Economy, Domestic Economy

Persian Rug Trade Back in Business

Persian Rug Trade  Back in BusinessPersian Rug Trade  Back in Business

Besides oil, sanctions imposed against Iran over the past decade to curb its nuclear program hurt the country's second largest export: the iconic Persian rug.

Iran is one of the world’s oldest continuous major civilizations and the Persian carpet tells much of that story, tracing back at least as far as the Bronze Age. It has been infused with magical properties in tales such as One Thousand and One Arabian Nights, celebrated by everyone from Edith Wharton to Sigmund Freud, and has survived centuries of holy wars, colonialism and revolutions, wrote the American weekly magazine Newseeek.

But until January, when US President Barack Obama signed an executive order lifting sanctions, all Persian rugs—whether antique or brand-new—were banned from entering the US, regardless of how long they had been outside Iran. For instance, a Persian rug sold in London that had not been in Iran for more than a century still could not be shipped to the United States.

Purveyors of Persian rugs in the US, Europe and elsewhere were forced to navigate convoluted rules imposed by the US government that would shift every several years or so, depending on the political vicissitudes of the day.

“It’s been a lot of political nonsense over these beautiful rugs that were woven hundreds of years ago,” says Jahangir Nazmiyal, an Iranian who goes by his Americanized name Jason and owns the Nazmiyal Collection in New York, one of the biggest buyers and sellers of antique Persian rugs in the United States.

Western elites’ love affair with fine carpets spans centuries.

“The Persian rug was long seen as a way for middle-class families to signal their upper mobility, going back to the late Victorian and Edwardian periods,” says Juan Cole, a University of Michigan history professor who specializes in the relationship between the West and the Muslim world.

Turning Point

Cole says much of it stemmed from colonial-era excursions to the East, from which “the colonels would bring back these remarkable goods”, including Persian carpets.

“This moment that we’re in is potentially a big turning point,” Cole says. “The prospect for improved relations economically, politically and culturally between Iran and the West is entirely plausible. But I don’t think there’s going to be an easy thaw.”

The US first imposed sanctions on Iran after the 1979 US Embassy drama in Tehran. Most recently, sanctions were escalated in 2010 (after being loosened in 2000) over Iran's nuclear program.

Nazmiyal has more than 3,000 rugs in his New York gallery worth anywhere from a few thousand dollars to millions apiece. Many were brought over before the Islamic Revolution and he built up the collection during periods when sanctions were intermittently eased, continuing to sell to clients in the United States.

For generations, Persian rugs have been woven the same way on room-sized looms. The making of the rugs is a family business and has been for what is known of its 2,500-year history.

“When a grandmother is doing it, she will teach the mother and they also will teach the children,” Nazmiyal says. “A master weaver is someone who invents new designs, new techniques, new ways of putting colors together, and he will weave only 15 to 20 rugs in a lifetime. Some of the bigger rugs can take more than 60 years to finish.”

The brilliant hues and designs reflect each Iranian town’s distinct color palette of native plants and style. The master weaver may hand-dye his wool, teaching his wife and children to embellish on designs they sign with the family name—patterns shot through with flowers, animals and climbing vines bearing the distinctive stamp of their city of origin. In Tabriz, it may be birds and gardens; and in Kerman, it may be leafy boughs in a vase-like spray.

Color is everything, as is the mood of the weaver. And the magic of this is that, although a rug may take decades to complete, the weaver’s moods may change every day.

“If it’s an ugly orange, it just kills the value; there is nothing you can do,” says Nazmiyal. “But if the weaver is in a good mood, he’ll weave in some lucky charms. There is a whimsicality to the Persian rug. You really get a glimpse into the mind of the weaver and how he sees the world.”

Nazmiyal, 55, has not been back to Iran since leaving in 1978, just before the Islamic Revolution, which toppled the country’s US-backed monarchy and led to the establishment of the Islamic Republic.

Since then, his business has risen and fallen with the ebb and flow of sanctions. Under the most stringent measures, any Persian rugs, antique or modern, that were imported to the US could be treated as contraband and destroyed, while the merchants involved could be imprisoned. “Can you imagine destroying a centuries-old Persian rug?” asks Nazmiyal. “You cannot buy a new one, because they are one of a kind. You cannot replace them.”

Legal Ambiguity

Despite the lifting of sanctions, he remains extremely skeptical, like many in the industry.

“Who knows how long it will last?” he asks. “We have seen this before. Every few years, they come back and decide to change the rules again.”

There is reason for his doubts. Even after Obama received word from the Vienna-based International Atomic Energy Agency in January that Iran was in compliance with the nuclear deal, leading him to lift the sanctions on January 16, US government officials scrambled to explain the new rules, often contradicting themselves and confusing merchants.

Omri Schwartz, Nazmiyal's gallery manager, says lengthy phone calls to the Office of Foreign Assets Control, an offshoot of the US Treasury Department that oversees the sanctions, often led to unnamed parties giving him information that he couldn’t verify within the text of the new rules.

For instance, whether he could export Persian rugs from the US, something that, just days ago, was a federal offense. It turns out he can, OFAC tells Newsweek, but it took weeks for Schwartz to get the final answer.

“If you read the rules, there’s a lot of ambiguity and a lot of holes where you could see the law going either way,” he says. “They won’t speak in any official capacity when you call them and they tell you they can’t say for certain how to interpret it. But I go to jail if they’re wrong.”

OFAC Acting Director John E. Smith sent a statement to Newsweek affirming that Persian carpets can now be imported and exported freely to and from the US, as well as to and from third-party countries, “as long as the transactions don’t involve an export to Iran or to blocked Iranian persons”.

Carpet Trade Suffers

It’s not just the antique Persian rug business that’s taken a hit. Sanctions also eroded the modern rug trade in Iran, according to Hamid Kargar, head of Iran’s National Carpet Center in Tehran.

Revenue from all Persian rug exports has fallen from around a billion dollars a year in 2000, the last time sanctions were lifted, to just over $300 million a year today, he tells Newsweek.

By 2010, just before the latest round of sanctions were reinstated, Persian rug exports to the US came to around $80 million a year, or 16% of Iran’s total shipments.

"Inside Iran, sales of rugs are slightly greater than outside the country, so total revenue is around $700 million to $800 million a year. That is hardly enough to make up for the sanctions-related shortfall that has hammered the more than 1.5 million weavers, dye masters, yarn producers and designers relying on the industry for their livelihoods," Kargar said.

“Despite the claim of targeted sanctions, the embargo on carpets was actually targeted directly at our culture, tradition and ordinary people.”

Unfortunately for the Iranian rug industry, while the US and Iran were engaged in their lengthy standoff, the world moved on to more modern floor coverings, according to Richard Amatulli, membership chairman of the Oriental Rug Retailers of America, a nonprofit trade group based in Landrum, South Carolina.

Amatulli noted that on top of the sanctions, the Great Recession of 2008–9 killed the price of Persian rugs.

“It’s been devastating to the industry. I’ve seen some rugs priced at just one-tenth of what they’d been worth after the first round of sanctions in the 1980s,” he said.

For those looking to invest in a Persian rug for the first time, that’s good news: Prices are at their lowest in decades.