Surge in gold smuggling to Iran creates hardships on Afghan jewellers

KABUL -- Gold smuggling from Herat, Farah and Nimroz provinces to Iran is on the rise with dozens of kilogrammes being illegally transported daily, according to local authorities in the western provinces.

"Some members of these mafia groups are residents of Herat and other border provinces such as Farah and Nimroz, and they smuggle dozens of kilogrammes of gold every day into Iran through Herat," said Ghulam Sakhi Haidari, spokesperson for the Herat Jewellers' Association.

"The amount of gold in the Herat market has decreased as it has been smuggled to Iran for the past year," he added. "Smugglers even buy gold at a higher price in the market and send it to Iran."

Tehran has been facing severe economic problems amid tighter sanctions by the United States and the international community due to its ongoing nuclear activity in breach of a 2015 accord, and the regime is seeking to ease some of its financial woes by smuggling gold and US dollars from Afghanistan, said Abdul Sattar Hussaini, a member of the Farah Provincial Council.

"The government of Iran is behind the smuggling of gold into its country, and it is trying to damage Afghanistan's fledgling economy," said Hussaini.

"Smuggling gold and dollars from Afghanistan to Iran is against Afghanistan's national interest, and the government needs to prevent it and arrest and punish the perpetrators," he added. "The security forces need to implement more-serious measures at the borders with Iran so that the nation's capital isn't sent to Iran."

The offenders hand over gold and dollars to Iranian security forces at the border, who are able to ship them anywhere in the country, said Hussaini.

Rising prices

In the past year, gold prices have grown by 35% in markets across the province because of the surge in smuggling of gold to Iran, say goldsmiths and jewellers in Herat and Nimroz provinces.

As gold prices soar out of reach for ordinary customers, fewer of them come to the jewellers' market to buy gold ornaments, causing a drop in sales of gold throughout Nimroz Province, said Juma Khan [no last name], chairman of the Nimroz Jewellers' Association.

"Local residents see most of the damage caused by gold smuggling, and as prices have increased, they have to purchase gold [ornaments] at higher prices," he added.

Crime rings bring gold from Kabul and other provinces to Herat, where smugglers then take it to Iran along with the gold in Herat, said Abdul Ahad [no last name], a jeweller in Herat city.

"The smuggling of gold from Herat to Iran by mafia groups has negatively impacted our business," he added. "We need gold to process into various ornaments, but smugglers collect gold ingots and other types of gold from the market and smuggle it to Iran."

"Every morning when we show up at gold wholesale stores, they tell us they have run out, while gold bars are being sent to Iran from these stores every day," he added.

If authorities prevented smuggling of gold to Iran, prices for it would drop on the market, he said.

The large amount of gold being smuggled to Iran has caused prices to rise in the market, which is curbing customers' ability to purchase the mineral, agreed Navid, who wished to share only his first name. He runs a jewelry store in Zaranj, Nimroz Province.

"Last year, 1 gram of 18-carat Arabic gold was worth 2,700 AFN ($35), but now the price has increased to 4,050 AFN ($53)," he added, citing one-year inflation (51%) even higher than the 35% reported by the Herat and Nimroz goldsmiths and jewellers.

"The main reason behind the rise in gold prices is the smuggling to Iran," he said.

Jewellers are calling on the government to block gold-smuggling routes so that the economy and their businesses escape further damage, Navid said.

Authorities making arrests

During the current solar year, authorities have blocked a number of gold packages being sent to Iran, according to the Herat Police Department.

Afghan forces confiscated more than 5kg of gold being smuggled to Iran in two separate incidents in the past solar year, said Abdul Ahad Walizada, a spokesman for the Herat Police Department.

"On September 16, security forces stopped a taxi carrying gold," he added. "When they searched the taxi, they found three gold bars weighing 2.179kg hidden under the driver's seat and arrested the driver, who has been prosecuted."

Security forces in another operation on October 13 detected and seized 2kg of gold in Herat city that smugglers wanted to take to Iran, added Walizada.

Security forces have launched measures at borders and airports to curb the illegal outflow of gold and dollars, said local authorities in Herat.

The spike in gold smuggling to neighbouring countries is concerning and authorities have made efforts to stop the practice, said Jilani Farhad, a spokesperson for the Herat governor.

"The security forces at borders, airports and highways have orders to stop any type of smuggling abroad," he added.

"It is still not clear how much gold is smuggled to the neighbouring countries every day, but we know that gold and dollars are smuggled ... abroad through Herat."