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Iran sanctions see Pakistani kids, drug dealers turn to smuggling diesel

Ian Kursheed / Reuters

A boy fills the tank of a motorbike with smuggled petrol near a roadside shop in Quetta, Pakistan, on Feb. 13, 2013.

JOGAR, Pakistan -- Some of the contraband is spirited across the mountains in Pepsi bottles carried by child smugglers. Yet more is loaded into pickup trucks or siphoned into barrels and strapped onto mules.

So lucrative are the returns that even seasoned opium traffickers are abandoning their traditional cargo to grab a share of Pakistan's closest thing to an oil boom: a roaring trade in illicit Iranian diesel.

As Western powers tighten sanctions on Iran, an unexpected set of beneficiaries has emerged in the hard-scrabble Pakistani province of Baluchistan -- smugglers lured by surging profits for black market fuel.

"Why smuggle opium when you can earn as much money by smuggling diesel? It's much safer," said a former opium trader from the Pakistani town of Mand, a smuggling hub near the Iranian border.

"Besides, I'm now called a successful businessman -- not a drug dealer," said the man, who gave his name as Hamid.

Ghulam Ali sells the smuggled products openly in Quetta, the main city in Baluchistan. "Vehicles loaded with Iranian diesel and petrol provide us with fuel as a routine matter -- there are no hindrances to its transportation," he said.

Diesel smuggling has long been a part of the illicit trade in Baluchistan, where a thriving trade in goods -- from guns and narcotics to duty-free cigarettes and second-hand Toyotas -- constitutes one the arteries of the globalized criminal economy.

'Why wouldn't I?'
In Nushki, a small town on one of the roads cutting through Baluchistan's arid moonscape, diesel traders preparing to drive to the Iran border had little to fear from the law.

"Bringing in fuel this way is so much cheaper and makes great profits," said one of the transporters, a burly man wearing a gold watch. "Even though there are security check points at all these border towns inside Pakistan, no one ever stops me. Why wouldn't I do this?"

Smugglers have gone into overdrive since late September, when growing pressure from Western sanctions caused the Iranian rial to lose 40 percent of its value against the dollar in a week, making diesel even cheaper for Pakistani buyers.

Iran sets its diesel price at 4,500 Iranian rials (about 15 cents) a liter -- less than the price of mineral water.

In Pakistan, a liter of smuggled diesel can sell for 104 rupees a liter ($1.06) -- cheaper than the official price of 112 rupees a liter.

At Jogar, a border pass in granite mountains, children trek across the hills bearing Iranian diesel in Pepsi bottles. Some is transported on donkeys.

On the Baluchistan coast, smuggling proceeds on an industrial scale as diesel arrives at ports via vessels plying the Gulf of Oman.

Like tributaries feeding a river, individual smugglers bring their barrels to depots, where the cargo is aggregated into tanker trucks.

In January, the U.S. Special Inspector General for Afghanistan Reconstruction warned that fuel purchases made for Afghan security forces using U.S. government funds may have included Iranian petroleum products, which would be a violation of Washington's own sanctions on Tehran.

Iran's attempts to boost formal energy ties with Pakistan are also a concern for the U.S. government. Washington has voiced opposition to plans to build a pipeline through Baluchistan to tap Iranian natural gas, which Pakistan sees as a possible answer to its chronic electricity shortages.

Iran's government, already battling Western moves to restrict supplies of gasoline and other refined products, has sought to stem smuggling by introducing a system of smart cards to ration subsidized fuel.

In Pakistan, authorities admit they are overwhelmed. Ibrahim Vighio, a senior customs official in Quetta, said the government plans to form a new 1,000-strong anti-smuggling unit. "We have lack of forces, proper weapons and equipment to stop the smuggling," he said.

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