Iran hurries to beat sanctions with British car kits

Most Iranian drivers weave in and out of Tehran's legendary traffic snarls in plain-looking four-door sedans called Paykans, assembled from kits shipped in from Britain. With European economic sanctions threatened for mid-May, Paykans suddenly seem to be flowing in as never before.

This could be the first indication of a phenomenon some European Community (EC) diplomats had predicted from the moment their heads of state confirmed the sanctions decision at an April 28 summit: a rush by Western businessmen to sneak under the wire.

For if the Europeans had clear political reasons for their earlier reluctance to follow President Carter's get-tough stance on the hostage issue -- principally, their conviction that it would not work -- there were just as clearly economic explanations for that reluctance.

European exports to Iran, like everyone else's, have dipped in response to an Islamic revolution that has badly battered the country's economy. Labor unrest plagues many projects, others are stalled altogether. Credit is hard to come by.

But West Europe still does hundreds of millions of dollars in business with Iran per year. "Sanctions," explains one European diplomat forthrightly, "will hurt us."

It remains less clear how badly those sanctions, if implemented, will hurt Iran. But few economic analysts or diplomats doubt the move will hurt more than Iranian leaders publicly admit, which is virtually not at all.

Look out any Tehran window onto any Tehran avenue and you will see Paykan after Paykan after Paykan, jointly representing some $200 million each year for Talbot Motors Ltd. -- the British arm of PSA Peugeot-Citroen.

By recent estimates, some 9,000 car kits a month have been shipped to the southern Iranian port of Bandar Abbas, trucked north, and assembled at a plant just outside this sprawling capital. Tehran's traffic jams, in a sense, have proven impervious to revolution.

With the European announcement that sanctions will be clamped on Iran if no "decisive" moves toward freeing the American hostages are made by May 17, the Paykan trade seems to have shifted into high gear.

Informed European diplomats say 20,000 car kits are on the way and that the company hopes to get another 18,000 in before mid-May.

"That's not sanctions-busting," added one diplomat. "That's sanctions-beating. It is for simple economic reasons, a clearing of the shelves back home."

No one can say exactly how many shelves in how many European countries now are being cleared, a process that could make the sanctions a lot less painful.

Diplomats' estimates of European trade with Iran vary. British exports are put at about $30-60 million a month, at most roughly half of the pre-revolution figure. a French diplomat says his country exports $20-40 million monthly to Iran.

Yet ask a diplomat from one European country, and he is likely to suggest his European Community partners may be underestimating their own export figures.

In early April, when it appeared France was more reluctant than some other European countries to follow US sanctions against Iran, one British businessman in Tehran snapped to a reporter:

"I'm suspicious. Why should we pay the price [for the sanctions]? Those French are always out to make a quick franc."