Costco does its part to squeeze Iran

The warehouse retailer cancels memberships tied to pariah state. Hey, every little bit helps.

By Jonathan Berr Jun 12, 2013 12:31PM
File photo of people entering a Costco warehouse store in New York City (© Spencer Platt/Getty Images)Iran, which has been subject for years to what the U.S. government calls unprecedented economic sanctions to thwart its illicit nuclear ambitions, is suffering a fresh economic indignity. From Costco (COST). This isn't from The Onion.

No less of an authority than The Wall Street Journal is pointing out that the warehouse retailer has decided to cut off Iran's embassies and overseas businesses. Costco's Japanese subsidiary had two memberships in the name of the Embassy of the Islamic Republic of Iran, and Iran Air was a member at Costco's U.K. affiliate. The warehouse club retailer canceled both memberships in the second quarter.

Costco isn't giving up a whole lot, though. Sales to the embassy were $5,178 in the second and third quarters, generating a profit of $160. No sales were associated with the Iran Air membership, according to a Costco SEC filing that the paper quotes.

Of course, the Iranian government isn't going to buckle because its citizens can't buy pallets of toilet paper or chocolate cakes that could feed its army. Every bit of pressure on the regime in Tehran certainly is welcome. Although the State Department argues that the international community has created "a strong, inter-locking matrix of sanctions," they aren't iron-clad.

Earlier this week, the U.S. government blacklisted what The New York Times called "a global network of front companies controlled by Iran's top leaders" designed to evade the sanctions. In April the U.S. hit a Malaysian bank and several businessmen with financial penalties for illegally doing business with Iran, according to Reuters.

The sanctions have certainly had an impact. Steve Hanke of the Cato Institute estimates that Iran's inflation rate in 2012 was 110%, almost four times the government's official figure of 27.4%. Even so, Iranians are managing to get by because of an influx of gold, among other reasons.

"While the collective punishment delivered by the sanctions has been devastating," Henke, also a professor at Johns Hopkins, wrote earlier this year, "it has ultimately failed to deter the Iranian regime from developing nuclear capacity." Chances are Costco's moves won't change that.

Jonathan Berr owns a small position in Costco. Follow him on Twitter @jdberr.

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22Comments
Jun 12, 2013 3:16PM
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So let me get this straight, Costco pays it's employees a fair wage, give them health benefits etc, and close back doors that allow them to sell to governments that they are not supposed to. Walmart treats their staff like slaves, and will sell crap to anyone with a dollar.

 

And Tom Cruise thinks Walmart is a role model.... Can't wait for my Costco to be built by me. Costco rules

Jun 12, 2013 3:12PM
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While entirely symbolic, this move by Costco is honorable and in the right spirit.  Good for them.

BTW, I love shopping at Costco.  In their stores, truly, the customer is treated first class.

Jun 12, 2013 6:38PM
Jun 12, 2013 5:42PM
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The anti-gun Costco , is now becoming pro American, wow.
Jun 12, 2013 8:26PM
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I always liked Costco.  Even though their actions will have no appreciable impact, thanks guys.

 

Now if we can just do the 'ol Jedi Mind Trick on Russia, China and France...

Jun 12, 2013 7:29PM
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A symbolic gesture, but a noteworthy one nonetheless.  Any company who tells evil Muslim barbarians to stick it where the sun doesn't shine does right by me.

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The USA's government doesn't cut off any nation from AID or arm shipments or jet fighters...greed kills US Military daily for decades and generations...our time is running out...
Jun 12, 2013 7:52PM
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They arent even building weapons. The only country capable of threatening americans anymore, is america
Jun 12, 2013 5:08PM
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I want a new Costco built near me.  The two nearest to me now are so crowded, I rarely go anymore.  It's not fun like it used to be.  I have been enjoying Sam's Club though!
Jun 12, 2013 7:51PM
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Funny, Iran has broken no international law, and does not attack us. ( they try to sell oil for gold instead of dollars, though.) This is disgusting. I like the costco people, but I think they really screwed up this time. No more of my money for them.
I know the slavers are wrong to want so many wars, I will not support anyone who supports them. I really do not get to shop many places any more, but better that than being a stupid wage slave who helps slavers at every turn.


Jun 12, 2013 4:23PM
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Sanctions are not going to have an affect on the regime, all they do is force the masses to suffer.  Moreover, the sanctions allow Iran's leader (Im not even going to try and type his name) to blame all of the problems facing his constituents on the U.S.  Its a stupid policy that never works, just look at North Korea.
Jun 12, 2013 3:30PM
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Since Costco is taking the moral high ground, I guess that means they will also be pulling the U.S. governments membership card too!
Jun 12, 2013 6:11PM
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This is totally stupid in that it has no effect on the Iranians today. But when relations normalize with Iran ( yes it can happen); they be left out holding the bag, being barred from billions in potential business. Walmart will be delighted.
Jun 12, 2013 5:01PM
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It's purely a public relations stunt. This isn't some huge cash cow that they are killing here. They are struggling to compete and want the goodwill gesture to open some more membership accounts. That's exploiting the U.S. , only in a "nicer" way. It's still shameful.
Jun 12, 2013 5:03PM
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Iran has been made stronger by the US persistent irritation of them.  The only ones I see hurting are the American taxpayers.  CONgress has spent, spent, spent on wars dating back decades against Iran, Iraq, and I guess Afghanistan and Pakistan.  What I see of it is the Iraqus laughing when the last Americans left while still bombing and killing each other, Pakistan burning lines of trucks and heavy equipment belonging to Bullymerica and closing the roads to Bullymerica use, Afghanistan still going about as normal with our military men dying far too often and Iran seemingly making fun of Bullymerica.  So, Bullymerica then starts on N. Korea only to be told by China "no country will be allowed to interrupt the peace on the Korean peninsula." Seems Bullymerica in Washington got that!
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