Official title : Islamic Republic of Iran
Head of state : Ayatullah Ali Khamenei
Head of government: President Mohammed Khatami (sworn in Aug 1997)
Capital : Tehran
Official Languages: Farsi
Currency : Rial (IR); 10 rials = 1 toman
Exchange rate : IR3,000 per USD (fixed from 22 May 1995)
Area : 1,648,195 sq km (638,000 sq miles, about the size of France, Germany,
Spain and the UK combined)
Population : 69.9m (1997 official estimate)
Pop. Growth Rate : 1.7% (1998 official estimate)
GDP per capita : IR2,460 (1995)
GDP real growth : 4.2% (1995)
GNP per capita : USD1,928 (1996)
GNP real growth : 3.5% (1996)
Labour force : 17.7m (1995)
Inflation : 49% (1996)
Oil reserves : 93bn barrels (end-1996)
Trade balance : USD7.5bn (1996)
Foreign debt : USD23bn (1996)
Legislature : 270-member unicameral body, members elected to 4 year terms
Suffrage : Universal, voting age is 15-years old.
Political Parties : Political parties have been legalized only recently.
Key Indicators
Unit 1995 1996
Gross national product (GNP) USDbn 113.40 118.17
GNP per capita USD 1,850 1,928
GNP real growth % 1.6 3.5
Inflation % 35.0 49.0
Crude petroleum production 1990=100 112.9 114.7
Exports USDbn 18.4 -
Imports (FOB) USDbn 12.7 -
Imports (CIF) from DOTS IRbn 21,201.7 24,132.4
Balance of trade USDm 5.7 7.5
Current account USDbn 3.5 -
External debt USDbn 23.8 *23.0
Exchange rate IR per USD 1,747.93 1,750.76
* estimated figure
Tehran (capital) 6,750,000 Area code 21 Mashhad 1,964,000 Area code 51 Isfahan 1,220,000 Area code 31 Tabriz 1,166,000 Area code 41 Shiraz 1,042,000 Area code 71 Ahvaz 828,000 Area code 61
Religions: Shi'a Muslim 89%, Sunni Muslim 10%, Zoroastrian, Jewish, Christian, and Baha'i 1%
Languages: Persian (Farsi) and Persian dialects 58%, Turkic and Turkic dialects 26%, Kurdish 9%, Luri 2%, Balochi 1%, Arabic 1%, Turkish 1%, other 2
Iran is a multilingual and multiethnic nation. The official language of the country is Persian, also known as Farsi, which is an Indo-European tongue. Persian is now spoken by the majority of Iranians as their first language and operates as a lingua franca for minority groups. Nevertheless, Kurdish, Baluchi, Gilaki, Azeri, Turkish and Arabic are all spoken and are important in their respective regions.
Iran is predominantly Shia Muslim, but it has a significant number of religious minority groups. The largest of these is the Sunni community, composed mainly of Kurds in the north-west and Baluchi tribes in the south-east. Other religious minorities include Zoroastrians, Armenian and Chaldean Christians, and a small number of Jews
Under the 1979 constitution, Judaism, Zoroastrianism, and Christianity are officially recognized as minority religions, and adherents are guaranteed freedom of worship and parliamentary representation. Proselytising is strictly prohibited.
Exports: Main exports are crude oil (typically 89% of total), petroleum products (8%); non-oil items (14%). Main destinations: Germany (typically 17% of total), Japan (12%), Belgium/Luxembourg (7%), France (7%), Netherlands (7%), Romania (6%), Italy, Spain, Turkey, India.
Imports: Main imports are non-chemical intermediate products (typically 23% of total), food and livestock (12%), machinery/motor vehicles (9%), chemical products (8%). Main sources: France (typically 21% of total), Germany (16%), Japan (8%), Italy (6%), Turkey (6%), UK (4%).
Agriculture: The agricultural sector contributed 23 per cent to GNP in 1996 and employed 39 per cent of the workforce.
Industry: The industrial sector contributed 16 per cent to GNP in 1996 and employed 18 per cent of the working population. Manufacturing has been badly affected by foreign currency shortages. Activities include textiles, petrochemicals and refining, food and beverage processing, furniture, printing, plastic and metal manufactures, leather/leather goods, bricks, cement, glass, automobile assembly, fertilisers, chemicals and electrical goods. There is low productivity and low capacity utilisation in manufacturing. Average capacity utilisation is approximately 65 per cent, but petrochemicals, steel, cement, pull the average up. There are two big petrochemicals complexes in Khorasan and Tabriz. In future, it is hoped they will provide Iran 's non-oil exports. Although there is a strong revival in company formation, barely a third is in the productive sector, with services proving the most popular area of expansion. Iran was a major importer of steel products before the Islamic Revolution in 1979, whereas now Iran is fast becoming an exporter of the same. The two Qeshm island aluminium smelter projects have been hampered by limited access to foreign exchange. The Almahdi smelter at Bandar Abbas was expected to have a 220,000 tonnes a year capacity, but this was reduced to a mere 5,000 tonnes in 1997, and the smaller smelter is estimated to output 33,000 tonnes in 1997, with plans to increase to 120,000 tonnes.
