
REF: RPO DUBAI 0030 
 
RPO DUBAI 00000033  001.2 OF 002 
 
 
CLASSIFIED BY: Jillian L. Burns, Director, Iran Regional 
Presence Office, Dubai, UAE. 
REASON: 1.4 (d) 
 
1.(C) Summary.  Iranians are complaining to IRPO that 
international pressure to isolate Iran is hurting the people 
more than the government.  According to anecdotal information, 
Iranians reportedly have difficulty opening letters of credit to 
import goods, including non-sensitive goods not covered by 
sanctions.  One former Iranian official told us that Arabs tell 
him the US wants to shut down all Arab-Iran trade, including 
foodstuffs, as well as contact with Iranian society.  Iranian 
businesses, as well as Emirati, are allegedly halting major 
construction projects in Iran, laying off thousands of employees 
from companies, and slowing business decisions due to political 
uncertainty.  An Iranian claimed she recently lost her job 
working for an American company in Dubai after a new "company 
policy" came out against employing Iranians.  An 
Iranian-American complains he cannot pay his US bills on-line as 
his US-based bank no longer allows Internet access to accounts 
from an Iranian internet service provider.  While it is not 
possible to assess the authenticity of all these claims -- and 
the roots of these problems are doubtless more complex than the 
causes cited -- the complaints are becoming common enough to 
document as a factor influencing Iranian public opinion.  End 
Summary. 
 
2.(C) Over the last two months, IRPO contacts have repeatedly 
claimed that new sanctions and financial restrictions on Iran, 
as well as increased pressure on countries to stop "business as 
usual" with Iran, have had a greater negative impact on the 
Iranian people and "legitimate" business than on the government. 
 (Comment:  Reftel details how Iranians also blame their 
economic problems on domestic policy as well as external 
pressure.  End comment.)  A former high level Iranian official 
claimed Arabs have told him they believe the US is pushing their 
countries not to have any trade, business, and interaction with 
Iranian society -- not just with the Iranian government -- and 
not only asking to stop sales of sophisticated material to Iran, 
but also "chocolates and dry milk."  An Iranian student said his 
government benefits from this period of political uncertainty as 
it drives up oil prices, but that ordinary Iranian nationals -- 
both inside and outside Iran -- are suffering the consequences 
of new measures against Iran. 
 
Letters of credit 
------------------ 
 
3.(C) A Dubai-based Iranian financial advisor relayed a 
second-hand account of a Dubai-based Iranian businessman who had 
to fly to Taiwan to meet with banking officials after they 
stopped a letter of credit (LC) he had opened to export 
toothbrushes from China to Iran.  Reportedly, the businessman 
was eventually able to re-open his LC after spending "unneeded" 
time and money to clear up the matter.  The financial advisor 
also claimed that on a recent trip to Iran, she noticed that the 
quality of medicines and basic foodstuffs has declined as 
Iranian merchants turn to the black market and to "cheap Chinese 
knockoffs" to secure basic needs.  In her opinion, merchants are 
turning to the black market because it is increasingly difficult 
to find banks that will support letters of credit, even for 
legitimate trade.  One businessman in Dubai alleged in February 
that the cost of LCs increased on average by 3-5%.  A major 
Dubai-based tea trader told IRPoff that his company lowered the 
quality of tea exported to Iran to offset increased operating 
costs triggered by financial measures on Iran. 
 
Stalled projects and lay-offs 
--------------------------------- 
 
4.(C) Contacts report that the stalled business climate in this 
period of political uncertainty is triggering higher 
unemployment.  Over the past year, Iranian business owners have 
told IRPoffs that they have had to lay off large numbers of 
employees and were holding off on new investment during this 
period of rising international tensions.  A hotel owner 
complained that foreigner tourists were no longer coming to 
Iran, only a few foreign businesspeople, and he has had to lay 
off large numbers of staff.  The Iranian-American cited above 
said an American-educated Iranian friend of hers recently had to 
sell his house in Iran to buy a car to use as a taxi in order to 
make ends meet.  She also claimed a young US-educated family 
 
RPO DUBAI 00000033  002.2 OF 002 
 
 
friend recently overdosed on heroin after returning to Iran and 
not finding work. 
 
5.(C) An Iranian-American said her brother-in-law recently had 
to lay off 2,000 employees in Iran after financing to develop a 
LNG conversion facility on Kharg Island -- northwest of the port 
of Bushehr -- "dried up."  She said the Iranian government was 
not able to finance the project.  (Note.  The contact did not 
indicate whether the original financing had come from a foreign 
source.  Endnote.)  The Iranian-American claimed that according 
to her relative, the private construction sector in Iran is only 
operating at 20% capacity and that public companies are only 
operating at 10% capacity.  Separately, an employee of 
Dubai-based Al-Futtaim Group said that the company recently 
suspended plans to build several branches of the French 
hypermarket Carrefour in Iran due to political uncertainty. 
 
6.(C) Expat Iranians also blame USG pressure against Iran for 
problems they are experiencing.  An Iranian contact claimed to 
IRPoff that US-headquartered Emerson in Dubai terminated the 
employment of an Iranian friend because a new company policy did 
not allow it to employ Iranians.  (Note:  this claim is 
unconfirmed.  Endnote)  An Iranian working in Dubai complained 
that his real estate project in Abu Dhabi was stalled after an 
American company refused to sell him construction materials 
because he is Iranian, despite the fact that the final 
destination for the goods was the UAE.  (Comment:  The contact 
appears to come from a reputable company with a long history in 
the UAE; however, there could, of course, be other reasons that 
the US company is refraining from doing business with him.  End 
comment) 
 
Impacts on Iranian account holders in US banks 
--------------------------------------------- ------------ 
 
7.(C) Several Iranians have complained that Bank of America 
reportedly no longer allows electronic bank transfers when 
account holders access their accounts from an Iran-based 
internet service provider.  An Iranian-American who travels back 
and forth to Tehran complained that he could not pay his 
California phone and water bills while in Iran.  An Iranian 
student at a US university told IRPoff that he fears he could 
default on his credit card bill while home in Iran over the 
summer since he will not be able to transfer funds from his Bank 
of America checking account to pay his US credit card. 
 
8.(C) Comment:  We stress that these reports are anecdotal; 
Iranians may also be blaming outside factors for problems of bad 
luck, poor business practices, and bad macroeconomic policies. 
Nonetheless, these comments are also an indicator of the kind of 
"common wisdom" circulating in Iranian business circles and 
beyond about the impact of US-led financial measures efforts. 
Most of the complaints appear to center around increasing 
reluctance from the international community to do business with 
Iran rather than any concrete measure from UNSCR 1737 and 1747. 
Iranians also tend to lump all measures together as "sanctions," 
which would indicate we have more work to do on the public 
diplomacy front, particularly regarding what actions we are 
asking of other countries regarding trade with Iran, to offset 
the notion that we are targeting the Iranian people.  President 
Ahmadi-Nejad will reportedly meet with the Iranian Business 
Council in Dubai while in the UAE May 13-14; presumably, such 
business concerns will also be raised with him.  End comment. 
BURNS