Sanctions,Smuggling, and the Cigarette: The Granting of Iran OFAC Licenses to Big Tobacco

This paper seeks to understand the political economy implications of nicotine addiction in Iran, focusing on the US Office of Foreign Asset Control's granting of Iran operations licenses to American tobacco companies. Presuming that tobacco taxes, levied both as import duties and ad valorem, would financially benefit the Iranian government, the introduction of a highly desired US product to the market would be antithetical to the sanctions regime currently in place. By comparing Iran's tobacco industry, and the attendant public health crisis that has arisen from high rates of nicotine addiction, to conditions in Turkey, it can be demonstrated that Iran is uniquely unable to extract revenues from the sale of tobacco products. The primary point of comparison between Iran and Turkey is smoking-attributable annual productivity losses of each country, as estimated through the use of Smoking-Attributable Mortality, Morbidity and Economic Costs Software (SAMMEC) and the available related literature. According to the calculations derived from the SAMMEC model, Iran is burdened with an astonishing economic cost due to the high prevalence of smokers. It is concluded that an awareness of this condition enables OFAC to award licenses to Big Tobacco without fear of undermining current foreign policy initiatives.