Iranian Commerce Overview

Iran, like many Middle Eastern nations, is a country marred by economic downturn as the state controls most trading and orchestrates price controls on many necessities. The Iranian government is believed to control approximately 60% of the economy. One of the central problems the Iranian government faces is retaining their talented youth who often travel overseas to find stable and higher paying occupations. With an unskilled labor force it is difficult for Iran to modernize their economic foundations. The vast majority of Iran’s economy is based upon agriculture and oil. Such a focused dependency on two industries can become detrimental to the growth and reconstruction of a country in dire need of revitalization to their economy.
After a decline through the 1980’s and 1990’s of oil production, Iran has recently resumed production to exploit their natural resources. Iran holds approximately 10% of the world’s proven oil reserves which allow them to exploit their natural resources for economic gains.
By 2004, Iran’s annual oil production was 1.4 billion barrels, creating a net profit of $50 billion. Iran manufactures 50-80% of its industrial equipments domestically, including refineries, oil tankers, oil rigs, offshore platforms and exploration instruments. In February 2008 the Iranian Oil Bourse was inaugurated in Kish Island to trade crude oil and petrochemical products.
Petroleum dominates 80% of Iran’s exports each year and was valued at $46.9 billion in 2006. Although profitable, this reliance upon a nonrenewable resource could prove to be even more problematic for the country which still remains in strained economic conditions.
The industrial sector of Iran’s economy contributes over 11% of the GNP and employees over a third of the work force. Although petroleum constitutes a large portion of Iran’s industrialization; 70% of miners work to produce minerals like: coal, iron ore, copper, lead, zinc, chromium, barite, salt, gypsum, molybdenum, strontium, silica, uranium, and gold. Like most other aspects of industry the Iranian government controls approximately 90% of all mines. Additionally, the government is currently seeking $1.1 billion in foreign direct investment to fully exploit these potential resources.
Agriculture contributes 11% of the GNP of Iran and employs over 30% of the country’s work force. Wheat and rice are two of the majorly produced crops; however farmers also grow barley, cotton, corn, tea, hemp and tobacco on the 20% of lands that are arable within Iran. By 2003, 25% of Iran’s non-oil exports were agricultural products.
Iran has also developed strong trading ties with other Asian entities since the early 1990’s. Its foremost trading partners include: China, India, Germany, South Korea, Japan, France, Russia and Italy. In 2007 Iran and India’s trade increased by 80% surpassing $13 billion in volume. The United States, who previously was Iran’s strongest trading partner, cut ties with Iran after the Iranian revolution in 1979. Iran has developed stronger trading ties with Turkey and Pakistan; all of whom share the common goal of developing a single economic market in West and Central Asia called the Economic Cooperation Organization (ECO). This organization is modeled after the very successful European Union which fosters a better trading and investment environment for member states.
As Iran and the United States have maintained polarizing policies since the revolution, it appears as this foreign policy stance will remain constant through the near future. As Iran continues to pursue a nuclear development program, the United States will keep sanctions in place.
Tensions between Iran and the West over the former's nuclear program are expected to persist, but the likelihood of military conflict over the issue has diminished. Despite the publication of a US national intelligence estimate in December 2007 that concluded that Iran stopped developing nuclear weapons in 2003, the degree of mistrust between Iran and the US, and the determination of Iran to press ahead with its nuclear program, is likely to complicate the search for an international agreement within the forecast period.
Iran and the United States currently have made little progress in coming to a mutual agreement which would substantially change policy from a trade perspective. However, the Economist states, “the slow pace of oil output growth, and consequent stagnation of oil revenue, will force the government to rein in its expansionary fiscal policy. We expect real GDP growth to average around 3.1% a year over the forecast period.” This would translate to a continuance of the economically strained standards for the citizens of Iran. Iranian conservatives, however, are frustrated with their country’s economic management which could result in changes within the hierarchy. Such changes could translate to a more moderate political position so that Iran would have the ability to have talks with other countries like the United States.
Iran appears to have a relatively firm commitment to its reliance on exhaustible resources as a central foundation for its economy. Additionally, the Iranian government maintains its stronghold of the economy with price controls. Assuming powerful conservative leaders do not successfully demand an economic reform, Iran will continue to fall behind in economic prosperity.

Iran in Brief Review

Iran, a terrorism supporting country, became an Islamic Republic state in 1979. Its relations with the United States have been strained since the inception of the country. Located in the Middle East and bordering the Gulf of Oman and the Caspian Sea, the approximate population of Iran is 65,875,224. Of this population 51% of people are Persian, 24% are Azeri, 8% are Gilaki and Mazandarani, 7% are Kurd, 3% are Arab, and the last 7% are Lur, Baloch, Turkmen, and other ethnicities. The primary language spoken by 58% of the population is Persian or a dialect of Persian.

Iran is under a Theocratic rule with Ali Hoseini-KHAMENEI as the chief of state and Mahmud AHMADI-NEJAD as the head of government. The supreme leader is appointed for life by the Assembly of Experts and the president is elected by popular vote for a four year term. The people are not organized by political parties (except when temporarily developed for an election year) as they assemble in political pressure groups which advance the interest of the people.

The majority of country revenues (GDP is $859.7 billion) and economic activity, most of which is controlled by the state, are provided by Iran’s dependency on oil. Agriculture accounts for 10.8% of the GDP and farmers typically grow such crops as wheat, rice, sugar cane, cotton, wool, caviar and dairy products. Price controls, subsidies, corruption, and shortages are some of the most common economic problems. With an unemployment rate of 12.5% many skilled young Iranians look for jobs overseas which devastates Iran’s ability to keep its future talent.

Iran is still developing in many aspects of its infrastructure. Currently there are 129 airports with paved runways, 8,368 kilometers of railways, and 125,908 miles of paved roadways. Iran still has yet to provide telephone service to several thousand villages around the country. Today, approximately 30 million people subscribe to telephone use and 23 million are internet users.

Iran bases its foreign policy on two principles: eliminating any outside influence upon the country and pursuing stronger diplomatic relationships with developing and non-aligned countries. The United States and Israel are the only two countries which Iran does maintain diplomatic relations. In the past two centuries Iran has not invaded any other country however they have the ability to mobilize approximately 1 million men.

The culture of Iran, a predominant culture of the Middle East, is a mix of pre-Islamic and Islamic culture. Like the culture the cuisine of Iran is of a diverse nature creating combinations of rice with meat, vegetables, nuts, herbs, and fruits. The Sassanid era was a period in Iranian culture which influenced China, India, Roman civilization, and Western Europe a considerable amount. Islamic learning in philosophy, medicine, architecture, literature, and sciences were all strongly influenced by the Sassanid era as well. As two thirds of the current population is under the age of 25, sports are an essential part of Iranian culture. Soccer is very popular in Iran and the country had success in some appearance of the World Cup finals. Architecture is well defined by the early uses of mathematics in constructing various buildings. Domes are a unique aspect of Iran’s architectural interests as they can commonly be found in mosques and bazaars. Although clearly developing, Iran has many aspects of its country which are attempting to keep in line with contemporary expectations. Its influence around the world is unquestionable however its domestic issues continue to be a challenge to overcome.