Tomato squeeze: US sanctions begin to distort Iran's economy

  • Thursday 11, October 2018 in 2:20 PM
Sharjah 24 – Reuters: Tomato paste is not the most obvious economic indicator, but in Iran, where it is a staple that some people have started panic-buying, it says a lot about the impact of renewed U.S. sanctions.
While Iran makes its own paste from an abundant crop of locally grown tomatoes, sanctions reimposed by U.S. President Donald Trump since August have played havoc with supply.
 
A 70 percent slide in the rial this year has prompted a scramble for foreign currency that has made exports much more valuable in local terms than selling produce at home.
 
Some shops are limiting purchases of tomato paste, which is used in many Persian dishes, and some lines have sold out as people buy up existing stock.
 
The government has responded by banning tomato exports, one of a raft of interventions to try to limit economic instability that has fuelled public protests and criticism of the government this year.
 
But the tomato policy is not working. An industry representative said tomatoes were being smuggled abroad.
 
It is one of many ways in which the sanctions are hurting ordinary Iranians while benefiting those with access to hard currency.
 
Washington reintroduced steps against Iran's currency trade, metals and auto sectors in August after the U.S. withdrawal from a deal that lifted sanctions in return for limits on Iran's nuclear programme. Trump said the deal was not strict enough.
 
With U.S. curbs on Iran's oil exports set to come into force next month, some Iranians fear their country is entering an economic slump that may prove worse than the period from 2012 to 2015, when it last faced major sanctions.