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Economy of Iran

Pre-revolutionary Iran's economic development was rapid. Traditionally an agricultural society, by the 1970s Iran had achieved significant industrialization and economic modernization, largely helped by the growing worldwide demand for oil. However, the pace of growth had slowed dramatically by 1978, just before the Islamic Revolution. Since the fall of the Shah, economic recovery has proven elusive due to a combination of factors, including state interference in the economy and fluctuations in the global energy market. Economic activity was further disrupted by years of domestic political upheaval immediately following the revolution. These conditions were worsened by the war with Iraq and the decline in world oil prices beginning in late 1985. After the Iran-Iraq war, Iran’s economic situation began to improve: GDP grew for two consecutive years, partly from an oil windfall in 1990, and there was a substantial increase in imports. Iran's social policies during the Iran-Iraq war additionally resulted in a baby boom, which has left Iran with a large, underemployed youth population today. As a result, Iran suffers from a "brain drain" as its educated youth leave the country to pursue better economic opportunities abroad. In March 1989, the government instituted a new 5-year plan for economic development, which loosened state control and allowed Iranians greater latitude in accessing foreign capital. However, mismanagement and inefficient bureaucracy, as well as political and ideological infighting, hampered the formulation and execution of a consolidated economic policy, and Iran fell short of the plan's goals. Economic growth was further hindered by a decrease in oil revenues in 1991 and growing external debt. Former president Khatami followed the market reform plans of his predecessor, President Rafsanjani, and indicated that he would pursue diversification of Iran's oil-reliant economy, although he made little progress; high inflation and expansive public transfer programs, as well as powerful economic and political vested interests, posed obstacles for rapid reform during the Khatami era. Unemployment, a major problem even before the revolution, has continued to plague Iran. However, unemployment statistics only tell part of the story--underemployment continues to affect a large portion of Iran’s young, educated workforce. Although Iran’s poorer, rural population initially enjoyed a psychological boost from the attention given them by the new Islamic government, they are only marginally better off in economic terms. The government has made some progress on rural development, including electrification, road building, and increased access to education, but Iran still suffers from inefficiencies related to agricultural land usage that are politically difficult to reconcile. The agriculture sector still suffers from shortages of capital, raw materials, and equipment--problems that date back to the 1980-1988 Iran-Iraq war. Although Islam guarantees the right to private ownership, banks and some industries--including the petroleum, transportation, utilities, and mining sectors--were nationalized after the revolution. Under President Rafsanjani, Iran first began to pursue some privatization through its nascent equities markets. However, the industrial sector, plagued by low labor productivity and shortages of raw materials and spare parts, remains uncompetitive against foreign imports. Today, Iran's economy is struggling as a result of a bloated and inefficient state sector and an overdependence on the oil sector (which provides over 85% of government revenues). Although the Supreme Leader issued a decree in July 2006 to privatize 80% of the shares of most government-owned companies, private sector activity is typically limited to small-scale workshops, farming, and the service industry. As a result of inefficiencies in the economy, significant informal market activity flourishes and shortages of goods are common. President Ahmadi-Nejad has failed to make any notable progress in fulfilling the goals of the nation's latest 5-year plan. A combination of price controls and subsidies continues to weigh down the economy, while administrative controls and widespread corruption undermine the potential for private-sector-led growth. President Ahmadi-Nejad has made known his plan to eliminate Iran’s inefficient subsidies on food and petroleum imports; however, whether this plan will be actually implemented is unclear. Previous government-led efforts at economic reform--such as fuel rationing in July 2007 and the imposition of the value added tax (VAT) in October 2008--were met with stiff resistance and violent protests. High oil prices in recent years allowed Iran to greatly increase its export earnings and amass over $70 billion in foreign exchange reserves. However, with widely fluctuating oil prices in 2009, the Iranian Government faced a particularly worrisome economic situation. The government has drawn heavily from the country’s Oil Stabilization Fund and there have even been reports that President Ahmadi-Nejad’s administration has illegally dipped into the foreign exchange reserves. Inflation is 16.8% (2009 estimate), while the unemployment rate continues to be in the double digits. Widespread underemployment amongst Iran’s educated youths has convinced many to seek employment overseas. While Iran’s economic quandary may look grim, the Islamic Republic has fared worse--notably during the Iran-Iraq war. With the government’s 2009 budget formulated to anticipate lower oil prices, it is very possible that Iran will be able weather adverse economic circumstances once again.
