An Iranian man repairs a carpet in the capital Tehran's Grand Bazaar on September 30, 2020. Photo: AFP/Atta Kenare

Iran’s carpet industry, once a rich trademark of Persian culture and a key source of non-oil and gas export revenues, is coming unraveled under the double whammy of US sanctions and a Covid-caused recession.

Without meaningful government relief and investment, the fast-fading export industry that normally employs 2.5 million people and provides livelihoods in associated businesses to as many as 10 million will soon be decisively overtaken by rival nations’ wares in regional and global markets, experts and analysts warn.

Local media reports suggest as many as one million Iranians involved in the rug industry have already lost their jobs.

Iran’s carpet industry survived the chaos that followed the 1979 revolution and the 1980s Iran-Iraq War. Today, several key cities including Gorgan, Heris, Isfahan, Kashan, Kerman, Mashhad, Tabriz and Qom are minor hubs of carpet manufacturing with styles and designs exclusive to each region.

Due to the exquisiteness of the materials used and the hard labor and time it takes for every carpet to be completed, the products are expensive, ranging from $500 to $50,000.

Several factors determine the price of a Persian rug, including the knot count per square inch, coming in anywhere from 60 to 1,000 knots per inch for highly plush ones, the use of handspun versus machine-spun yarns, the application of natural dyes, size and design.

Carpet-weaving in Iran boasts a documented history of at least 2,500 years, whereby generations have meticulously handed down rug-making art and skill to their descendants. Historians surmise Iran’s carpet enterprise reached a pinnacle under Shah Abbas of the Safavid dynasty, who ruled the Persian Empire from 1588 to 1629.

A woman walks past a carpet shop in Tehran’s business district. Hand-made carpets are highly prized by Iranians. Photo: Morteza Nikoubazl/NurPhoto/AFP

The world’s oldest hand-knotted oriental rug in existence is called the Pazyryk Carpet, discovered in the Altai Mountains in Siberia in 1948.

The showpiece, which is suggested to have been woven around the 5th century BC, is kept at the Hermitage Museum in St Petersburg, Russia, and its design and production are almost unanimously attributed to ancient Iranians.

But the gradual commercialization of the carpet industry has stripped Iran of its global market dominance.

Today, countries as diverse as Afghanistan, Belgium, Canada, China, Egypt, India, Morocco, the Netherlands and Turkey have domestic rug industries, though connoisseurs claim many produce cheap spin-offs of Iranian designs and motifs.

In 2018, Iran trailed behind China, Turkey, India, Belgium, the Netherlands and the US as the 7th largest exporter of factory-made carpets. The value of its exports totaled nearly $300 million that year, according to Ministry of Industry, Mine and Trade officials.

The same year, Iran’s exports of hand-made carpets accounted for 10.9 % of the global trade, trailing only India and Egypt.

The US has customarily been a major destination of Iranian carpets, with demand rising in recent years. Despite perennial tensions, Persian carpets have found innovative ways to reach US shores.

Those exports are so crucial to Iran’s economy as well as US business interests that a paragraph in the now-annulled Joint Comprehensive Plan of Action nuclear deal laid out explicitly that America would “license the importation into the United States of Iranian-origin carpets” as well as food products.

Iranian vendors say carpets exports have decreased due to US sanctions. Photo: Atta Kenare/AFP

In 2017, when the JCPOA was still being implemented, Iran was the world’s top exporter of handmade carpets, of which $125.6 million worth were shipped to the US. In 2018, following then-president Donald Trump’s dumping of the JCPOA and imposition of broad-ranging sanctions, Iran’s US-bound exports plummeted, including rug shipments.

According to Iran National Carpet Center, the Persian Gulf country’s rug exports in 2018 amounted to $238.4 million, but by 2019 had slumped to just $70.5 million.

Aside from US punitive measures denying Iran lucrative markets in North America, and secondary sanctions that ban partners’ trade with Iran, the Covid-19 pandemic has also hit the industry.

