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Sorry for the long posts; but these articles are archived on a Geocities free server. Geocities locks out the site once it gets too many hits.

Daniel Pearl was the WSJ reporter who was taken hostage and killed. He had A LOT of research on how the terror network worked, the ME culture and more.

I posted these two below to give everyone background on Dubai and smuggling activity:

November 16, 2001

Much-smuggled gem aids al-Qaida
Bought, sold by militants near mine, tanzanite ends up at Mideast souks

By Robert Block and Daniel Pearl
THE WALL STREET JOURNAL

MERERANI, Tanzania, Nov. 16 — In the shadow of Mount Kilimanjaro, miners with flashlights tied to their heads crawl hundreds of feet beneath the East African plain, searching for a purple-brown crystal that will turn into a blue gem called tanzanite. Many of the rare stones chipped off by the spacemen, as the miners are called, find their way to display cases at Zales, QVC or Tiffany. But it’s a long way from these dusty plains to U.S. jewelry stores, and the stones pass through many hands on their journey. Some of those hands, it is increasingly clear, belong to active supporters of Osama bin Laden.

A TRADE GROUP called the Tanzanian Mineral Dealers Association denies that bin Laden’s al-Qaida has any role in the tanzanite trade. But in the bars and cafes that dot the streets of Tanzania’s mining community, the radical connections are no secret. According to miners and local residents, Muslim extremists loyal to bin Laden buy stones from miners and middlemen, smuggling them out of Tanzania to free-trade havens such as Dubai and Hong Kong.

“Yes, people here are trading for Osama. Just look around and you will find serious Muslims who believe in him and work for him,” says Musa Abdallah, a Kenyan who has worked as a tanzanite miner for six years.

EMBASSY BOMBINGS

Many details of the trade remain murky, such as whether its main role is to earn money for the militants or simply to help them move funds secretly about the world. Still, William Wechsler, a former National Security Council member in charge of counterterrorism under President Clinton, says there is little doubt that bin Laden’s links to gemstones, including tanzanite, have been used at times to help fund his terror activities. Al-Qaida’s dealings in tanzanite in the 1990s were detailed at length during the recent federal trial that convicted four bin Laden men in connection with the U.S. embassy bombings in Tanzania and Kenya.

Alex Magyane, a Tanzanian government official actively investigating the tanzanite trade, says he has recently traced bin Laden-linked smuggling of rough stones through Kenya to bazaars in the Middle East. “Beyond any doubt, I am 100 percent sure that these Muslim gem traders are connected to Osama bin Laden,” the official says.

Tanzanite is so rare it is mined in only one place on earth, a five-square-mile patch of graphite rock here in northeastern Tanzania. Legend has it that Masai tribesmen discovered the gem when a bolt of lightning set fire to the plains, and some crystals on the ground turned blue. In 1967 an Indian geologist identified the stone as a rare form of the mineral zoisite and determined that it turned a velvety blue when heated to 400 degrees Fahrenheit. Tiffany & Co. named it “tanzanite” and promoted it as “the most important gemological discovery in 2,000 years.” Tanzanite became a U.S. marketing phenomenon, second in popularity only to sapphire among colored stones.

HEART OF THE OCEAN

Its popularity soared when movie fans learned that the sapphire heart-shaped pendant Kate Winslet hurled into the sea in the movie “Titanic” was actually tanzanite. By then, the U.S. was selling $380 million of tanzanite jewelry a year.

Yet Tanzania’s official exports of uncut tanzanite crystal totaled a mere $16 million last year. Rampant smuggling spirits as much as 90 percent of the production out of the country, Tanzanian government statistics show. Local traders often buy plastic bags full of rough stones, paying cash and exchanging none of the paperwork that would trigger a 3 percent export duty. And in faraway places where the rough tanzanite is cooked, cut and polished, such as the Indian city of Jaipur, dealers say they don’t question suppliers closely about sources.