GDP (purchasing power parity, 2010 est.):
$ 863.5 billion. GDP (official exchange rate, 2010 est.): $337.9 billion. GDP real growth rate (2010 est.): 3%. GDP composition by sector (2010 est.): Agriculture 11%, industry 45.9%, services 43.1%. Per capita income (PPP, 2010 est.): $11,200. Work force (2010 est.): 25.7 million. Work force - by occupation (June 2007): Agriculture 25%, industry 31%, services 45%. Unemployment rate (2010 est., according to the Iranian Government): 14.6%. Natural resources: Petroleum, natural gas, coal, chromium, copper, iron ore, lead manganese, zinc, sulfur. Agriculture: Principal products --wheat, rice, other grains, sugar beets, fruits, nuts, cotton, dairy products, wool, caviar. Industry: Types --petroleum, petrochemicals, textiles, cement and building materials, food processing (particularly sugar refining and vegetable oil production), metal fabricating (particularly steel and copper), armaments. Trade (2010 est.): Exports --$78.69 billion (2010 est.): petroleum 80%, chemical and petrochemical products, carpets, fruits, nuts. Major export partners (2009)--China (16.58 %), Japan (11.9 %), India (10.54 %), South Korea (7.54 %), Turkey (4.63 %). Imports --$58.97 billion (2010 est.): industrial raw materials and intermediate goods, capital goods, foodstuffs and other consumer goods, technical services, military supplies. Major import partners (2009)--U.A.E. (15.14 %), China (13.48 %), Germany (9.66%), South Korea (7.16 %), Russia (4.81 %), Italy (5.27%), India (4.12%).

Geography of Iran

Cities: Capital--Tehran. Other cities--Isfahan, Tabriz, Mashhad, Shiraz. Terrain: Desert and mountains. Climate: Semiarid; subtropical along the Caspian coast. Location: Middle East, bordering the Gulf of Oman and the Persian Gulf, between Iraq and Pakistan Map references: Middle East
Area: total area:
1.648 million sq km land area: 1.636 million sq km comparative area: slightly larger than Alaska Land boundaries: total 5,440 km, Afghanistan 936 km, Armenia 35 km, Azerbaijan (north) 432 km, Azerbaijan (northwest) 179 km, Iraq 1,458 km, Pakistan 909 km, Turkey 499 km, Turkmenistan 992 km Coastline: 2,440 km note: Iran also borders the Caspian Sea (740 km) Maritime claims: contiguous zone: 24 nm continental shelf: natural prolongation exclusive economic zone: bilateral agreements, or median lines in the Persian Gulf territorial sea: 12 nm International disputes: Iran and Iraq restored diplomatic relations in 1990 but are still trying to work out written agreements settling outstanding disputes from their eight-year war concerning border demarcation, prisoners-of-war, and freedom of navigation and sovereignty over the Shatt al Arab waterway; Iran occupies two islands in the Persian Gulf claimed by the UAE: Tunb as Sughra (Arabic), Jazireh-ye Tonb-e Kuchek (Persian) or Lesser Tunb, and Tunb al Kubra (Arabic), Jazireh-ye Tonb-e Bozorg (Persian) or Greater Tunb; it jointly administers with the UAE an island in the Persian Gulf claimed by the UAE, Abu Musa (Arabic) or Jazireh-ye Abu Musa (Persian); in 1992 the dispute over Abu Musa and the Tunb islands became more acute when Iran unilaterally tried to control the entry of third country nationals into the UAE portion of Abu Musa island, Tehran subsequently backed off in the face of significant diplomatic support for the UAE in the region, but in 1994 it increased its military presence on the disputed islands; periodic disputes with Afghanistan over Helmand water rights; Caspian Sea boundaries are not yet determined Climate: mostly arid or semiarid, subtropical along Caspian coast Terrain: rugged, mountainous rim; high, central basin with deserts, mountains; small, discontinuous plains along both coasts Natural resources: petroleum, natural gas, coal, chromium, copper, iron ore, lead, manganese, zinc, sulfur Land use: arable land: 8% permanent crops: 0% meadows and pastures: 27% forest and woodland: 11% other: 54% Irrigated land: 57,500 sq km (1989 est.) Environment: current issues: air pollution, especially in urban areas, from vehicle emissions, refinery operations, and industrial effluents; deforestation; overgrazing; desertification; oil pollution in the Persian Gulf; inadequate supplies of potable water natural hazards: periodic droughts, floods; duststorms, sandstorms; earthquakes along the Western border international agreements: party to - Endangered Species, Hazardous Wastes, Nuclear Test Ban, Ozone Layer Protection, Wetlands; signed, but not ratified - Biodiversity, Climate Change, Desertification,

Government of Iran

