Iranian customs checkpoint on a border crossing with Iraq in Kermanshah province. (Twitter)

October 20, 2020

News broke on Saturday of a record haul of drugs being smuggled from Iran into Iraq, with the Iraqi army reporting it had intercepted some 19 trucks of medicines in Diyala governorate. The trucks were heading toward the Iraqi city of Khanaqin, taking side roads from Iran’s Kermanshah province in an attempt to evade heavy customs duties.

Described by Iraqi media as “the largest drug smuggling operation from Iran,” the seized pharmaceuticals are likely to be worth hundreds of thousands of dollars. Its seizure happened at a time when Iranian officials have been repeatedly warning that American sanctions are leading to a shortage of drugs in Iran itself country: an accusation the US has contested.

How did this incident come about, and what are the reasons behind the shortage of medicines in Iran?

On Saturday, October 17, Iraqi forces in Diyala governorate launched a comprehensive security operation aiming to cut off well-trodden smuggling routes on the Iran-Iraq border.

A military source told IranWire: “The army has been deployed on the roads and corridors that get used by commercial convoys to smuggle in goods and medicines. They do this to avoid the border crossings and evade customs.”

The new crackdown comes after the Iraqi army increased its presence at Diyala’s Mandali and Al-Munthiriya crossing points from July this year – and less than a day after a record-breaking 19 trucks containing hundreds of thousands of medicines were intercepted on entering Iraq from Iran.

The trucks had been aiming for Khanaqin and, a source from Diyala Governorate Council told IranWire,  A source from Diyala Governorate Council, who asked to remain anonymous, told IranWire the trucks had managed to pass through Al-Munthiriya border crossing before being intercepted by Iraqi intelligence.

Policing the border crossings can be difficult as they may be controlled by armed militias, some thought to be affiliated to Iran. Iraq’s former intelligence minister and – as of May 2020 –  prime minister Mustafa al-Kadhimi vowed in his first months in office to counter these so-called “axis of resistance” paramilitaries, including by stamping out their influence at border checkpoints.

Confiscated Drugs ‘Did Not Come From Iran’

Following the seizure of the trucks, a spokesman for Iranian customs insisted the drugs had not been made in Iran, in spite of the fact that the seizure of consignments passing through the country had “become news these days”.

“The Islamic Republic of Iran is in the field of transit,” said Seyed Ruhollah Latifi, “which is fully complied with in accordance with international laws and conventions.

“These drugs were completely non-Iranian, and Iraqi traders bought them from other countries for consumption in Iraq. These consignments simply conveyed through our country according to international law and all documents and goods were controlled at the entrance and exit in Iran.”

According to the customs official, from the beginning of this year to October 2017 Iraq has bought 1,654 tons of drugs from five countries: Turkey, India, Indonesia, China and the United Arab Emirates. These were conveyed to Iraq through Iran, from the borders at Bazargan in West Azerbaijan province and Shahid Rajaee Special Economic Zone near Bandar Abbas. The drugs have included insulin, antibiotics, penicillin and veterinary vaccines.

Kianoosh Jahanpour, director of public relations at the Ministry of Health, tweeted the same statement. It was met with widespread scepticism from Twitter users, some of whom asked why Turkey, which shares a border with Iraq, would possibly take a route through Iran or why consignments from India and Indonesia would not be shipped to Iraq instead of taking a land route. Others demanded to know why, if it were so easy for drugs to enter and exit Iran despite the sanctions, there were medicine shortages taking place in the country itself.

Still others suggested the medicines had, in fact, originated in Iran. “They give $4,200 to their comrades to import medicine,” one user wrote, “then they smuggle the same medicine to Iraq and sell it on the open market for 32,000 tomans. Later, the shortage of drugs is called the effect of sanctions.”

How widespread are views like these, and how founded are they? While it’s hard to say for certain, drug smuggling, fraud and the “medicine mafia” do have a long history in the Islamic Republic of Iran. Just yesterday, a senior official from the country’s Food and Drug Organization said trafficking groups were in large part to blame for the country’s depleted supply of both Iranian-manufactured and imported insulin pens.

Where are Iran’s Medicines Going?

For years now officials in the Islamic Republic have been quick to lay the blame for medicine shortages in Iran at the door of the United States, and the harsh sanctions that were reinstated in 2018.

The US has long countered that Iran can buy medicine and medical equipment from other countries, as long as it is done in a transparent way and with transactions not carried out through Iran’s Central Bank or other sanctioned banks. The US Treasury also made it possible for Iranian currency to be transferred for the purpose of buying medicine.

Some US officials, such as David Cohen, the former undersecretary of the US Treasury under President Obama, have said that the effect of sanctions on medicine was manageable and Iran had exaggerated the problem, but Iranian officials repeatedly insisted this was a lie.

The impact of sanctions is often top of the agenda in discussions about severe – and long-running – medicine shortages in Iran. But less is said about the impact of drug trafficking, smuggling and fraud in the medicine market, as well as the lack of health insurance that keeps what foreign-made medicines are available out of the hands of some of Iran’s most vulnerable patients.

A State Monopoly on the Drug Market

According to the Statistical Center of Iran, in the first five months starting from April 2017, Iran imported pharmaceutical products from more than 50 countries, the bulk of which came from Europe. Over the past 17 years, the center’s data shows, Iran has imported an average of $692 million worth of drugs annually, with Switzerland, Germany and France accounting for the largest share of imports.

Domestically, four holdings companies in Iran control about 66 percent of the country’s drug market. These are the Social Security Organization, the Executive Headquarters of Imam’s Directive through its Barakat Pharmaceutical Company, the Cobel Darou Company and finally Iran’s state-controlled Melli Bank, through the Shafa-Darou Investment Company.

According to Iran’s Food and Drug Administration, there are currently 330 companies active in the pharmaceutical supply chain in Iran. Among them, 107 are involved in  drug production, 130 are providers of pharmaceutical products and 93 split their activities across both fields. Many of these are subsidiaries of the four entities companies mentioned above.

Because of the extent of Iranian state control over the drugs supply, there is every possibility that decisions are being made not solely on the basis of supply and demand but for political purposes. Ministry of Health officials have repeatedly said in recent months that Iran can domestically produce 98 per cent of the drugs needed to meet the population’s health needs. If there are shortages, therefore, it can be assumed that at least some of the problems are the result of political decision-making rather than business constraints.

The response by Iranian customs to the seizure of medication by Iraqi forces has thrown into sharp relief the fact that these companies, then, are more than capable of importing at least some of the drugs Iran is not able to produce domestically. But if Iran went ahead and did so, the regime would no longer be able to hide behind US sanctions as an excuse for the ongoing suffering of Iranian patients – rather than internal disarray.

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.