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for tea producers. With producers receiving subsidized prices on the one
hand and facing a declining market share on the other there is little
incentive to invest in better technologies and maintain standards. This
problem has now begun to surface because the state has sought to
introduce market forces into domestic production that cannot compete
with smuggled foreign tea in terms of price and quality.54
The failure of the current system can also be detected in the new
pattern of tea consumption. Wholesalers and packagers no longer mix
local and foreign teas because of the large quantities of foreign tea that
are smuggled into Iran (both packaged and loose), the price of tea on the
world market has declined in the past three decades, and the quality of
Iranian tea has declined. The vast majority of Iranians today, even those
with the most meager wages, consume purely foreign tea. Even if the tea
company is Iranian (e.g. Shahrzad or Golestan) chances are that the tea
is 100 percent foreign. One wholesaler estimated that since the revo-
lution over three-fourths of the tea consumed in Iran is purely imported
tea. Other merchants speculated that Iranian tastes have changed so
much in the past two decades that even if domestic tea becomes more
attractive in terms of quality and price, it will take a long time for
consumers to switch back to blends or pure Iranian tea.
The new commercial system has also radically changed the structure
of the tea bazaar. A member of the governing board of the Tea
Wholesalers™ Trade Association sums up the results of the changes in
the system when he says, ˜˜Before the Revolution, tea importing had
conditions, was competitive, and purchase and sales were free to all and
there weren™t any monopolies. People would get import licenses who
also bought domestic tea. This prevented smuggling and supported tea
farmers, factories, and sellers. But in recent years [meaning after the
Revolution] conditional importing has declined.™™ He added, ˜˜At pre-
sent, licensed imports are one-tenth of unlicensed imports. Therefore,
tea farmers, factories, and sellers are not protected, and smugglers and
importers follow their own interests.™™55 Brokers added that these new
actors involved in importing and distributing tea are no longer tea
specialists; thus bazaaris with decades of experience are being replaced
not because of loss of reputation, but because they no longer have the
capacity to import, mix, package, or distribute the commodity. The
Bazaar™s reputation system, based on brokers, has thus been replaced by
exchange that is based on a system of demand and supply, where supply


54
Jahan-e Eqtesad, 3 Ordibhesht 1380 (April 23, 2001).
55
Asnaf, no. 91(Azar and Day 1379 [December“2000-January 2001]), 40.
Carpets, tea, and teacups 213

is predicated on contacts with exclusive importers outside of the purview
of the Bazaar.
In terms of relations, my interviews and participant observation in the tea
market demonstrated the general shift from cooperative to coercive hier-
archies that has occurred at the Bazaar level. The networks that constitute
the Bazaar are now heavily skewed toward ties with powerful actors who
are spatially dispersed. Tea merchants now work with importers in
Dubai, smugglers, and anonymous middlemen operating between the
state-af¬liated importers and the Bazaar. Bazaaris are more active in
developing contacts with actors beyond the Bazaar and even beyond Iran.
In the middle of one of my interviews, a wholesaler gestured toward the sara
and said, ˜˜Look around! Do you see anyone here? No, there is no reason to
come to the Bazaar. You don™t do business in the Bazaar; you do it in
ministries or at the borders.™™ Not only are bazaaris no longer physically
present in the Bazaar, but they are also less able and willing to discuss their
affairs with one another. Some say that they do not know who delivers their
orders, while others comment that since goods arrive from external sources
bazaaris are less willing to discuss their suppliers with one another. Finally,
with checks and even cash replacing many exchanges, the reputation-
based credit system has been replaced by legally enforceable arrangements.
To remedy these acute problems, in 2000 the Khatami government
unveiled a liberalization package. The Economic Council of the Board
of Ministers presented a plan that called for restructuring of the tea
sector by privatizing both the production and distribution of tea. The
report called for cooperation among various state organs: the Ministry of
Industry, the Organization for Planning and Budget, the Ministry of
Cooperatives, the Ministry of Commerce, the Ministry of Agriculture,
the Ministry of Interior, which is responsible for customs and borders,
and representatives of the tea factory syndicate. The NTO was no longer
required to set prices and purchase tea leaves; instead factories could
directly purchase harvests from farmers. Both farmers and factory
owners would be given subsidized loans to help ¬nance short-term
requirements and investments. Finally, after a few months and with little
public discussion, in May 2001 it was announced that the distribution
and import of tea would handed over to the private sector.56
This sudden announcement that the tea sector would be handed over to
the private sector was met with suspicion in the Bazaar; there were two sets
of reactions. Even though they were understandably supportive of such a
trend, many were skeptical that privatization plans would materialize “
˜˜There are many plans, but they are rarely executed™™ “ and more