Mererani, which is a 30-minute drive from the mines along a treacherous dirt road, is reminiscent of a Gold Rush town, with shacks, bars, brothels and hordes of young men hoping for a strike. Besides a few big mechanized mining operations, hundreds of individuals hold tiny, 50-yard-square claims that they mine as best they can. Working with the “spacemen” who descend the tunnels are “snakes,” the term for boys who sift piles of grit on the surface and sometimes wriggle into the crevices too small for adults. Restaurants play on the dreams of prosperity, taking names like New York and The Big Apple. But alongside the dreams and the decadence, a religious radicalism is brewing.

Tanzania’s Muslims, who make up about 40 percent of the populace, have long practiced a “soft” Islam, tolerant of drinking, revealing dress and their many Christian neighbors. But Muslim radicalism began to rise in the early 1990s, fueled by poverty and financial support from Islamic charities abroad. It included the al-Qaida cell that bombed the U.S. embassy in Tanzania three years ago.

In Mererani, a new mosque called Taqwa has brought an openly radical Muslim presence to the tanzanite district. Taqwa’s imam, Sheik Omari, has issued edicts that Muslims miners should sell their stones only to fellow Muslims. The diktats breed resentment. “The fundamentalists have established a mafia to dominate the trade,” says Abdallah, the Kenyan spaceman. “Even if non-Muslims offer better prices for our stones, we are harassed by the fundamentalists not to sell to anyone but them. Many Muslim miners obey because they are scared of them.”

The Taqwa mosque is still under construction on a dusty side street. Inside a temporary prayer hall of wood and corrugated metal, miners are taught the importance of avenging the “arrogance” of America and defending Afghanistan from “U.S. oppression.” Support for bin Laden is a duty, miners are told. The faithful of Taqwa often address one another as Jahidini, a Swahili word that means Muslim militant. Some routinely greet one another as “Osama.”

After prayers, the mosque’s courtyard becomes an open-air gem-dealing space, where Sheik Omari and other mosque leaders trade tanzanite with small-time miners. In between haggling, the elders preach the virtues of suicide attacks as a way to defend their faith.

‘TICKET TO PARADISE’

“Remember, Islam teaches us that your body is a weapon,” Sheik Omari tells a group of young men in Swahili. “But if you die, you should take as many of your enemy with you as you can. This will be your ticket to paradise.”

Asked if he works with or belongs to al-Qaida, Sheik Omari gives a vague answer, as do others at the mosque. ” ‘Al-Qaida’ means ‘base.’ I don’t know any base. But Islam says we must support our brothers and sisters and those who defend Islam from its enemies,” Sheik Omari says.

The mosque traders, who aren’t licensed as dealers but act as informal middlemen, make clear the gem business must serve their militant brand of Islam. “We as Muslims must unite in dealing in gemstones to help one another and to generate funds to defend Islam from those who want to destroy it,” says Aman Mustafa, a Kenyan gem broker and teacher at the mosque, who says he has studied Islamic law in Sudan.

U.S. investigators of al-Qaida’s business say that it is designed to create self-sustaining networks and cells. Here in Mererani, some proceeds from the tanzanite trade are plowed back into expanding Taqwa’s influence. “This mosque is being built with tanzanite,” Sheik Omari says. “Our Islam is stronger with our efforts to create a Muslim force in this gemstone.”

KENYAN CONNECTION

Magyane, whose government title is regional mine officer, says some of the stones bought by the Muslim militants are smuggled through “rat routes” to the Kenyan city of Mombasa. That city is a stronghold of al-Qaida sympathizers and was a base for the 1998 embassy bombings.

Throughout the embassy-bomber trial this year in New York, several bin Laden associates or former ones, both state witnesses and defendants, referred to dealings in tanzanite in the mid-1990s. Testimony described how the stones moved through Kenya to Hong Kong via one of two al-Qaida companies, Tanzanite King or Black Giant, set up by defendant Wadih el Hage, a gem dealer and former personal secretary to bin Laden. El Hage is serving a life sentence for his role as the bombers’ financial facilitator.

