Wall Street Journal: Economic sanctions have been working to strangle the Iranian economy, and now, the country’s diplomats and overseas businesses are being cut off from Costco. The Wall Street Journal
By Tom Gara
A tightening noose of economic sanctions has been working to strangle the Iranian economy in recent years, as Western powers push the country to abandon its nuclear program. The effects have been felt at levels high and low, from raging inflation for food and basic goods to a 20% reduction in the capacity of the country’s oil industry.
And now, to add a small insult to a large economic injury, the country’s diplomats and overseas businesses are being cut off from Costco .
The members-only retailer serves a base of signed-up customers roughly equivalent to the population of Italy, and is known for selling in bulk and at large discounts, from an entire 24 lb frozen Thanksgiving dinner to a surprisingly good selection of old-world wines.
But one group of people have been shut out of this cut-price retail paradise, Costco said in an SEC filing today:
During the second and third fiscal quarters of 2013, we had as cardholders at our subsidiary in Japan four individuals under two business memberships in the name of the Embassy of the Islamic Republic of Iran (“Embassy”). In the same time period, we had as cardholders in our United Kingdom subsidiary two individuals under one business membership in the name of Iran Air.
Gross revenue in the second and third quarters of 2013 attributable to the memberships associated with the Iran Embassy was approximately $5,178, and our estimated profit on these transactions was less than $160. The Company recognized no revenue or profit attributable to the Iran Air membership in the second and third quarters of 2013. The Iran Air membership and one of the Iran Embassy memberships were canceled during the second quarter of 2013, and the remaining Iran Embassy membership was canceled in June 2013, prior to which time an additional $319 in revenue and less than $8 in estimated net profits were earned in the fourth quarter of 2013.
The Company does not intend to continue these activities.
The disclosure was made in compliance with the Iran Threat Reduction and Syria Human Rights Act of 2012, which requires, among other things, companies to disclose their dealings with the Iranian government or any government controlled entities. The companies also need to disclose whether they intend on continuing with those activities, according to this explainer on the Act (PDF) by law firm Shearman & Sterling.