Caspain Sea, Iran and Caviar (CASPAIN Case)



        CASE NUMBER:        188
        CASE MNEMONIC:      Caspian
        CASE NAME:          Caspian Sea, Iran and Caviar

A.  IDENTIFICATION
1.   The Issue
     "The bread can be white or brown, but the caviar must be
black" is a saying among fishermen living along a stretch of land
near the Caspian Sea.  Caviar is synonymous with conspicuous
consumption and a high standard of living, but the fact of the
matter is that many overlook the environmental degradation in
countries such as Iran and Russia, which has caused the supply of
sturgeon to dwindle and the price of caviar to skyrocket.  During
the 1960's and 1970's, the Caspian Sea was polluted as adversary
countries competed to reap the benefits of sturgeon fishing.
     Traditionally, only two nations of the world have been major
caviar-exporters: the former Soviet Union and Iran.  In October
1987, the Reagan administration imposed a ban on Iranian caviar due
to Iran's anti-U.S. political stance.  Meanwhile, the Soviets,
concerned about overfishing in the Caspian Sea, the main breeding
ground for Russian sturgeon, limited the harvesting of that
particular fish.  By July, 1989, the wholesale prices of caviar had
skyrocketed.  But a decade after the Islamic revolution, Iran re-
entered the market and the price of caviar returned to what it was
before 1989 as a result of anti-pollution methods and strategies
adopted by the major producers of caviar.  In June, 1991, the
alarming rise of the Caspian Sea threatened half of Iran's caviar
supply.  Today, the Caspian Sea is threatened by pollution, which
has led the main exporters of caviar to take initiatives designed
to help protect its abundant supply of sturgeon.
2.   Description
     In the 1960's and 1970's, a combination of overfishing and
pollution drastically reduced the stock of sturgeon, whose tiny
eggs are a delicacy throughout the world.  In 1989, caviar prices
soared because of the former Soviet Union's restraint on sturgeon
fishing due to pollution and the U.S. ban on Iranian caviar due to
Iran's anti-U.S. policies following the 1979 Islamic Revolution and
the hostage crisis.  These developments led the United States to
cut off all ties with Iran and the United Nations to adopt a
trading ban on all Iranian products. 
     In the 1980's, the United States entered the market to become
a major caviar supplier.  Thanks to the success of anti-pollution
measures, America is beginning to compete with Russia and Iran as
a producer of caviar.  Sturgeon, the fish whose eggs are a true
delicacy with Russian vodka, have always lived in U.S. waters, but
for most of this century, overfishing and polution had combined to
keep them scarce.  The clean-up campaigns of the past few years
have decreased pollution in many U.S. rivers, and, with the help of
conservative measures, have increased the sturgeon population.  
     The timing could not have been better.  After American
hostages were seized in Iran and the Russians invaded Afghanistan
in late 1979, the United Staes introduced trade sanctions against
its two leading suppliers of caviar and had to find other
suppliers, including domestic ones.  
     Although America has resumed its imports of Russian and
Iranian caviar, the demand for American caviar is still strong, in
large part because it is cheaper than the Caspian Sea variety and
appeals to American consumers who previously considered caviar a
luxury for the rich.  
     Iran re-launched its world-renowned caviar trade a decade
after the 1979 Islamic revolution, which led the Shah, who was
perceived as pro-Western, to flee the country.  In the first year
after the Shah's departure, caviar was taboo and its consumption
was prohibited by religious zealots.  Ironically, unlike the
alcoholic beverages poured into the gutters and the lipstick
forcibly wiped off of women's faces, caviar could not be condemned
as a Western import.  Indeed, real caviar comes only from sturgeon
caught in the landlocked Caspian Sea, which lies between Iran and
Russia.  But the sturgeon appeared to have an anti-revolutionary
flaw: it was thought not to have any scales, which are needed to
make it halal, i.e. acceptable under Islamic law.  The moratorium
on sturgeon fishing lasted until 1982, when a mullah (religious
leader) from a Caspian Sea fishing village caught a sturgeon and
discovered it did, in fact, have scales.  Following this discovery,
the theologians in Iran and Qom (religious body) gave their
blessing to caviar.
     Iran, Azerbaijan, Turkmenia, Kazakstan and Russia are all
surrounded by the Caspian Sea, the largest inland sea in the world. 
On February 18, 1992, the five countries signed a letter of
understanding to form an organization to exploit the Caspian marine
resources.  Iran and Russia are the largest exporters of caviar and
have formed a joint cooperation to help protect and  conserve the
Caspian Sea.  This venture ensures that caviar will be on the menu
around the world, especially in France, which is the largest
importer of caviar -- but for a very high price.  Iran and Russia
now have to deal with the problem of caviar smuggling across their
borders, which can alter the world prices of caviar.  As a result,
major Russian producers of caviar have called on the government to
make this delicacy a state monopoly in order to help reduce
smuggling.  Another problem many of the large producers have to
deal with is small fishermen who are driving the prices down by
selling a poor quality of caviar.  Large producers complain that
these fishermen are not professionals and do not know how to handle
the product to keep it fresh, which could tarnish the image and
reputation of caviar.
3.   Related cases
      
