Iran Watch: What’s with all the wheat?
Sanctions-saddled Iran may be importing fewer BMWs than it used to, but recent reports suggest that it’s voraciously raking in wheat. Today, Bloomberg highlights a pending deal to buy as much as 3 million metric tons of wheat from India, which is engaged in the high-wire act of trying to do business with Iran while ...
Sanctions-saddled Iran may be importing fewer BMWs than it used to, but recent reports suggest that it’s voraciously raking in wheat. Today, Bloomberg highlights a pending deal to buy as much as 3 million metric tons of wheat from India, which is engaged in the high-wire act of trying to do business with Iran while maintaining good relations with the United States and Israel.
Some 120,000 tons of hard red winter wheat grown in the Plains is on its way to the Islamic Republic, according to the U.S. Department of Agriculture. The sale of another 60,000 tons has been finalized, according to trade sources, and Iran may ultimately buy some 400,000 tons of U.S. wheat this year.
Iran can import wheat from the United States and other countries because sanctions don’t cover agricultural products. But why is Iran on a wheat shopping spree in the first place? After all, Iran’s Supreme Leader Ayatollah Ali Khamenei has dubbed the new Iranian year the “Year of National Production” and argued that Iran can overcome sanctions by consuming domestic products. What’s Iran up to with all the wheat?
Iran meter: The short answer is we’re not exactly sure. Iran may be stockpiling grain for reasons unrelated to sanctions to the specter of conflict (such as concerns about dry weather and the quality of the domestic wheat crop), but sanctions are most likely influencing the decision. And the aggressive purchases would seem to enhance Iran’s ability to withstand the international isolation that President Obama is betting on to head off a military confrontation.
Christopher Gadd of the Macquarie Group, for example, has noted that wheat imports may help Iran keep high food prices — and especially bread prices — from fueling Arab Spring-style unrest. The purchases also highlight the fact that Iran still has trading partners — even if these relationships are increasingly predicated on complex barter deals such as sending Pakistan iron ore and fertilizer in exchange for wheat.
But while sanctions don’t technically apply to grain, they are making it difficult for Iran to finance imports of raw materials such as wheat, since many banks are reluctant to offer Iranian traders letters of credit (Turkish banks, among others, are stepping in to fill the void). Gadd tells Bloomberg that around 400,000 tons of mostly Russian and Ukrainian grain are currently idling outside Iranian ports for this very reason.
Plus, the sanctions drumbeat continues, with the U.S. Senate now eyeing Iran’s oil revenues. And while a report by Iran’s Press TV today suggests that the energy sector is doing just fine — the country’s oil minister boasts of a world record in making “62 percent physical progress [in building a gas refinery] in 20 months” — it’s going to take a more momentous (and comprehensible) milestone to make a convincing case that Iran can weather a seemingly relentless barrage of sanctions.
Uri Friedman is deputy managing editor at Foreign Policy. Before joining FP, he reported for the Christian Science Monitor, worked on corporate strategy for Atlantic Media, helped launch the Atlantic Wire, and covered international affairs for the site. A proud native of Philadelphia, Pennsylvania, he studied European history at the University of Pennsylvania and has lived in Barcelona, Spain and Geneva, Switzerland. Twitter: @UriLF