Screw the embargo, build a pipeline from Iran to Karachi and get cheap oil. Would boost the economy if prices fell by 50%
Not a bad idea.
Iranian gasoline & diesel has been smuggled to Iran & Afghanistan even since I joined Esso Pakistan back in 1967. Smuggling carries a bad name and is a criminal offense, but otherwise honest & law-abiding citizens often indulge in it without any feeling of guilt. The famous Landi Kotal market and ‘Bara’ bazaar, which once existed just outside Karachi at the begging of the national highway, sold smudged cloth and luxury goods quite openly.
As long as there is a significant price difference between the price of a commodity across the border, enterprising merchants would risk the border controls and smuggle goods in demand into the country with higher duties & taxes.
The only thing a country loses is the customs duty; but from the purely commercial point of view, it is just normal trade and dates back to the time when the countries started imposing exorbitant duties on imported goods. In the majority of cases, the smuggled goods are sold in the local currency and often the proceeds are used to purchase locally produced goods which are cheaper & in demand in the other country.
For a country like Pakistan where paring for the LPG, gasoline & diesel creates a big hole in the pockets of the Joe public, in my opinion, smuggled petroleum products from Iran are economically beneficial. The public buys cheap petrol and the country does pay in Dollars.
Here is an article from Iran on this subject.
ran: Smuggling fuel to neighboring Pakistan
Trucks smuggling fuel from Iran to Pakistan
Analysis by PMOI/MEK
Iran, July 9, 2019 - In recent days, reports have emerged on social media claiming that huge amounts of fuel are smuggled to Pakistan over Iran’s eastern borders. Namely the Sistan and Baluchistan province in southeast Iran where the major part of the Sunni minority lives is blamed for the smuggling.
However, it is no secret that the main smuggling of fuel and especially oil in recent years isn’t done with 40-liter fuel containers. Organizing endless caravans of fuel tankers with thousands of liters of capacity each can’t be done without at least receiving the green light from authorities.
In 2018, the Fars news agency, affiliated to the
terrorist-designated Islamic Revolutionary Guards Corps (
IRGC), published a video clip titled, “Organized smuggling of fuel/pipework on the seabed for smuggling fuel!” They also wrote about smuggling fuel with small boats: “In Hormozgan province, there are 50 launches [small boats] which smuggle 20,000 to 50,000 liters of fuel each, every day. That’s how millions of liters of the country’s resources are stolen every day.”
Smuggling fuel was a lucrative business in Iran even before the
energy sanctions that prevented the Iranian mullahs from selling the country’s crude oil for hard currency. That is because fuel is subsidized in Iran and is sold way lower than free market prices. Profiteers with the right connections and assets can make a fortune by smuggling the cheap fuel to neighboring countries.
Also in late 2018, Abdollah Hendiani, deputy manager of the office of the fight against goods and currency smuggling in Iran, said during an interview with Iran’s state-run television, “Over the past three months, about one billion liters have been smuggled. This is about ten to 13 million liters of smuggled fuel every day.”
Smuggling this huge amount of fuel over the Iranian border per day requires a caravan of 500 fuel tankers with a capacity of 20,000 liters each. And every tanker needs to cross the border twice per day.
The amount of trafficked fuel is so high that Pakistani officials are calling for action to prevent further damages to their economy.
Fars news agency writes, “The Pakistani customs office announced in a report that smuggled fuel from Iran is damaging the country in the range of 300 million rupees per year, calling for increased supervision of the borders.”
“Reports show that about 50 to 60 percent of Karachi’s fuel is smuggled and foreign shipping companies and domestic fuel stations are the customer base of Iran’s smuggled gas,” Fars news agency further writes.
The situation is so bad that Iranian regime Oil Minister Bijan Namdar Zanganeh acknowledges the fact that officials have a hand in the entire smuggling business. “Smuggling has increased. And it’s not only smugglers, everybody has [a hand in it],” he said.
Iran’s chief of the committee for combating trafficking also said that smuggling fuel is an “organized crime” and “it may be connected to some government institutions.”
Although smuggling fuel and crude oil can by no means compensate for the sales that the Iranian regime has lost due to sanctions, pundits expect further increases in smuggling in the coming months.
https://english.mojahedin.org/i/iran-oil-fuel-smuggling-pakistan-IRGC