In the city of Tabriz, one of Iran’s carpet manufacturing hubs, 1,100 weaving workshops, 400 carpet processing centers, 95 carpet washing services and 2,200 retailers are on the edge of bankruptcy and closure, according to local reports.

In East Azerbaijan province, 200,000 carpet weavers were previously covered by social security insurance. This number has dropped to 45,000 due to the government’s fiscal problems.

The government, in financial distress due to US sanctions, cannot readily provide relief for the losses incurred by the industry due to the Covid-19 downturn. Rug exporters, meanwhile, are being squeezed by regulations on foreign currency transactions, making overseas sales an increasingly risky enterprise.

Morteza Miri, a carpet exporter and member of the board of directors of the Iran Carpet Manufacturers and Exporters Association said that rug merchants who have not yet exported products are required to commit to return foreign currency resulting from the sales.

“After going through customs formalities, a merchant who has not yet exported the carpets would have to make a commitment to return the foreign currency resulting from the sales of the products within a four-month or one-year period through the channels specified by the Central Bank of Iran.

“Therefore, exporters who have transported the carpets overseas but were unsuccessful in selling them on time have to pay the foreign currency to the Central Bank of Iran from their own pocket out of a transaction that has not taken place, or else have their commercial licenses revoked,” he said.  

A man repairs a carpet in Tehran’s Grand Bazaar. Customers pay up to $50,000 for a carpet. Photo: Atta Kenare/AFP

Miri believes Iran’s carpet business is going through a rare if not unprecedented recession, with exports in 2019 at their lowest level in 45 years. Last year was likely worse due to the pandemic’s impact on trade and the associated global economic recession.  

With US markets drying up due to sanctions and others inhibited by banking transaction bans on Iran, Britain, Denmark, Germany, Iraq, Italy, Japan, Lebanon, Qatar and the UAE are still buying substantial quantities of Iranian carpets. Exporters say, though without elaborating, they manage to sell to the said countries by circumventing sanctions.

Local markets are also drying up due to hyperinflation and depressed economic conditions.

“Considering the high inflation in the recent years, purchasing power has been slashed significantly. Also, the costs of manufacturing have soared inevitably,” said Dariush Akradi, co-founder of the CPersia online carpet shopping platform.

“Within a three to four-year period, the prices have increased almost two-fold, which means this product has been eliminated from the customers’ market basket.”

Akradi, however, says Iranians are innately passionate about carpets, and even those with low incomes bend over backwards to purchase expensive hand-woven carpets because of the value it adds to their houses.

“Desire for carpet lies in the DNA of Iranians. Even those families who are not very well-paid insist that their living rooms should be decorated with hand-woven carpets, although they may buy factory-made carpets for their bedrooms,” he said.

Sheyda Mayahian, a graduate of carpet design studies and co-founder of the Ensug rug design group, told Asia Times her business was mostly affected during the Covid-19 crisis by government mismanagement and skyrocketing production costs, which have worked in tandem to demoralize many designers and weavers.

She believes there are several steps the government can take to salvage the industry, including the provision of financial assistance to manufacturers, better facilitation of rug transportation and exports and a reformulation of the regulations on repatriating foreign currency earned by exports.

Mayahian contends if the current government’s approach to the carpet production and business persists, “the Persian carpet will have no future, and will turn into a luxury commodity which a very limited number of manufacturers will make for a very limited number of customers. It will be eviscerated of its status as a consumer product.”

Iranian carpet vendors wait for customers in the capital Tehran’s Grand Bazaar. Photo: Atta Kenare/AFP

But with the government squeezed by sanctions and no early sign of a new deal with the US under the Biden administration, investing in national heritage and safeguarding a craft that many see as the epitome of Iranian culture is for now beyond Tehran’s fiscal reach.

“The government is facing a serious budget deficit and is resorting to conventional and unconventional sources to make up for this loss,” said Mohammad Mehdi MirzaAmini, a carpet designer and lecturer at the Shiraz University of Arts. 

“It doesn’t have anything at its disposal to invest on the carpet industry, and of course it is clear that hand-woven carpets are of no importance to the government as a priority.”