Iran's Carpet Industry Unravelling Under Sanctions

ERBIL (Kurdistan24) – Once a globally renowned symbol of cultural prestige and a titan of Iran's non-oil economy, Iran’s legendary handmade carpet industry is unravelling, its intricate threads of commerce and artistry frayed by a relentless combination of international sanctions, crippling domestic policies, and shifting global tastes.

According to a detailed report by Agence France-Presse (AFP) from Tehran, the fabled Persian rug, a fixture of luxury and a testament to an art form dating back to the Bronze Age, is facing an existential crisis.

The AFP report revealed that the export revenues have collapsed by a staggering 95 percent from their peak, threatening the livelihoods of millions and risking the relegation of a national treasure to a relic of a lost golden age.

In its heyday during the early 1990s, the industry commanded more than $2 billion in export revenues.

Mehr News Agency provided further historical context, noting that in 1994, carpet exports accounted for an astonishing 44 percent of the country's total non-oil exports.

Today, that figure has dwindled to a near-inconceivable low. Iran's customs organization, as cited by AFP, reported that during the last Persian calendar year ending in March, exports stood at a mere $41.7 million—a precipitous fall from over $400 million as recently as 2017.

The primary catalyst for this dramatic decline, AFP reports, was the reimposition of punishing United States sanctions in 2018, a move that abruptly severed the industry's lifeline to its largest and most lucrative market.

"In the years when the unkind and cruel US sanctions on the hand-woven carpet sector were imposed... we lost the US, the buyer of more than 70 percent of Iranian hand-woven carpets," Zahra Kamani, head of Iran's National Carpet Centre, told state TV in a comment carried by AFP.

This externally imposed blockade was devastatingly compounded by what many in the industry describe as a form of "domestic sanction."

The news outlet Asr-e-Iran analyzed the devastating impact of a flawed foreign exchange repatriation policy, also implemented in 2018, which it argued turned into a "full-blown crisis."

The policy, requiring exporters to return foreign currency earnings through official channels, proved fundamentally incompatible with the nature of the handmade carpet trade—a sector characterized by decentralized, often cash-based transactions.

Asr-e-Iran reported that this mandate forced many exporters to abandon their businesses, directly contributing to the industry's freefall and Iran's tumble from its century-long position as the world's top exporter to sixth place, ceding market share to competitors.

The consequences of this collapse are being felt acutely across the country.

According to official figures cited by AFP, at least two million people, many of them women in rural areas, depend on the carpet-weaving industry for their livelihood.

Speaking to the ISNA news agency, Mohammad Ali Mohammadi, the Director General of Industry, Mine and Trade of Hamedan Province, confirmed the scale of this dependency, stating that some 60,000 people are active in the trade in his province alone.

However, he told ISNA that only a fraction is covered by insurance and that the Social Security Organization acts "somewhat restrictively."

The decline is vividly illustrated by the tragic fate of the Iran Carpet Joint Stock Company, as detailed in a lengthy investigation by the Iran Carpet Information Website, Carpetour. Established in 1935, the company was once the largest producer and exporter of Iranian handmade carpets and a "cultural arm of the government," as described in the Carpetour report.

However, a series of ill-considered privatizations, beginning in 2013, transferred the company to banking institutions with no expertise in the field. This, coupled with alleged mismanagement, led to what Carpetour chronicles as a catastrophic decline.

The once-mighty company is now a shadow of its former self, introduced in Central Bank documents as a major debtor.

Anecdotes recounted by Carpetour paint a heartbreaking picture of a frustrated weaver shouting "give me my carpet to take!" after not being paid, and employees making bitter jokes about having to "photosynthesize" to survive.

Compounding the crisis is a fundamental shift in consumer demand, a point highlighted in the AFP report. With Iran's tourism industry also battered, the flow of foreign buyers has slowed.

Even those who visit are often deterred by changing trends and high prices. "It is somewhat difficult for even someone living in a European country to buy a silk carpet for, say, $30,000 to $40,000," carpet trader Hamed Nabizadeh explained to AFP.

Experts in Tabriz, another major carpet hub, echoed this sentiment in comments to the official IRNA news agency.

Majid Abbasi, an official at the Tabriz Chamber of Commerce, told IRNA that "paying attention to customer tastes is one of the basic requirements in reviving the historical and global position of Iranian carpets."

This challenge is perhaps most poignantly reflected in the domestic market, where, as AFP reports, the collapse of the national currency has put traditional handwoven rugs out of reach for many.

"Even though I always wanted handwoven carpets for my dowry and my family had promised me that, they couldn't afford them. Instead, we opted for factory-made ones," Shima, a 31-year-old bride-to-be, told AFP.

This erosion of a foundational domestic customer base represents a profound cultural and economic blow.

Iranian officials insist that a revival is possible. Trade Minister Mohammad Atabak, quoted by both AFP and Mehr News Agency, has acknowledged the damage caused by domestic policies and spoken of new agreements to facilitate exports, expressing hope that "we can resuscitate this industry."

Ahad Azimzadeh, a prominent figure in the Tabriz carpet trade, told IRNA that production must move towards modernism while preserving authenticity. Yet, the scale of the challenge is immense.

With production workshops reportedly being transferred outside the country, a development noted by Mehr News Agency, and lower-cost imitations from competitors flooding the global market, the path to recovery is fraught with obstacles.

As the warp and weft of this ancient art industry continue to weaken, the Persian rug, an ambassador of Iranian culture for centuries, now finds its own legacy hanging precariously by a thread.