The December 1979 Iranian constitution defines the political, economic, and social order of the Islamic Republic. The document establishes Shi'a Islam of the Twelver (Jaafari) sect as Iran's official religion. Sunni Islam, Zoroastrianism, Judaism, and Christianity are the only other recognized, legal minority religions. The country is governed by secular and religious leaders through governing bodies, whose duties often overlap. The Supreme Leader holds power for life unless removed by the Assembly of Experts. He has final say on all domestic, foreign, and security policies for Iran, though he establishes and supervises those policies in consultation with other bodies, including the National Security Council and the Expediency Council. The Supreme Leader is the final arbiter on nearly all disputes among the various branches of government, although the Expediency Council is charged with resolving disputes between the Majles and the Guardian Council. The Supreme Leader appoints officials to key positions including the head of judiciary and the Council of Guardians. He has the power to remove the president and is commander-in-chief of the armed forces. The constitution stipulates that the Assembly of Experts, which consists of 86 popularly-elected clerics elected to 8-year terms, chooses the Supreme Leader based on jurisprudent qualifications and commitment to the principles of the revolution. The Assembly of Experts reviews his performance periodically and has the power to depose and replace him. Pragmatic conservative candidates generally polled better than their hardline conservative opponents during the December 15, 2006 elections for the Assembly of Experts. (This vote coincided with municipal council elections, and turnout, according to unverified Iranian Government statistics, was reportedly 60%.) Citizens will not vote for representatives for the Assembly again until 2014. The Council of Guardians consists of 12 persons. The Supreme Leader appoints the six religious members of the Council, while the Majles selects the six lay members from candidates recommended by the judiciary (which is, in turn, selected by the Supreme Leader). The non-clerics play a role only in determining whether legislation before the Majles conforms to Iran's constitution. The religious members, on the other hand, take part in all deliberations, considering all bills for conformity to Islamic principles. The Council of Guardians can veto any law. This body also certifies the competence of candidates for the presidency, the Assembly of Experts, and the Majles, and it has the power of approbatory supervision over elections. The president of the Islamic Republic of Iran is elected by universal suffrage to a 4-year term. The president supervises the affairs of the executive branch, appointing and supervising the Council of Ministers (members of the cabinet), coordinating government decisions, and selecting government policies to be placed before the Majles. The Majles, or National Assembly, consists of 290 members elected to 4-year terms. Elections are held by secret ballot from amongst the candidates approved by the Council of Guardians. In 1988, Ayatollah Khomeini created the Council for Expediency, which resolves legislative issues on which the Majles and the Council of Guardians fail to reach an agreement. Since 1989, it has been used to advise the Supreme Leader on matters of national policy as well. The Expediency Council is composed of the president, the speaker of the Majles, the judiciary chief, the clerical members of the Council of Guardians, and other members appointed by the Supreme Leader for 3-year terms. Cabinet members and Majles committee chairs also serve as temporary members when issues under their jurisdiction are considered. In 2005, it was announced that the Expediency Council, which now has over 40 members, would have supervisory powers over all branches of government, though that has not resulted in any noticeable change in this institution's day-to-day authority or operations. Judicial authority is constitutionally vested in the Supreme Court and the four-member High Council of the Judiciary; although these are two separate groups, they have overlapping responsibilities and one head. Together, they are responsible for supervising the enforcement of all laws and establishing judicial and legal policies. Iran has two military forces. The national military is charged with defending Iran's borders, while the Islamic Revolutionary Guard Corps (IRGC) is charged with protecting the revolution and its achievements. The Qods Force, a fifth branch of the IRGC, is the regime’s primary mechanism for cultivating and supporting terrorists abroad. The Qods Force provides aid in the form of weapons, training, and funding to Hamas and other Palestinian terrorist groups, Lebanese Hizballah, Iraq-based militants, and Taliban fighters in Afghanistan. Iran has 30 provinces managed by an