Bin Laden supporters trading tanzanite today face no interference from Tanzanian authorities. “We have no proof they are involved in terrorist activities,” says the mining area’s regional governor, Daniel Ole Njoolay.

Adadi Rajabu, head of Tanzania’s counterterrorism police, adds that “before 1998, we never knew there were people smuggling gemstones on behalf of a terrorist group. But it is not an area we have looked at carefully. Most of our attention since 1998 has been focused on operatives who were likely to be engaged in activities like bombings, not business.”

ROAD TO DUBAI

Sheik Omari and Mustafa say they sell their stones to a prominent local dealer, Abdulhakim Mulla, who Mustafa says sends some of the gems on to Dubai. The dealer denies the Dubai connection. In any event, on a recent day Sheik Omari could be overheard telling miners to bring perfect stones to the mosque, because “our market in Dubai only wants perfect stones.”

To Westerners in the gem business, mention of Dubai raises alarms. For one thing, the emirate is known as a center of money laundering and the underground cash-transfer system known as hawala, much-favored by bin Laden. Dubai also has no gem-cutting industry. It lies far outside normal channels for the trade in rough gemstones, most of which go to Jaipur, to Bangkok or to a few other traditional centers of cutting and polishing.

“Dubai is the kind of place that should throw up a flag that something is definitely askew,” says Cap R. Beesley, president of American Gemological Laboratories in New York, which tests colored stones. “When you see any rechanneling through nontraditional destinations like Dubai, it means someone is finding some financial incentive not to play by the book.”

U.S. law-enforcement officials have identified Dubai as a haven for al-Qaida business interests. The FBI and the Treasury Department are currently trying to help the United Arab Emirates, of which Dubai is a part, to crack down on the abuse of Dubai’s free-trade zones by terrorists and criminals. While this effort mainly focuses on gold smuggling, the U.S. also has reports that al-Qaida uses tanzanite as a way to move funds around the world, says a U.S. government investigator familiar with Dubai.

Out of more than 12,000 pounds of official tanzanite exports from Tanzania last year, a mere 13 pounds were sold to Dubai dealers. But Magyane estimates that a hundred times that amount actually made its way to Dubai, through smuggling.

CASH BUSINESS

In Dubai, on a strip of small jewel shops along a creek, Africans often go door to door trying to sell plastic bags full of unrefined gold and sometimes uncut gemstones for cash. D.B. Siroya, an Indian dealer based in Dubai for two decades, says he has sometime acquired rough tanzanite in Dubai on behalf of Indian friends, buying from sellers he knows.

The cash element is part of what makes the gem trade attractive to al-Qaida, according to Wechsler, the former U.S. counterterrorism official. He says the gem business is also attractive because it is tiered, with many layers of brokers, traders, cutters, polishers and wholesalers between miner and consumer.

A U.S. government-funded report last year for Tanzania’s mining industry noted that the country’s gem industry was “subject to abuse by money launderers, arms and drug dealers.” Afgem Ltd., a South African mining company, has been trying to change that. It advocates branding tanzanite stones with tiny laser-etched logos and bar codes, plus other regulations to discourage smuggling. But its plan last year ignited clashes with small miners, who, Tanzanian intelligence claims, were funded by foreigners with a stake in the current loose system.

The many tiers in the business make it possible for unsavory players to get in and out without leaving much of a trace. In the U.S. jewelry industry, which consumes nearly 80 percent of tanzanite gems, many participants say they have heard industry reports of tanzanite links to al-Qaida only recently, and tend to discount them.

QVC Inc. says it has met with its seven tanzanite vendors to make sure they comply with its ethics code, which says QVC won’t knowingly deal in gemstones “that originate from a group or a country which engages in illegal, inhumane or terrorist activities.” Darlene Daggett, executive vice president of merchandising, says that if tanzanite “definitively can be linked to terrorist activities, we will not continue to sell it.”

