Afghan money changers gather to deal with foreign currency at a money change market in Herat province. (Reuters)

December 5, 2018

I talked to an Afghan money-changer in the Afghan capital of Kabul who told me he makes at least $500 on every $10,000 that he smuggles into Iran. He has a currency exchange shop in Kabul, but on top of his usual business, he occasionally travels to Iran.

Each time, he brings in between $20,000 and $30,000, which he sells in Mashhad. He says the biggest hurdles he faces when smuggling dollars to Iran are Kabul and Herat airports, but the moment he steps on to Iranian soil he relaxes because the Iranian government welcomes imports of dollars.

Getting dollars from Kabul airport to the western city of Herat and transporting them by long-haul cabs to Mashhad is not too difficult. It is usually done through the border town of Islam Qala. And it is not only money-changers who are involved. The cab drivers who drive passengers between Herat Province and Mashhad every day do their share as well.

According to him, this year, and especially in recent months, the illegal transfer of dollars from Afghanistan to Iran has increased considerably, turning into a highly profitable job for both the currency salesman and the smugglers. “Of the 400 money-changers who have shops in one mall, between 80 to 100 are involved in smuggling dollars to Iran,” he says. They buy dollars directly from markets in Afghanistan at low prices and sell them at a higher price after transporting them to Mashhad.”

In response to criticisms from members of the Afghan parliament about the increase in the price of the dollar, Khalilullah Sadighi, the governor of Afghanistan’s Central Bank, said that dollars were being smuggled into Iran from Kabul and Mazar-i-Sharif and through the border crossings of Nimruz, Farah, Islam Qala and Hairatan. But the currency dealer I spoke to told me: “Dollar smuggling is done only through border crossing on land because it is difficult to do it through airplanes. That is why money-changers and smugglers prefer to use border crossings.”

According to him, one main reason for the shortage of dollars in Herat and Nimruz markets compared to Kabul and other Afghan provinces is the excessive smuggling of dollars to Iran through Islam Qala and Nimruz, which has reduced the availability of dollars in the markets of the two provinces.

The governor of the Afghan Central Bank reported that every day more than 100 passenger cabs operate between Herat and Mashhad. “A number of mafiosi and mighty individuals travel this route just to smuggle dollars to Iran,” he said. “They place whatever amount they want in boxes and transport them to Mashhad. And nothing is checked across this route.”

Greasing the Wheels of Border Guards

He also said that border guards are complicit in the smuggling and that the smugglers and dealers bribe the guards to transport the dollars to Iran. He refused to say how much they pay the guards for their complicity.

Abdol Ahad Valizadeh, spokesman for Herat Province’s security forces, told IranWire that they have put measures in place to put an end to the practice of smuggling dollars into Iran through the province’s borders. He says that in the last month police officers in Herat have arrested two people on smuggling charges. “These two are Afghan nationals and they were arrested when each wanted to smuggle $20,000 to Iran through the border with Herat. The National Security Agency has also apprehended a number of people in this regard, but we have received no detailed information about it.”

Valizadeh said that although dollar smuggling has decreased compared with previous months, the problem has not been completely solved. But he added that provincial police forces were working hard to catch people involved in the illegal transfer of dollars to Iran.

Nevertheless, despite efforts to stem the tide of smuggling, the price has not changed significantly. Due to the presence of international institutions and United States military forces in Afghanistan, the dollar is the most-used currency in the country after the national currency, the Afghani.

In June, Reuters reported that as much as $2 or 3 million is smuggled from Afghanistan to Iran every day. The news agency found that drivers of passenger cars carry dollars from Herat province to Mashhad and sell it for a higher price. “Lately it’s been possible to make good money with dollars in Iran,” one driver told Reuters. On each trip, he takes about $5,000 or 6,000 with him, making around $100 on the exchange rate alone and buying foodstuffs and other products to sell back home. “Usually, I bring back a few things you can make a profit on here,” he said. Reuters called him “one of the unlikely winners of the stand-off between the United States and Iran, turning his modest transport service into an international foreign exchange operation that is providing much-needed dollars to the stricken Iranian economy.”

Fayzollah Ghamkhor, the press advisor to the governor of Nimruz Province, says that provincial officials have created a joint commission to fight against dollar smuggling to Iran. The police, border guards and all law-and-order forces have been told to take serious action to stop dollar smuggling, he said.

Since the US withdrew from nuclear agreement and re-imposed sanctions on the Islamic Republic, the price of the dollar in Iranian markets has skyrocketed out of control. The beneficiaries of this sorry state of affairs, obviously, are Afghan smugglers and members of the mafia.

Iran Wire

About Track Persia

Track PersiaTrack Persia is a Platform run by dedicated analysts who spend much of their time researching the Middle East, in due process we fall upon many indications of growing expansionary ambitions on the part of Iran in the MENA region and the wider Islamic world. These ambitions commonly increase tensions and undermine stability.