appointed governor general. The provinces are further divided into counties, districts, and villages. Sixty percent of eligible voters took part in the first-ever municipal and local council elections in 1999, although a lower percentage went to the polls in the second round in 2003. Turnout for the December 15, 2006 elections, during which citizens also elected Assembly of Expert representatives, was reportedly over 60%. The local councils select mayors.POLITICAL CONDITIONSThe Islamic Republic of Iran’s post-Revolution difficulties have included an 8-year war with Iraq, internal political struggles and unrest, and economic disorder. The early days of the regime were characterized by severe human rights violations and political turmoil, including the seizure of the U.S. Embassy compound and its occupants on November 4, 1979, by Iranian students. Iranian authorities released the 52 hostages only after 444 days of captivity. By mid-1982, the clergy had won a succession of post-revolution power struggles that first eliminated the center of the political spectrum and then the leftists, including the communist Tudeh Party and the Mujahedin-e Khalq (MEK or MKO). Assassinations, acid attacks on uncovered women, and other acts of political violence punctuated this period. Although the Islamic Republic of Iran experienced a partial expansion of political and social freedoms during the tenure of former president Khatami, serious problems remained. Since taking office in 2005, President Ahmadi-Nejad’s administration has cracked down on civil society, continued to violate human rights, tightened constraints on press freedom and harassed activists, including Nobel Prize laureate Shirin Ebadi. The Islamic Republican Party (IRP) was Iran's sole political party until its dissolution in 1987. Iran now has a variety of groups engaged in political activity; some are oriented along ideological or ethnic lines, while others are more akin to professional political parties seeking members and recommending candidates for office. Conservatives consistently thwarted the efforts of reformists during the Khatami era and have consolidated their control on power since the 2004 Seventh Majles elections and President Ahmadi-Nejad's 2005 electoral victory. In the period following the June 2009 presidential election, Iran’s already poor human rights record further degenerated. Following the June 13 announcement of President Ahmadi-Nejad's reelection, hundreds of thousands of citizens took to the streets to protest. Police and the paramilitary Basij violently suppressed demonstrations. The official death count was 37, but opposition groups reported approximately 70 individuals died, and human rights organizations suggested as many as 200. In August 2009 the judiciary estimated that authorities detained approximately 4,000 persons. During 2009, authorities continued to suppress periodic opposition protests and continued to arrest numerous political activists, women’s rights reformers, minority rights activists, and student activists. Please see the State Department’s 2009 Human Rights Report for additional information. The Islamic Republic of Iran has faced armed opposition from a number of groups, including the Mujahideen-e Khalq (added to the U.S. Government’s Foreign Terrorist Organizations list in 1999), the People's Fedayeen, the Kurdish Democratic Party of Iran, the Party for a Free Life in Kurdistan (added the to the U.S. Government’s Foreign Terrorist Organizations list in 2009), and the Baluchi group Jundallah (added to the U.S. Government’s Foreign Terrorist Organizations list in 2010).Principal Government OfficialsSupreme Leader of the Islamic Revolution--Ayatollah Ali Hosseini-Khamenei President--Mahmoud Ahmadi-Nejad First Vice President--Mohammad Reza Rahimi Foreign Minister--Manouchehr Mottaki Ambassador to the United Nations--Mohammad KhazaeeType: Islamic republic.Constitution: Ratified in December 1979, revised 1989.Branches: Executive--Supreme Leader (head of state), president (head of government), Council of Ministers, Assembly of Experts, Expediency Council, Council of Guardians. Legislative--290-member Majles (National Assembly, or Islamic Consultative Assembly). Judicial--Supreme Court.Political parties: A number of reform-minded groups achieved considerable success during elections to the sixth Majles in early 2000. However, many reformist candidates, including sitting members of the Majles, were disqualified from participation in the February 2004 elections. As a result, a new conservative group, the Builders of Islamic Iran, won a majority of the seats and took a leading position in the seventh Majles.Administrative subdivisions: 30 provinces.Suffrage: Universal suffrage at 18 years of age.