Zale Corp. says it has heard “bits and pieces” about such a link, but not enough to know if it needs to change procedures. “It comes down to knowing who we do business with and knowing where they get their stones,” says spokeswoman Sue Davidson. “But all we really know is what they’re telling us. Without some kind of gemstone authorization, certification and tracking system in place, we cannot guarantee that no stone has been smuggled.”

Zale CEO Robert DiNicola adds: “If it came to light that there is a problem with tanzanite, we wouldn’t deal with it.”

Jewelers of America, a retail jewelers’ trade group, says it has been focusing on the “far more significant consequences to human life” of “blood” diamonds, those whose sale helps to fuel African conflicts. “I’m not suggesting we are not willing to look at other connections,” but “we need more information,” says the group’s chief executive, Matthew Runci.

Ann Zimmerman contributed to this article.

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January 9, 2002

Afghanistan provides valuable route for smugglers shipping goods to Pakistan

By DANIEL PEARL
The Wall Street Journal

PESHAWAR, Pakistan - During their five years in power in Afghanistan, the Taliban raged against modern culture and values. But the regime profited from traffic in Sony televisions, Gillette shaving cream and Marlboro cigarettes, among other products.

None of these consumer goods from the West and Asia are made in Afghanistan, and under the Taliban government, they didn't have much of a market there. Watching television, for instance, was banned.

But for decades, whoever has run Afghanistan has exacted tolls on smugglers who ship foreign-made goods through the country and then illegally move the merchandise over the border to Pakistan. The products end up in places such as Peshawar's sprawling Karkhano market, where vendors' shelves are packed with cartons of smuggled Marlboro and Dunhill cigarettes and sidewalk carts offer bright Korean fabrics. Stacks of mud-stained cartons of Sony Trinitron televisions line courtyard after courtyard.

By smuggling these items through Afghanistan, traders evade Pakistan's stiff taxes and duties on foreign goods. This allows consumers at Karkhano and other markets to enjoy large discounts compared with legally imported products.

Smuggling also effectively boosts Western and Asian manufacturers' sales volume by allowing goods to be retailed at lower prices in Pakistan, a poor nation overall, but one with 140 million inhabitants and a substantial consumer class. The manufacturers all condemn smuggling but say they can't stop it once products leave their direct control. But a close look at the behavior of one major manufacturer, Sony Corp., reveals that some company representatives appear to have tolerated smuggling as part of Sony's marketing strategy in the region.

The fees the Taliban collected on shipments of goods manufactured by Sony and other foreign companies provided one of that harsh regime's biggest sources of earnings. A United Nations study released last year estimated that "unofficial" exports from Afghanistan to Pakistan in 2000 totaled $941 million, with merchandise worth another $139 million moving illegally from Afghanistan to Iran. The U.N. estimated the Taliban's annual take at $36 million. The World Bank, in a 1999 report, said it was $75 million.

The prospect of exacting similar tolls on the smuggling business helps explain why the Taliban's successors are now wrestling for control over Kandahar, Jalalabad and other cities that are important transit points on smuggling routes. United States bombing and poor security have discouraged smuggling for the last three months, but it is expected to resume as relative calm returns.

Beyond providing potential revenue to those in charge, smuggling offers employment to poor inhabitants of tribal areas along the Afghan border. That is one reason Pakistan — eager for stability in that area — has made only feeble attempts to compel vendors at Karkhano to pay taxes.

Smuggling economics are simple: A smuggled 21-inch Sony Wega TV typically costs the equivalent of about $400 in Pakistan. The same legally imported television costs the equivalent of $440, after duties and taxes. Sony receives the same payment — about $220 — from the distributor either way. Manufacturers thus have little financial incentive to crack down on smuggling.

