Bitcoin helps Iranian business evade sanctions

Another loophole has materialized in Pres. Obama’s “toughest sanctions ever.”  Not that it really matters when we’re offering $20 to $50 billion in sanctions relief anyway if Iran agrees to scale back on its nuclear program somewhat.

By the way, if bitcoin can help businesses in Iran to skirt international sanctions, can’t bitcoin help Hezbollah as well?

From CoinDesk on Nov. 5:

Bitcoin helps Iranian shoe store overcome international trade sanctions

Jon Southurst

An interesting e-commerce site that went online just last week is accepting bitcoin only, because most overseas customers cannot pay with anything else.

The business is Persian Shoes, an over 70-year-old business selling handmade footwear. It is located in Isfahan, the third-largest city in Iran.

The owners are happy to ship anywhere, but paying them is a problem. Thanks to the vagaries of international diplomacy and the past few decades of history, the usual e-commerce channels are blocked.

Trade sanctions against the entire country of Iran by the United Nations, United States, European Union and others mean Western Union and major credit card companies will not deal with Iranian businesses, even those in the fashion world.

The only way to pay someone in Iran is with cash carried in your pocket – or some easily transferrable, mostly unregulated, digital currency.

The bitcoin-only store sold four pairs of shoes in its first day of business. “To my standards it is a good sale!” said the CEO, Mor Roghani. The store’s success continued throughout its first week.

“We have sold ten pairs of shoes so far using bitcoin. This is way above our expectations,” he added.

Persian Shoes is currently operated by three brothers, who are keen to expand the business their father started. Roghani’s cousin, who lives in Australia, introduced them to bitcoin and helped them to set up the site.

The site currently offers leather handbags, purses and shoes for women and seven varieties of shoes for men. Prices are all listed in USD and start around US $80.

Its FAQ page explains bitcoin and guides new users to online services like Coinbase, Bitstamp and BitBargain, as well as LocalBitcoins. It also explains the trade situation:

Our business is making and selling leather products. We like to sell our products across the world and the more customers the better. The problem is we operate in Iran and most payment systems either are not willing to serve us at all or impose a huge risk on our business. Before launching this website, our international sale has been limited to a few dedicated customers who knew about the quality of our products and were prepared to go through a lot of trouble to pay us! This of course, may sound incomprehensible for people who have all sorts of electronic payments at their disposal. However, before finding out about bitcoin, receiving our money was the number one obstacle in expanding our business.

As well as international trade restrictions, exchanging bitcoin back into local currency (Iranian Rials) also faces knowledge and technical barriers.

“Exchange is a bit tricky because bitcoin is not common yet. We are planing to hold onto some of the bitcoins and sell some at localbitcoins,” Roghani said. A lack of online shopping culture locally and poor internet connectivity hinders trade with other parts of Iran.

Depending on your country of citizenship or residence, you may not actually be allowed to buy these shoes even with bitcoin. Just as Americans may not spend a weekend in Havana or enjoy real Cuban cigars, they are also forbidden to engage in any trade activity with businesses or individuals located in Iran.

Despite this, Persian Shoes has taken orders from customers in the US and is waiting to see how smoothly the deliveries go before advertising the business more widely (update: all US orders have reached their destinations so far without problems.)

A query sent to United States Customs and Border Protection (part of the Department of Homeland Security) asking specifically about private e-commerce transactions for items of clothing received the following response: “Unfortunately, sanctions against Iran prohibit this”…

Hillary begs Obama to keep funding Hamas

Responding to the foreign aid spending reductions proposed by Republicans in the House of Representatives, Hillary Clinton has written a letter demanding that Pres. Obama veto any legislation that would limit her multi-billion dollar State Department budget.

In other words, not only does Sec. Clinton want to keep spending money during a time of national financial calamity, but it also means that she is rejecting the Republican proposal that the U.S. first certify that money will not go to Hamas, Hezbollah, or the Muslim Brotherhood before it distributes foreign aid.