The Islamic Republic of Iran maintains an Embassy at 1250 23rd Street NW, Suite 200, Washington DC, 20037

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History of Iran

The ancient nation of Iran, historically known to the West as Persia and once a major empire in its own right, has been overrun frequently and has had its territory altered throughout the centuries. Invaded by Arabs, Seljuk Turks, Mongols, and others--and often caught up in the affairs of larger powers--Iran has always reasserted its national identity and has developed as a distinct political and cultural entity. Archeological findings have placed knowledge of Iranian prehistory at middle paleolithic times (100,000 years ago). The earliest sedentary cultures date from 18,000-14,000 years ago. The sixth millennium B.C. saw a fairly sophisticated agricultural society and proto-urban population centers. Many dynasties have ruled Iran, the first of which was under the Achaemenians (559-330 B.C.), a dynasty founded by Cyrus the Great. After the Hellenistic period (300-250 B.C.) came the Parthian (250 B.C.-226 A.D.) and the Sassanian (226-651) dynasties. The seventh century Arab-Muslim conquest of Iran was followed by conquests by the Seljuk Turks, the Mongols, and Tamerlane. Iran underwent a revival under the Safavid dynasty (1502-1736), the most prominent figure of which was Shah Abbas. The conqueror Nadir Shah and his successors were followed by the Zand dynasty, founded by Karim Kahn, and later the Qajar (1795-1925) and the Pahlavi dynasties (1925-1979). Modern Iranian history began with a nationalist uprising against the Shah in 1905 and the establishment of a limited constitutional monarchy in 1906. The discovery of oil in 1908 would later become a key factor in Iranian history and development. In 1921, Reza Khan, an Iranian officer of the Persian Cossack Brigade, seized control of the government. In 1925, having ousted the Qajar dynasty, he made himself Shah and established the Pahlavi dynasty, ruling as Reza Shah for almost 16 years. Under Reza Shah's reign, Iran began to modernize and to secularize, and the central government reasserted its authority over the tribes and provinces. During World War Two the Allies feared the monarch close relations with Nazi Germany. In September 1941, following the occupation of western Iran by the Soviet Union and the United Kingdom, Reza Shah was forced to abdicate. His son, Mohammad Reza Pahlavi, became Shah and would rule until 1979. During World War Two, Iran had been a vital link in the Allied supply line for lend-lease supplies to the Soviet Union. After the war, Soviet troops stationed in northwestern Iran not only refused to withdraw but backed revolts that established short-lived, pro-Soviet separatist regimes in the northern regions of Azerbaijan and Kurdistan. These ended in 1946. The Azerbaijani revolt crumbled after U.S. and United Nations (UN) pressure forced a Soviet withdrawal. Iranian forces also suppressed the Kurdish uprising. In 1951, the government of nationalist Prime Minister Mohammed Mossadeq (sometimes spelled Mossadegh) nationalized the British-owned Anglo-Iranian Oil Company (AIOC). The Shah fled to Rome from Iran before the U.S.-backed coup against Mossadeq in August 1953, during which pro-Shah army forces arrested the Prime Minister. The Shah returned soon thereafter. A few years later, AIOC was renamed British Petroleum, better known today as BP. In 1961, Iran initiated a series of economic, social, and administrative reforms that became known as the Shah's White Revolution. The core of this program was land reform. Modernization and economic growth proceeded at an unprecedented rate, fueled by Iran's vast petroleum reserves, the third-largest in the world. However, his autocratic method of rule and pro-western policies alienated large sectors of the population, including the Shia clergy. In 1978, domestic turmoil swept the country as a result of religious and political opposition to the Shah's rule and programs--especially SAVAK, the hated internal security and intelligence service. In January 1979, the Shah left Iran; he died abroad several years after. On February 1, 1979, exiled religious leader Ayatollah Ruhollah Khomeini returned from France, to assume control of the revolution and established himself as Supreme Leader of a new, theocratic republic