During most of the 1990s, Sony imported few TVs through legal channels into Pakistan and assembled no sets locally, according to Sony Gulf FZE, Sony Corp.'s wholly owned subsidiary and sales office in Dubai, United Arab Emirates. But that doesn't mean Sonys were unavailable. The Pakistan Electronics Manufacturers Association, a trade group that includes local TV assemblers hurt by sales of smuggled goods, found in a 1996 survey that 500,000 televisions were smuggled into the country that year. At least 70 percent, or 350,000, of them were Sonys, the survey found.

Today, Sony TVs remain one of the most prominent consumer-electronics products in Pakistani smuggled-goods markets. Sony Gulf's authorized distributor in Dubai sells sets to traders who often ship them to the Iranian port of Bandar Abbas. From there, some of the goods head northeast to the Afghan border near Herat, then southeast on the highway to Kandahar, on to Jalalabad, and then typically enter Pakistan illegally along the Khyber Pass near Peshawar.

Twice a month, Khalid M. Khan, a manager with Sony Gulf, visits the Karkhano market in Peshawar, which is widely known as a major retail center for smuggled goods. He says he makes the trips merely to see which models are popular and should be supplied legally by the local assembly plant in Pakistan that Sony opened in 1999. Mr. Khan acknowledges, though, that none of the locally made Sonys are sold in Karkhano. All of the TVs he sees changing hands here have been smuggled from Afghanistan, he says.

Dealers in the Karkhano market who acknowledge they sell smuggled TVs say that for years they have routinely ordered Sony products from the traders in Dubai who obtain the goods from the authorized Sony distributor there, Jumbo Electronics Co. One of the Karkhano dealers, Abdul Basir Khan, manager of Muslim Electronics, says Sony Gulf's Khalid Khan (no relation) "doesn't come here to book orders, but he gives ideas." For instance, the Sony Gulf man points out that " 'such-and-such model is available,' " Abdul Basir Khan says. The Muslim Electronics shop is filled with Sony Trinitron TVs and has a large Sony sign above the door. "Khalid usually presses us hard to dispose (of inventory) as quickly as possible," Abdul Basir Khan says.

For his part, Khalid Khan makes no apology for telling black-market dealers here that certain Sony models are available in Dubai or Singapore. "There is no harm" in this encouragement, he says. "They are making our brand popular in the country."

But he denies promoting smuggling in any way. He says that when Sony Gulf discovers traders selling through unauthorized channels, it threatens to punish them. The company has fined one trader and briefly cut off another one, he says. Smuggling hurts sales of the Sony televisions assembled in Pakistan, he says. But, he adds, smuggling is "beyond our control."

Ram Modak, a spokesman for Sony Gulf, also denies his company has knowingly shipped any goods intended for Pakistan through Afghanistan. He says, "Sony Gulf is not aware of the routes the (Dubai-based traders) use for their shipments to Pakistan." Kei Sakaguchi, a spokesman at Sony's headquarters in Tokyo, says the parent corporation has nothing to add to Mr. Modak's comments.

Vishesh L. Bhatia, director of Jumbo Electronics, says his company isn't allowed by Sony Gulf to sell goods directly in Pakistan, and it often can't control what traders do. "Duty barriers always encourage smuggling," he notes.

Minoru Kubota, Japan's ambassador to Pakistan from 1997 through early 2000, says he heard complaints from Pakistani businessmen during that period about the smuggling of Japanese goods. But he says the smuggling issue "is a business matter," not a concern of governments. "If trade shrinks, it will not benefit anyone," he adds.

Smugglers have operated across the Afghan-Pakistani border since Pakistan became independent in 1947. In the 1980s, huge amounts of United States money flooded the region, as the Central Intelligence Agency used Pakistani proxies to fund the mujahedeen resistance to Afghanistan's Soviet-backed government. Smuggling of electronics, tires, crockery and textiles gave some mujahedeen commanders a way to enrich themselves and keep supporters employed. For its part, "the government of Pakistan encouraged people to invest in this business," even supplying telephone and electricity connections for the Karkhano market, recalls Rafique Shinwari, a longtime distributor of smuggled goods in Peshawar who says he now imports only legally.

