Image: Iranian shopper
Hasan Sarbakhshian  /  AP
An Iranian shopper examines what appear to be American-brand refrigerators at a store in Tehran on July 1.
updated 7/8/2008 5:22:17 PM ET 2008-07-08T21:22:17

The rhetoric between the Bush administration and Iran may get tougher and tougher, but the trade marches on.

Terrorists and nuclear ambitions aside, the United States sells Iran brassieres and bull semen, cosmetics, cigarettes and a host of other goods, possibly even rifles.

In the words of President Calvin Coolidge: “The chief business of the American people is business.”

So true!

U.S. exports to Iran grew more than tenfold during President Bush’s years in office even as he accused it of nuclear ambitions and sponsoring terrorists. America sent more cigarettes to Iran, at least $158 million worth under Bush, than any other product.

Other surprising shipments to Iran during the Bush administration: fur clothing, sculptures, perfume and musical instruments. Top states shipping goods to Iran include California, Florida, Georgia, Louisiana, Michigan, Mississippi, New Jersey, North Carolina, Ohio and Wisconsin, according to an analysis by The Associated Press of seven years of U.S. government trade data.

Despite increasingly tough rhetoric toward Iran, which Bush has called part of an “axis of evil,” U.S. trade in a range of goods survives on-again, off-again sanctions originally imposed nearly three decades ago. The rules allow sales of agricultural commodities, medicine and a few other categories of goods. The exemptions are designed to help Iranian families even as the United States pressures Iran’s leaders.

“I understand that these exports have increased. However, we believe that they are increasing to a segment of the population that we want to reach out to, we want to know and understand that the U.S. government, the U.S. people want to be friends with them, want to work with them to integrate them into the world economy and become partners in the future,” Gonzalo Gallegos, a State Department spokesman, said Tuesday when asked by reporters about AP’s findings.

The government tracks exports to Iran using details from shipping records, but in some cases it’s unclear whether anyone pays attention.

Sanctions are intended in part to frustrate Iran’s efforts to build its military, but the U.S. government’s own figures showed at least $148,000 worth of unspecified weapons and other military gear were exported from the United States to Iran during Bush’s time in office. That included $106,635 in military rifles and $8,760 in rifle parts and accessories shipped in 2004.

The Bush administration looked into those shipments after AP questioned whether the U.S. really approved the export of military rifles to Iran. A review found the rifles and parts actually went to Iraq; the wrong country was entered on the shipping record, Treasury Department spokesman John Rankin said. The government will correct the data, he said.

The remaining military gear is likely $33,000 in military apparel shipped to Iran under the humanitarian exemption to the trade sanctions, Rankin said.

The government was also looking into U.S. records showing the export of at least $13,000 in “aircraft launching gear and/or deck arrestors,” equipment needed to launch jets from aircraft carriers. Iran’s navy is not believed to have carriers. It’s likely the wrong commodity code was entered in the shipping record or the parts are for civilian aircraft and legal to export, Rankin said.

U.S. law enforcement believes Iran is actively trying to acquire U.S. military technology, including aircraft parts that can sell for pennies on the dollar compared with what the Pentagon paid. Last year, federal agents seized four F-14 fighter jets sold to domestic buyers by an officer at Point Mugu Naval Air Station, Calif., for $2,000 to $4,000 each, with proceeds benefiting a squadron recreation fund. When F-14s were new, they cost roughly $38 million each.

Bush this year signed legislation prohibiting the Pentagon from selling leftover F-14 parts. The law was prompted by AP reporting that buyers for Iran, China and other countries exploited Pentagon surplus sales to obtain sensitive military equipment that included parts for F-14 “Tomcats” and other aircraft and missile components. Two men were indicted in Florida last week on charges they shipped U.S. military aircraft parts to Iran, including Tomcat and attack-helicopter parts.

Iran received at least $620,000 in aircraft parts and $19,600 worth of aircraft during Bush’s terms. Iran relies on spare parts from other countries to keep its commercial and military aircraft flying. In some cases, U.S. sanctions allow shipments of aircraft parts for safety upgrades for Iran’s commercial passenger jets.

Iran is a hot issue in Washington. The House plans a hearing Wednesday on U.S. policy toward Iran, and the Bush administration announced Tuesday it was freezing the U.S. assets of several people and entities accused of helping Iran develop nuclear weapons.

But the U.S. government seems uncoordinated on efforts to limit trade with Iran.

The Securities and Exchange Commission sought to shine a light on companies active in Iran but stopped after business groups complained. The Treasury Department allowed some companies and individuals suspected of illegal trading with Iran to escape punishment. Yet the Bush administration also has collected millions of dollars in fines from trade-rule violators and pressed Congress without success to pass laws to strengthen enforcement.

The fact that the United States sells anything to Iran is news to some.

“Until you just told me that about Iran I’m not sure I knew we did any business with Iran,” said Fred Wetherington, a tobacco grower in Hahira, Ga., and chairman of Georgia’s tobacco commission. “I thought because of the situation between our two governments, I didn’t think we traded with them at all, so I certainly didn’t know they were getting any cigarettes.”

The United States sent Iran $546 million in goods from 2001 through last year, government figures show. It exported roughly $146 million worth last year, compared with $8.3 million in 2001, Bush’s first year in office. Even adjusted for inflation, that is more than a tenfold increase.

Exports to Iran are a politically loaded but tiny part of U.S. trade. The United States counted more than $1 trillion in world exports last year. The value of U.S. shipments last year to Canada — America’s top trading partner — was more than 1,000 times the value of shipments to Iran.

