Traders in Lebanon are angry over a surge in imports of cheap Iranian steel and iron this year, which no one is admitting to bringing in for fear of US sanctions imposed for doing business with Tehran, The National reported.
Businessmen are accusing each other and Hezbollah, Tehran’s main political ally in Lebanon, for the low-cost Iranian imports that have disrupted the local market.
Traders quietly held a meeting with the Minister of Economy to discuss the issue but all are reluctant to speak publicly.
Importing goods from Iran is not against Lebanese law, but paying for them through banks, including Lebanese lenders, could breach the US sanctions.
Lebanese banks are particularly wary of US rules after the now-defunct Lebanese Canadian Bank agreed to pay a $102 million (Dh374.6m) settlement in 2013 for enabling payments to Hezbollah and money laundering.
The bank, once one of the largest in the country, closed and sold viable assets to Societe Generale in Lebanon.
But two local steel traders told The National that between $9m and $15m of steel was imported from Iran during the first three months of the year.
Official figures from Lebanese Customs are lower but the data shows a large increase in Lebanese steel imports since 2016, when they were, at least officially, non-existent.
In 2017, Iranian steel imports to Lebanon reached $13,000 for the year but rose to $500,000 in 2018.
In January 2019, the last time Customs figures were updated, they had already reached $1.4m, equal to 42
A banker said that traders found ways around sanctions by paying in cash or through local companies that do not appear to have links with Iran.
The Lebanese steel market is divided between eight importers and manufacturers. None of the businessmen who spoke to The National admitted to buying Iranian steel.
But it has arrived in Lebanon in large quantities and has disrupted the local market.
The largest suppliers are usually Ukraine, Turkey
One Lebanese steel trader said that Iranian imports increased in 2018 after the Iranian currency plunged when the US withdrew from the 2015 Iran nuclear deal and reimposed tough sanctions.
He said that Iran was unable to sell its steel on the local market because of the sanctions and the slump in the Iranian economy.
Turning to Lebanon was an obvious solution because the likes of Hezbollah, one of the country’s most powerful parties, could help with the sales.
“We are worried because we cannot compete with them,” said the trader, who complained that Iranian competition was unfair.
“I work with international companies and banks, which means I cannot trade with Iran. Those who import Iranian material have strong ties to Hezbollah."
He accused the Moussawi family, who head three Lebanese companies linked to construction and steel.
Muhammad Moussawi, the manager of Moussawi Industrial Trading, dismissed the accusation.
“Let them talk. We are bigger than them,"
He accused other local traders of importing from Iran but refused to identify them.
“I haven’t been able to sell for the past three months," he said. "This has to stop, or else everyone should be able to buy from Iran."
The two other family-linked companies did not respond to a request for comment.
Local traders say Iranian steel exports to Lebanon are mostly rebar, reinforced steel used in construction that is not produced locally.
The steel imported since early 2019 was carried by boat and on land, legally and illegally, traders said. On January 31, 22,000 tonnes of Iranian rebar were delivered by one Iranian-flagged ship at the Beirut port.
Smaller quantities were imported by sea through Turkey, where the Iranian certificates of origin were changed to Turkish documents, several traders said.
They said the steel was also smuggled by truck from the Syrian port of Lattakia, but The National was unable to confirm the claims.
Iran has previously adopted similar strategies to smuggle out oil despite sanctions, said Holly Dagres of the Atlantic Council.
The steel was sold on the Lebanese market at a little under $500 a tonne, between 25 and 30
Lebanon also imported welded steel tubes from Iran, which were sold at a similar price, a trader said.
A delegation of steel traders, led by Elie Beianou from one of the Lebanese companies affected, met Economy Minister Mansour Bteich on March 8 to complain about the situation.
“We are worried. We employ 2,000 workers in total. What will we do if this continues?” one trader asked.
The meeting was not reported by the state-run National News Agency like most ministerial meetings.
One trader pointed to the gravity of repercussions from
“The topic is bigger than steel," he said. "You cannot run away from a US investigation."
He said the delegation had asked the minister to bring in protectionist measures, such as increasing taxes on Iranian steel, to curb the supply.
He said the minister told them that Lebanese Customs could not get involved in the matter but banks should warn customers against doing business with Iran.
“I have no idea what they are talking about regarding Iranian steel," he said. "I have nothing, no documents regarding imports, no bills of lading or certificates of origin coming from Iran.
“We have to get proof. Lebanese Customs are very strict in controlling our land and sea borders."
One trader said: “We are a dumping ground because our government won’t take serious measures."
Another said the minister's reluctance to discuss the matter might be because Hezbollah is such a powerful force.
“It’s a confusing game. The minister cannot do anything because of the political situation” he said.
Hezbollah, the military arm of which has become one of the most powerful in the region since backing up the Assad regime in the Syrian civil war, was recently awarded three ministries for the first time in the Lebanese government.
A trader said he hoped that the Iranian steel issue was temporary rather than the start of a new trend.
“Lebanon is far from Iran so Iran has to ship the steel by sea, which is expensive," he said. "And because of
How trade between Lebanon and Iran will evolve remains unclear, although Hezbollah has recently sent signals that it welcomed increased Iranian investment.
Iran is ready to “help” Lebanon at “very low prices”, Hezbollah leader Hassan Nasrallah said in a speech early in February to mark the 40th anniversary of the revolution in Iran.
“Does the Lebanese government dare to accept?"
The lack of clarity suggests that for the moment, the Lebanese government prefers to look the other way.