From the Washington Post (h/t Israel Matzav) on July 27:

Secretary of State Hillary Rodham Clinton is blasting a House bill that would impose strict new requirements on U.S. aid  to countries including Egypt, Lebanon, Pakistan and Yemen, warning that she will urge a veto if the measure reaches President Obama’s desk.

Mack: Venezuela is state sponsor of terror

U.S. Rep. Connie Mack (R-FL) says what we should do is declare “Venezuela as a state sponsor of terrorism due to its continued material and financial support of the Revolutionary Armed Forces of Colombia (FARC), Hezbollah, the National Liberation Army (ELN), and the Iranian Revolutionary Guard Corps (IRGC).”

The allegation from a sitting congressman that Venezuela is funding Hezbollah and the IRGC has scarcely been covered by the media, but it should be.  From Rep. Mack’s press release (with a hat tip to La Gaceta):

WASHINGTON – Chairman of the Western Hemisphere Subcommittee Connie Mack (Fl-14) today pushed five amendments in a full committee mark up of The Foreign Relations Authorization Act, Fiscal Year 2012 to bring fiscal discipline to the nation’s foreign policy and cease aid to those countries which harm America’s freedom and security.

Mack’s five amendments would:

• Eliminate foreign aid funds for Argentina, Venezuela, Nicaragua, Ecuador, and Boliviia
• Cease U.S. contributions to the Organization of American States.
• Eliminate U.S. funding for Global Climate Change Initiative Activities.
• Establish a Congressional recorded vote which states “The delay in the authorization of the Presidential Permit is threatening the economic and national security benefits of the Keystone XL Pipeline.”
• Name Venezuela as a state sponsor of terrorism due to its continued material and financial support of the Revolutionary ArmedForces of Colombia (FARC), Hezbollah, the National Liberation Army (ELN), and the Iranian Revolutionary Guard Corps (IRGC).

Mack stated:  “Let’s engage our allies and friends, but let’s not continue to support organizations and countries that perpetuate destruction of freedom and democracy,” Mack said.

“With our financial house in disarray in our homeland, the least the Congress and the President can do is streamline our foreign dollars to our allies and engage in efforts to improve our economy at home; such as, the immediate passage of the pending Free Trade Agreements with Colombia and Panama.  Additionally, with American businesses saddled with environmental protections already, other countries should do their part to improve the global climate, not just the U.S.” Mack added.

House GOP against aid to Hamas

…Putting them squarely at odds against the Democratic administration…

Not to mention that America is going broke.  What a novel proposal that the U.S. must certify that foreign aid doesn’t go to terrorist organizations before it is distributed!  From the Washington Post on Jul. 21:

House moves to restrict U.S. foreign aid

By Mary Beth Sheridan

House Republicans sought to put their stamp on U.S. foreign policy Wednesday by advancing a bill that would slash federal payments to the United Nations and other international bodies and slap restrictions on aid to Pakistan, Egypt and others.

With the bill, the House Foreign Affairs Committee sought to rein in some of President Obama’s policies and to slice $6.4 billion from his $51 billion request for 2012 for the State Department and foreign operations.

The measure’s passage was a foregone conclusion because of the panel’s Republican majority. Even if it passes the full House, though, the bill is expected to be dead on arrival in the Senate, where the Democratic majority is preparing a State Department authorization bill of its own.

Still, the bill could signal to lawmakers how to shape the appropriations bill, a separate piece of legislation that determines where the money actually goes.

The committee’s measure mandates that security assistance be provided to Egypt, Yemen, Lebanon and the Palestinian Authority only if the Obama adminstration certified that no members of terrorist organizations or their sympathizers were serving in their governments. That was aimed at Islamist groups such as the Palestinian organization Hamas and Lebanon’s Hezbollah — which have political power but are on the U.S. terrorism list — and the Muslim Brotherhood, which is expected to do well in Egypt’s upcoming elections. It is not considered a terrorist group.