Top U.S. exports to Iran over Bush’s years in office include corn, $68 million; chemical wood pulp, soda or sulphate, $64 million; soybeans, $43 million; medical equipment, $27 million; vitamins, $18 million; bull semen, $12.6 million; and vegetable seeds, $12 million, according to the AP’s analysis of government trade data compiled by the World Institute for Strategic Economic Research in Holyoke, Mass. The value of cigarettes sold to Iran was more than twice that of the No. 2 category on the export list, vaccines, serums and blood products, $73 million.

Iran is a top customer of Alta Genetics Inc., a Canadian company with an office in Watertown, Wis., that sells bull semen, used to produce healthier, more profitable cattle. “The animals we’re working with are genetically superior to those in many parts of the world,” said Kevin Muxlow, Alta’s global marketing manager.

Also getting Bush administration approval for export to Iran were at least $101,000 worth of bras; $175,000 in sculptures; nearly $96,000 worth of cosmetics; $8,900 in perfume; $30,000 in musical instruments and parts; $21,000 in golf carts and/or snowmobiles; $4,000 worth of movie film; and $3,300 in fur clothing.

Few people or companies asking U.S. permission to trade with Iran are turned down by the Treasury Department, the lead agency for licensing exports to sanctioned countries. During Bush’s terms, the office has received at least 4,523 license applications for Iran exports, issued at least 2,821 licenses and 213 license amendments and denied at least 178, Treasury Department data shows.

Neither the Treasury data nor trade data compiled by the Census Bureau identify exporters or specify what they shipped. The AP requested those details under the Freedom of Information Act in 2005 and still is waiting for the Treasury Department to provide them.

Though some trade with Iran is legal, some businesses prefer that people not know about it.

Citing corporate financial reports, the SEC published a list online last year of companies that said they had done business in Iran or four other countries the State Department considers state sponsors of terrorism. The SEC withdrew the list after business groups complained but is considering releasing one again.

“There’s no question that people are looking for that kind of information,” SEC spokesman John Nester said. “But under the current disclosure regime, it’s beyond most people’s abilities and time to slog through every corporate report and find companies that make reference to one of those nations.”

Business groups oppose publishing such lists. It “could inappropriately label companies with legitimate activities as supporters of terrorism,” the European Association of Listed Companies told the commission earlier this year.

An AP photographer strolling through shops in Tehran had no problem finding American brands on the shelves. An AP review of corporate SEC filings found dozens of companies that have done business in Iran in recent years or said their products or services may have made it there through other channels. Some are household names: PepsiCo, Tyson Foods, Canon, BP Amoco, Exxon Mobil, GE Healthcare, the Wells Fargo financial services company, Visa, Mastercard and the Cadbury Schweppes candy and beverage maker.

Georgia led states in exports to Iran over the past seven years, with cigarettes representing $154 million of the $201 million in goods it exported there. Cigarette shipments to Iran peaked in 2006, apparently from a Brown & Williamson cigarette factory in Macon, Ga.

When the plant closed, tobacco shipments to Iran fell dramatically. No U.S. tobacco shipments to Iran were reported for 2007 or the first quarter of this year, the most recent figures available.

British American Tobacco began operating in Iran in 2002, producing most of its cigarettes under a contract with the Iranian tobacco monopoly, company spokesman David Betteridge said. B.A.T. shipped Kent cigarettes from the United States to Iran until 2006, he said.

The factory in Macon closed after B.A.T.’s Brown & Williamson Tobacco Corp. and R.J. Reynolds Tobacco Holdings merged their U.S. tobacco and cigarette businesses. B.A.T. said it now makes cigarettes for export to Iran in Turkey. It declined to say how much tobacco the company previously shipped from the U.S. to Iran, but said the U.S. government approved the shipments.

The Bush administration’s record enforcing export laws is mixed. The Office of Foreign Assets Control let the statute of limitations expire in at least 25 cases involving trade with Iran from 2002 to 2005, according to one internal department audit. The companies involved, disclosed to the AP under the Freedom of Information Act, include Acterna Corp., American Export Lines, Parvizian Masterpieces, Protrade International Corp., Rex of New York, Shinhan Bank, Phoenix Biomedical Corp., World Cargo Alliance and World Fuel Services.

Abdi Parvizian of the Parvizian Masterpieces rug gallery in Chevy Chase, Md., said his case was dropped because his business proved everything was imported from Iran legally. He bristled over current congressional proposals to ban imports from Iran, including carpets.

“The problem with the rugs is it has nothing to do with the government of Iran,” Parvizian said. “This is something that is made by the very unfortunate people in the country, and those people are going to get hurt more than anybody else.”

World Fuel Services said an employee fueled a ship out of Singapore that turned out to be Iranian-owned, and the U.S. government spotted it from a wire transfer. The company explained the mistake to Treasury with no repercussions, said Kevin Welber, general counsel of the company’s marine business. It has since put in place techniques to identify Iranian-owned ships, which Welber said can be difficult because some Iranian ships sail under Cyprus flags.

Phoenix Biomedical acknowledged it shipped surgical shunts to Iran without a license. It previously was allowed during the Clinton administration to send them to Iran and sent replacement shunts without a new license, which was required, said Charles Hokanson, who sold Phoenix Biomedical to French-based Vygon and is now chief executive of Vygon USA. He said that was the last business it did with Iran.

The other companies did not respond to requests by the AP for explanations.

Failure to obtain export licenses has caused trouble for some companies whose products can legally be sold to Iran.

Months after Zimmer Dental of Carlsbad, Calif., acquired Centerpulse Dental in late 2003, it learned Centerpulse had sold dental implants and related items to Iran without necessary export licenses, Zimmer spokesman Brad Bishop said. It voluntarily reported the violations to the Treasury Department, which announced in January that Zimmer Dental had paid an $82,850 penalty.

Bishop said the company has since trained employees and also took the easiest solution to avoid such problems:

It stopped doing any business with Iran.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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