guided by Islamic principles. Following Khomeini's death on June 3, 1989, the Assembly of Experts chose the outgoing president of the republic, Ali Khamenei, to be his successor as Supreme Leader in what proved to be a smooth transition. In August 1989, Akbar Hashemi-Rafsanjani, the speaker of the Majles, was elected President by an overwhelming majority. He was re-elected June 1993, with a more modest majority. Some Western observers attributed the reduced voter turnout to disenchantment with the deteriorating economy. An overwhelming majority of Iranians elected Mohammad Khatami-Ardakani as President in August 1997, hoping he would usher in a new era of freedom and reform. Khatami had modest successes in broadening the participation of Iranians in government and politics through initiating popular elections for local government councils and encouraging the development of civil society. Many liberal-minded Iranians were disappointed that Khatami did not support student protesters in 1999, but he was nevertheless re-elected in June 2001. In February 2004 flawed elections were held for the Seventh Majles in which many reformists were prohibited from contesting their seats, meaning that a much more conservative group of parliamentarians easily retook control of the Majles in May 2004. The next Majles elections are currently slated to take place on March 14, 2008. None of the seven candidates in the presidential vote on June 17, 2005 received a majority, resulting in a two-candidate runoff between Tehran mayor Mahmud Ahmadi-Nejad and former President Akbar Hashemi Rafsanjani on June 24. Ahmadi-Nejad, winning in the second round with almost 62% of the vote according to Iranian Government figures, took office in August 2005. The next presidential elections are scheduled for 2009.

People of Iran

Iran is a pluralistic society. Persians are the largest ethnic group in Iran, though many are actually of mixed ancestry. The population of the country has important Turkic elements (e.g., Azeris) and Arabs predominate in the southwest. In addition, Iran’s population includes Kurds, Balochi, Bakhtyari, Lurs, and other smaller minorities, such as Armenians, Assyrians, Jews, and Brahuis (or Brohi). The 1979 Islamic Revolution and the 1980-88 Iran-Iraq war transformed Iran's class structure politically, socially, and economically. During this period, Shi’a clerics took a more dominant position in politics and nearly all aspects of Iranian life, both urban and rural. After the fall of the Pahlavi dynasty in 1979, much of the urban upper class of prominent merchants, industrialists, and professionals, favored by the former monarch, Shah Mohammad Reza Pahlavi, lost standing and influence to the senior clergy and their supporters. However, Bazaar merchants, who were allied with the clergy against the Shah, gained significant political and economic power after the revolution. The urban working class has enjoyed a somewhat enhanced status and economic mobility, spurred in part by opportunities provided by revolutionary organizations and the government bureaucracy. Though the number of clergy holding senior positions in the Majles and elsewhere in government has declined since the 1979 revolution, Iran has nevertheless witnessed the rise of a post-revolutionary elite among clerics who are strongly committed to the preservation of the Islamic Republic. Most Iranians are Muslims; 89% belong to the Shi'a branch of Islam, the official state religion, while about 9% belong to the Sunni branch. Non-Muslim minorities include Zoroastrians, Jews, Baha'is, and Christians. Nationality: Noun and adjective --Iranian(s). Population (July 2010 est.): 76,923,300 million. Population growth rate (July 2010): 0. 1.253%%. Ethnic groups: Persians 51%, Azeri 24%, Gilaki and Mazandarani 8%, Kurd 7%, Arab 3%, Lur 2%, Baloch 2%, Turkmen 2%, other 1%. Religions: Shi'a Muslim 89%; Sunni Muslim 9%; Zoroastrian, Jewish, Christian, and Baha'i 2%. Languages: Persian and Persian dialects 58%, Turkic languages (besides Turkish) 26%, Kurdish 9%, Luri 2%, Balochi 1%, Arabic 1%, Turkish 1%, other 2%. Education: Literacy (total population age 15 and over who can read and write, 2003)--79% (male: 86%, female: 73%). Health (2010 est.): Infant mortality rate -- 43.45 deaths/1,000 live births. Life expectancy at birth (2010)--total population: 69.77yrs.