With its economy in free fall, Iran is turning to its porous borders with Iraq and other countries to skirt increasingly effective global economic sanctions, according to congressional staffers, local journalists and advocates for tough sanctions against Tehran.
Analysts say Iran's government and citizens have become desperate, resorting to "cash transactions" on the black market with neighboring countries — principally Iraq, with which it shares a 910-mile border.
"Iraq is a very hospitable place for Iran," said Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a Washington think tank that advocates tougher sanctions against Tehran.
Mr. Dubowitz, who heads the foundation's Iran Energy Project and has advised the White House on sanctions policy, said smuggling on the Iran-Iraq border consists most notably of "gas into Iran and oil out."
A July report from the Congressional Research Service noted that the value of Iran's currency, the rial, has dropped by about 50 percent in the past year and Iran is virtually cut off from the international banking system. It said the Islamic republic increasingly is forced to trade through "barter arrangements," with many major international firms having left the market and many Iranian firms reported to be closing and laying off workers.
"The signs of economic pressure on Iran are multiplying," the report said.
As a result, Iran, which sits on massive reserves of crude oil, lacks the capacity to refine petroleum, making it reliant on gasoline imported from other countries.
"Iranians need hard currency," Mr. Dubowitz said, noting the effectiveness of sanctions imposed by the U.S. and the international community in an effort to force the country to stop its development of nuclear weapons.
Western nations have long suspected that Iran's nuclear program is geared toward building an atomic bomb, and the U.S. and European Union have implemented sanctions against Iran's central bank and oil industry to persuade Tehran to scrap its program. Iran has said repeatedly that its nuclear program is intended only for civilian uses, but it has not cooperated with international inspectors.