56
Abrar-e Eqtesadi, 11 Oridbehesht 1380 (May 1, 2001).
214 Bazaar and State in Iran

interestingly they believed that this was untenable since it would destroy
domestic tea producers and both the farmers and the processors would
rise up and would make it politically unviable. In both cases their
expectations were proven correct. Only a few months later, not only did
the government not liberalize trade, but the Ministry of Commerce and
the Ministry of Agricultural Crusade in fact announced that all imports of
tea were banned.57 The reason was that the ¬‚ood of imported tea had not
subsided,58 and within the year the negative impact of imposing market
forces on domestic producers were felt. As one may expect, the rather
sweeping proposals faced a number of problems owing to con¬‚icts
between vested interests and endemic problems in the industry. On the
production side, because of technical problems with cultivation, inef¬-
ciencies in tea processing, and lack of marketing on the part of factory
owners, domestic tea could not compete on quality and price with tea
from South Asia, which is of higher quality and not considerably more
expensive.59 By the end of 2000, after the reforms that ended the NTO™s
purchasing of tea, only 15 percent of tea processed by factories in Iran was
purchased by packagers and distributors.60 Subsequently, after tea
growers in the north protested and lobbied their representative in the
parliament, the government was forced to purchase the unsold tea and
also subsidize factories.61 Eventually, the NTO was forced to sell this
surplus tea to foreign markets.62

Conclusions
Well aware of the perverse and chronic problems of the tea sector, the
bazaaris have advocated changes. As early as 1993 they warned gov-
ernment of¬cials that the tea industry was facing a crisis and advocated a
return to the conditional import policy where the NTO would coordi-
nate imports and domestic production, but they claimed that ˜˜nobody
would listen.™™63 The members of the Bazaar™s tea-selling community
whom I interviewed claimed that regulation and supervision (nezarat)
57
Nawruz, 12 Day 1380 ( January 2, 2002); and Tehran Times, January 2, 2002.
58
Bonyan, 25 Bahman 1380 (February 14, 2002).
59
Dawran-e Emruz, 19 Day 1379 ( January 8, 2001). World prices for tea have declined in
the past two decades as production has increased (especially with Kenya, and Tanzania
having entered the market) and costs have been reduced by major producers.
Meanwhile, tea-producing countries such as (India, Sri Lanka, China, Indonesia, and
Kenya which produce roughly 80 percent of the world™s tea, have not been able to
coordinate production. Ridwan, Chaudhry, and Lister, ˜˜Sri Lanka™s Tea Industry.™™
60
Hamshahri, 22 Azar 1379 (December 12, 2000).
61
Hayat-e No, 25 Esfand 1379 (March 15, 2001).
62
Tehran Times, October 17, 2001.
63
Asnaf, no. 91 (Azar and Day 1379 ([December 2000“January 2001]), 40“2.
Carpets, tea, and teacups 215

have been replaced by the interference (dekhalat) of an amorphous state
apparatus. Supervision is seen as a necessary result of a bargain where
domestic production and employment are secured and the necessary
shortfall in production is ¬lled by imports. Bazaaris believe that if Iran
returns to the old system where private actors in domestic production
and national and international trade are the purveyors of goods, the
quality of domestic tea will improve, consumers will again turn to
blended teas, domestic producers will prosper and invest, and the
Bazaar will be revived and again dominated by experienced and repu-
table traders. This scenario, however, assumes that the tea merchants
continue to have commercial and social networks capable of coordi-
nating actions and distributing information and goods. Their inability to
lobby political actors or act collectively to identify disreputable smug-
glers and middlemen suggests that this past capacity and solidarity are
precarious and need to be planted anew.

The china and glassware bazaar64
The [Hajeb al-Dawleh] Timcheh appears isolated from the rest of the Bazaar,
but our concerns are the same as everyone else™s.
Retailer, September 2000

Near the Shah Mosque, renamed the Imam (Khomeini) Mosque after
the Revolution, in the northern section of the Tehran Bazaar lies the
grand nineteenth-century Hajeb al-Dawleh Timcheh, an expansive
three-story vaulted arcade centered around an open courtyard and pool.
Surrounding the courtyard are stores and trading companies specializing
in all sorts of kitchen appliances and utensils; principal among these is
the china and glassware sector. The merchants in this section of the
Bazaar are quite conscious of the fact that their trade, notwithstanding
its rather splendid environ, is not as prestigious as the carpet bazaar or as
pro¬table as the cloth and iron sellers™ bazaars. China and glassware is
neither a necessary staple such as tea or clothing, nor a commodity used
as investment such as carpets or gold. Nevertheless, ˜˜people do renew
their dishes once in a while, and people continue to marry and wives
continue to need dowries.™™ The rather unremarkable standing of this
sector is re¬‚ected in the saying sometimes muttered by members of the
kitchenware bazaar: ˜˜In the Timcheh, losses only go up to your shin,