     See CAVIAR Case

      Key Words      (1): Product:           FOOD
                     (2): Bio-geography:     DRY
                     (3): DOMAIN:            MIDEAST

4.   Draft Author:  EYAD H. ZAYED
  
B.   LEGAL CLUSTERS

5.   Discourse and status: AGReement and INPROGress
6.   Forum and Scope:    IRAN and REGION
     The forum of the agreement of cooperation between Iran,
Russia, Azerbaijan, Turkmenia and Kazakstan, is designed to deal
with the issue of conserving the Caspian Sea.
7.   Decision Breadth:  5 (Iran, Russia, Azerbaijan, Turkmenia, and
     Kazakhstan)
8.   Legal Standing:  MOU
C.   Geographic Filter
9.   Geographic locations
        
             a. Domain:       MIDEAST
             b. Site:         West Asia [WASIA]
             c. Impact:       IRAN
10.  Sub-National Factors:  Yes
11.  Type of Habitat: Ocean
IV.  TRADE FILTERS
12.  Type of Measure:  Regulatory Standatrd [REGSTD]
13.  Direct vs. Indirect Impacts:  Indirect
14.  Relation of Measure of Impacts
      a) Directly Related to Product:        Yes CAVIAR
      b) Indirectly related to Product:      No
      c) Not related to  Product:            No
      d) Related to process:                 Yes SPLS
     Sturgeon is directly related or affected by the trade in
environment.  First, it is very possible that this animals can
become extinct and should be considered as an endangered species. 
Second, the Caspian Sea was very polluted during the 1960's and
1970's and the many countries surrounded are attending to keep it
clear and conserve its pressure resources.  There is no guarantee
that these countries will not back out of their promises.  If they
do will cause an irreversible in environmental problem to the
Caspian Sea and Sturgeon.
15.  Trade Product Identification:  Caviar
16.  Economic Data
17.  Degree of Competitive Impact: High
18.  Industry Sector:  Food
19.  Exporters and Importers: Iran and France
E.   Environmental Filters
20.  Environmental Problem type: Species Loss Sea [SPLS] 
21.  Species Information
           Name & Number:  Sturgeon
           Species & Genera:  Animal/Fish
22.  Impact and Effect:  High and REGULatory
23.  Urgency:  MEDium
24.  Substitute:  LIKE
     The issue of substitution for Sturgeon or Caviar is underway. 
A company in Israel is building a plant to start the production of
a sateric substitue for caviar.
F.   OTHER FACTORS
25.  Culture:  YES
     The influence of religion in Iran had been distorted when the
religious community banned caviar, because sturgeon was thought not
to have scales, which are required for the fish to be halal under
Islamic law.  It was later discovered that sturgeons did have
scales, which led the religious leaders to declare caviar as a
halal food good for exports and personal consumption. 
26.  Human Rights:  NO
27.  Trans-Boundary Issues:  YES
     The issue involves at least the five countries listed above
they signed a letter of understanding to preserve the species
(struges) from possible extinction and protect the Caspian Sea from
any farther pollution problems.
28.  Relevant Literature
Berman, Phyllis and Wechster, Dana. "King caviar."  Forbes (Nov.
14, 1988).

"Caviar and Fish Exports." The British Broadcasting Corporation
(Oct. 20, 1991).

"Caviar and French Fries."  The Economist (May 28, 1983).

"Fisheries both good, bad for Iran" The Xinhua General Overseas
News Service. (Feb. 18, 1992).

Halverson, Guy. "Caviar Price Soars in Wake of Soviet Restraint." 
The Christian Science Monitor (July 7, 1989).

"Iran Banking on Pollution in Caviar Was."  Chicago Tribune (Feb.
6, 1986).

"Iran: Caspian Sea is Rising Rapidly."  Middle East Economic Digest
(June 28, 1991).

"Iran Drills First oil well in Caspian Sea."  The Reuter Library
Report (Sept. 14, 1989).

"Iranian Fishery to supply caviar to UAE distributer." The British
Broadcasting Corporation (June 9, 1992).

"Iranian Fishery to supply 15 tons of caviar yearly to Dubai."
Moneyclips, Tehran Times (June 2, 1992).

Kotzer, Yigal.  "Factory to make caviar substitute" The Jerusalem
Post (June 10, 1992).
  
Novikova, L. "Caviars Dark Days."  Russian Press Digest (Sept 6,
1992).

"Mullah Fish." The Economist (Dec. 2, 1989).
 
Renay, Eugen. "Tiny Pearls of Great Price."  The Sunday Times (May
27, 1990).

"Rising Caspian Sea Threatens Iran's Caviar Exports."  The Reuter
Business Report (June 26, 1991).

Ryckman, Larry "Soviet Demise Spawns Straggle for Caviar." 
Associated Press, Chicago Tribune (August 9, 1992).

Shevtor, N.  "Would You like some Caviar"  Russian Press Digest
(Jan. 18, 1992). 

Womak, Helen. "Strict Controls Ensure Soviet Caviar is Always on
the  Menu." The Rueter Business Report  (June 6, 1987).

Young, Robin. "Bread? Let Them Eat Caviar" The Times (Nov. 22
1991).


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