In 1994, after the Soviets had left Afghanistan and the country was divided among rival commanders, Abdul Haq, an ex-mujahedeen Afghan leader living in Peshawar, approached Sony Gulf about distributing TVs in Afghanistan. Sony Gulf's Khalid Khan says he negotiated a deal under which Mr. Haq's company, Khyber-Afghan International, began sending televisions by his family's airline from Dubai to Jalalabad, in eastern Afghanistan. "Whatever he did (with the TVs) inside Afghanistan, we don't know," Mr. Khan says.

Black-market dealers in Pakistan say Mr. Haq's family was prominent in the cross-border television trade in the mid-1990s. Mr. Haq was killed in October trying to organize anti-Taliban forces. His nephew, Abdulrahim Zalmai, says, "The family itself was not involved by any means," in smuggling. But he says that traders in Jalalabad who bought TVs from his uncle may have smuggled them into Pakistan.

Pakistani officials say they haven't cracked down aggressively on smuggling markets such as Karkhano. "We have been working over the last two or three years to start curtailing smuggling," says Abdul Razak Dawood, Pakistan's commerce minister, but "through economic means rather than coercion."

Pakistan has been reducing import duties to diminish the price advantage of smuggled products. It has also ended duty-free access through the Pakistani port of Karachi for Afghanistan-bound goods, such as TVs, that often end up being smuggled back into Pakistan. Smugglers responded to the new obstacle in Karachi, however, simply by shipping through Iran and then across Afghanistan.

Traversing Afghanistan is by no means a simple trip. During the country's civil war in the early 1990s, various mujahedeen set up more than a dozen checkpoints along the country's major roads. Truckers had to pay small fees at each stop, and sometimes had their whole cargo expropriated by fighters or roving bandits.

The Taliban first gained prominence in Afghanistan in 1994 by eliminating most of the highway checkpoints and robberies. Afghan traders based in Dubai and Singapore poured money into the Taliban's coffers, as the regime extended its control from Herat to Jalalabad and enforced more orderly transportation, according to Pakistani officials who were also assisting the Taliban at the time.

After conquering Kabul in 1996, the Taliban simplified the fees for passage through Afghanistan, exacting a single payment determined by weight and other factors. For example, the Taliban sometimes imposed fees equivalent to roughly five-to-10 cents a kilogram, regardless of the merchandise, says one Dubai-based freight forwarder. "These guys didn't want to use calculators," he says. The 1999 World Bank study estimated that televisions valued at $367 million were smuggled into Pakistan from Afghanistan in 1997.

Traders say they quickly adjusted to the Taliban's spiritually motivated rules. To get around the ban on packages with depictions of humans or living animals, traders put boxes in larger, blank cartons or simply reminded Taliban authorities that the packages were moving on to Pakistan.

The smuggling of American-made goods was hindered in July 1999, when former President Clinton signed an antiterrorism executive order prohibiting United States companies from exporting any goods, except for humanitarian aid, to Afghanistan. But Pakistani traders say they still could obtain products smuggled from Afghanistan — such as Gillette shaving cream, Head & Shoulders shampoo and Marlboro cigarettes — if the goods came from distributors outside of the United States.

Manufacturers of these goods say they discourage any smuggling but can't always control it in distant lands. "It is obviously something we don't sponsor or endorse," says Eric Kraus, a spokesman for Gillette Co. Linda Ulrey, a spokeswoman for Procter & Gamble Co., maker of Head & Shoulders, says the company lacks specific information about smuggling through Afghanistan.

A spokesman for Philip Morris Cos., which makes Marlboros, says the company can't comment because it doesn't do any business in Afghanistan. British American Tobacco PLC, maker of Dunhill cigarettes, says in a written statement that it doesn't condone or encourage smuggling.