64
There is very little secondary literature, journalistic reporting, or government
information about the china and glassware sector. Information in this section is
compiled almost exclusively from my observations and interviews with bazaaris, non-
bazaari commercial actors in Tehran, Dubai, and the free trade zones, and domestic
producers of china and glassware.
216 Bazaar and State in Iran

and pro¬ts only reach your shin™™ (Dar Timcheh zarar ta saq va naf˜ ta
saq); in other words, in the kitchenware market you are never going to
lose your life savings, but neither will you become exceptionally wealthy.
The atmosphere in the china and glassware sector is also strikingly
different from that in the carpet and tea bazaars. While in the carpet
bazaar, and to a lesser extent the tea bazaar, it was still common to see
several traders sitting together and conversing or to witness bazaaris
drop by to ask business questions and exchange small talk, the china and
glassware merchants are noticeably more detached from one another.
Rarely do you see neighboring shopkeepers in each other™s stores, and if
you do, you can rest assured that there are actual business matters at
hand “ debts being negotiated, purchases being made, or disputes being
solved. If information about the price of a good is needed, these bazaaris
send their apprentices to investigate. While carpet dealers invite visitors
by leaving their doors (if they even have them) open, placing their goods
outside, and sitting at the entrance of their stores, in the Timcheh,
shopowners are often not visible, their store doors may be closed, dis-
play cases limit their entrances, and storeowners are often in their back
of¬ces. Save for the ornate architecture and tight quarters, one is
reminded more of the restaurant supply district in New York™s Lower
East Side or even a mall in a North American suburb than a Middle
Eastern marketplace. This is a product of the standardized nature of the
manufactured wares. Teacups, unlike carpets, have a set of de¬ned
qualities “ name of manufacturer, model, and quantity. Prices may not
be stable and bargaining may exist, but quantity and quality are de¬ned,
helping to reduce price dispersion and transaction costs related to
information costs.
Nevertheless, the glass and chinaware bazaar is also quite illustrative
of some of the basic trends facing most of the Tehran Bazaar, which is
increasingly a purveyor of more standardized goods, such as manu-
factured shoes, textiles, clothing, and stationery products. The china
and glassware bazaar has gone from being composed of highly hier-
archical, specialized, and stable value chains to one that consists of
relations that are more transitory and dispersed. While, the entire
national trade in china and glassware used to be anchored in the Tim-
cheh, it now revolves around multiple commercial centers.
Before the Revolution, the value chains were headed by a small
number of importers who specialized in speci¬c brands, since they were
representatives of particular European (French, Italian, German, and
Czech), and to a lesser extent Japanese, companies. This specialization
was transmitted to wholesalers who worked with these importers
to distribute their wares to representatives in the Tehran Bazaar and
Carpets, tea, and teacups 217

provincial centers (Isfahan, Tabriz, Mashhad, and Shiraz). Thus, prices
and pro¬t margins were scripted and competition regulated. For the
customer this all resulted in a highly segmented marketplace. If one
wanted to purchase a speci¬c brand, there were a select few retailers,
and without exception they were located in the Bazaar. Thus, cliente-
lism between importers and wholesalers and between wholesalers and
retailers was reproduced between retailers and customers. Owing to the
longevity and repeated nature of the exchanges, transactions were made
based on credit and promissory notes.
In the 1960s and 1970s, imports prevailed in this market for two
reasons. First, oil revenue helped keep the value of the rial relative to
hard currencies at a high and stable level, thus making western imports
affordable for the growing middle class. Second, domestic production
was minimal. While state development projects invested in consumer
durables such as televisions, refrigerators, and automobiles, china and
glassware production was left unprotected and unsupported by the
regime. Thus, the importing value chains dominated.
These economic ties were reinforced by a number of social factors.
For instance, a large portion of those in the Timcheh were from Isfahan,
a factor that continues to be discernible today, with several bazaaris
from the china and glassware sector investing in newly established fac-
tories in Isfahan. Intermarriage and kinship ties have also helped cement
business relations, with many of the middle-aged members of the sector
today still able to identify cousins and relatives in the various sub-trades
in the Timcheh (kitchen utensils, steel pots and pans, and other
household goods; see Chapter 3). Supporting the multifaceted and
crosscutting nature of these ties were the relatively small number of
retailers, wholesalers, and importers in this sector; their numbers were
no more than a few dozen, rather than several hundred as was the
situation in the carpet or cloth bazaars. This small number was localized
exclusively in the Hajeb al-Dawleh Timcheh, a particularly secluded and
self-contained segment of the Bazaar. Nestled between the two main
alleys, the Grand Bazaar and the shoemakers™ bazaar, small doorways
open into the Timcheh, creating a relatively tranquil island from which
nationwide trade took place.
After the Revolution, the china and glassware trade went through a
number of changes that were precipitated by shifts in the state™s eco-

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