By Chandeepa Wettasinghe
The expected relief for the tea industry in the form of a sanction free Iran may be over a year away, an expert said. “Even if Kerry (US Secretary of State) says that the sanctions are lifted tomorrow, it will take more than a year for the instructions to trickle down into the process,” Sri Lanka Tea Exporters Association Past Chairman Niraj De Mel told Mirror Business.
It has been observed that political statements in most countries are not immediately turned into practice, as officials in the ground level will not act until comprehensive legislation enabling such political statements will be enacted to protect their actions.
The United Nations slapped on wider economic sanctions against Iran for continuing research and development into nuclear power in 2006. This was an extension of various sanctions imposed by the US since 1979. The US recently said that it would remove the sanctions if Iran meets certain goals in its nuclear programme. Many stakeholders in the Sri Lankan tea industry including top politicos have been expecting the lifting of sanctions to breathe a new life into the country’s ailed industry. Export volumes and prices have fallen drastically this year due to the upheavals in Eastern Europe and the Middle East, as well as the fall oil prices. Ceylon Tea’s main consumers are in the traditional global oil supplying regions.
De Mel said that the tea industry eventually would pick up, and the current slump is a natural part of the economic cycle. In the short-term however, he said that even if Iran’s sanctions are lifted, its market for Ceylon Tea may already be saturated.
“The Iranian Ambassador assured me that they will buy more tea, and the US Ambassador told me that everything will be smooth after the sanctions are lifted, but if you see, Iran has always been taking 30,000 tonnes of tea from us, even during the sanctions,” he said.
He added that Iran has continuously worked around the sanctions by paying Ceylon Tea exporters through third parties. However, he noted that there are some dues Sri Lanka must repay Iran for importing crude oil in the past, which if not paid may affect the tea trade between the two countries. While Iran has stayed loyal to Ceylon Tea despite cheaper Indian and Kenyan varieties, Sri Lanka has had to turn to Iran’s neighbours for crude.