Dubai's emergence as a major trading hub has helped fuel the expansion of smuggling through Afghanistan. In the mid-1990s, many large United States, Japanese and European consumer-goods manufacturers opened operations that brought products through the duty-free zone of Jebel Ali, along the Dubai coast. Official Dubai customs records show that such "re-exports" from Dubai to Afghanistan jumped 79 percent, to $819 million, in 1996, the year the Taliban took over, compared with 1995.

Much of this trading relies on the illegal hawala currency-exchange system. (Hawala means "change" in Arabic.) Black-market consumer-electronics dealers in Pakistan say that after they place orders with traders in Dubai, they pay for the goods by giving Pakistani rupees to a hawala dealer in Peshawar. The hawala dealer telephones a counterpart in Dubai, who hands over United Arab Emirates dirhams to a consumer-electronics trader in Dubai. The hawala dealers settle their accounts later, splitting the commission.

Most of the victims of Afghan smuggling receive benefits as well. The Pakistani government has lost tax revenue, but border tribes engaged in smuggling are less likely to resort to kidnapping or drug-running. Authorized Pakistani dealers of foreign goods lose sales to black-market competition, but in the capital of Islamabad, many such dealers stock smuggled and legally imported goods on the same shelves.

The biggest losers have been local manufacturers that have assembled TVs but found their products consistently undercut by smuggled goods. Several local-assembly factories stopped production in the mid-1990s.

These difficulties prompted the Pakistan Electronics Manufacturers Association to conduct its 1996 survey. The trade group found that for every TV legally imported or assembled locally, more than two were smuggled in.

Sarfrazuddin, the association's chairman, who goes by one name, says he subsequently showed Sony officials and Japanese diplomats copies of documents indicating that in 1997 Sony Gulf was promoting service guarantees that retailers could offer to buyers in Pakistan. Since at the time Sony TVs were "neither being manufactured in Pakistan nor being imported" legally, "we wonder how the guarantees" could be offered, he wrote in a July 1997 letter to the Japanese Embassy in Islamabad, Pakistan.

Faiz Rahim Khan, chief executive of Data Electronics, a Lahore, Pakistan-based company that provided service under Sony Gulf's guarantees in Pakistan until 1999, says the Sony unit routinely reimbursed his firm for repairs on TVs sold in the Middle East and used in Pakistan. "How it got there was not our concern," he says.

Sony Gulf's Mr. Modak confirms the company had an agreement in the 1990s with Data Electronics to repair Sony products in Pakistan. He also says Sony Gulf's authorized Dubai distributor, Jumbo Electronics, has offered warranties on Sony products that are good in Pakistan. He adds that Sony Gulf didn't make the Pakistan warranties available to Dubai-based traders who bought products from Jumbo.

In 1999, Sony began assembling televisions in Pakistan, contracting with a Pakistani-Korean joint-venture company. Tahir Arshad, the venture's finance manager, says smuggling of Sony TVs has been reduced in recent years. Still, the local-assembly plant is running at only half capacity, and the venture's officials are worried about whether their contract will be renewed this year. Sony Gulf declines to comment on whether it will renew the contract.

Televisions are legal again in Afghanistan, and if Sony closes down local production in Pakistan, it "can still sell" in Afghanistan, says Mr. Arshad. In fact, the late Abdul Haq's brother, Haji Abdul Qadir, is back in power in Jalalabad as provincial governor, and he is trying to revive the family's Dubai-Jalalabad air-cargo service.

Khalid Khan of Sony Gulf says he has begun scouting for authorized Sony dealers to operate in Afghanistan. One place he intends to recruit is in Peshawar, although he says that any TVs imported into Afghanistan would be sold to Afghan buyers, not smuggled into neighboring countries. Mr. Modak, the Sony Gulf spokesman, says it hasn't authorized Mr. Khan to do this recruiting.

Some dealers of smuggled goods in Karkhano say they are eager to be recruited. "If we manage to work from Afghanistan, we can export to Russia, to Iran, to other neighboring countries" — if possible, without paying taxes and duties, says Muslim Electronics's Abdul Basir Khan. "We will have a much greater market."