Mining: The hydrocarbons and mining sector contributed 13 per cent to GNP in 1996 and employed 6 per cent of the working population. Development of copper, iron ore, lead, zinc and coal is under way through private company contracts and joint ventures with different countries.
Hydrocarbons: Iran has the second-largest reserves of gas in the world but they are under-exploited, both for the domestic market and for export. Reserves of natural gas estimated at 741.6 trillion cu feet (end-1996). Natural gas production was 34.3m tonnes oil equivalent in 1996, up 8.5 per cent on the 1995 output. Iran signed a USD23bn gas deal with Turkey in 1996. Oil output in 1996 was 3.715m barrels per day (bpd), up 0.3 per cent on 1995 output. Total exports are estimated at 2m bpd. Oil reserves 93n barrels (end-1996). In September 1996 a 10- year plan was outlined to develop the gas and petrochemical industries. Gas exports, which are negligible, should in the future generate USD3bn a year. Construction of a 140-km gas pipeline from Turkmenistan to Iran was completed in December 1997. Total, of France, together with Malaysia's Petronas, are helping to develop two offshore oil and gas fields.
Its modern history, however, starts as recently as the period following the first world war and the rise of Reza Khan, a colonel in the Persian army, first to the premiership and then to the throne in 1925. It was Reza Khan who officially requested Western nations to stop using the term "Persia", since Iranians had always referred to their country as Iran, meaning "Land of the Aryans." His reign also marked Iran's emergence as the Middle East's largest oil exporter. However, during the second world war Iran was occupied by Soviet and British troops and Reza Shah Pahlavi (as he then was) was forced to abdicate in favour of his son, Mohammed Reza.
The "White Revolution"
Mohammed Reza Pahlavi sought to ally Iran closely with the West, but was thwarted by growing nationalist sentiment, which forced the appointment of Mohammed Mosaddiq as prime minister in 1951. Mr Mosaddiq nationalised the Anglo-Iranian Oil Company in the same year, but in 1953 his government was overthrown in a US- and UK-backed coup d'etat. The shah, who had fled to exile before the coup, returned and initiated a massive, rapid modernisation programme, which he named the White Revolution. At the same time, he concentrated more and more political power in his own hands, arresting opponents and crushing dissent. A leading critic of the regime, a Shia cleric, Ayatollah Ruhollah Khomeini, was forced into exile in 1964 following a series of riots sparked by his opposition to the government's reform programme.
The shah's overthrow
The oil-price explosion of 1973-74 fuelled rapid economic growth, but the speed at which export revenue poured into Iran exposed serious deficiencies in the structure of the economy. The shah built prestige projects and spent heavily on defence, forgoing investment in infrastructure development. As prices rose, popular discontent over economic hardship and political repression, as well as a widespread perception that the shah had turned Iran into a Western client state resulted in mounting unrest, culminating in the overthrow of the monarchy in January 1979. Iran became a self-styled "Islamic Republic" in March 1979, following the return from exile of Ayatollah Khomeini.
Iran under Ayatollah Khomeini
For much of the next year Iran was in turmoil as rival factions competed for power in the new republic. To make matters worse, international opinion turned strongly against the new government in November 1979, when militant students seized the US embassy in Tehran and held 52 embassy personnel hostage for over a year. Then, in September 1980, Iraqi forces invaded Iran, hoping to exploit the chaos to inflict an easy defeat on their historical enemy, and annex Iranian territory around the strategically important Shatt al-Arab waterway. The Arab states of the region, with the exception of Syria, came to Iraq's aid, determined to crush what they viewed as the dual threat of Persian nationalism and radical Islamism.
However, Iranian troops responded more effectively than expected and the Iraqi high command found itself locked in combat with Iran until August 1988, when Iran finally accepted a UN cease-fire resolution. Ayatollah Khomeini died on June 3rd 1989, leaving no clear successor to his specially created constitutional position of vali-e faqih, the qualified religious leader (see Constitution and institutions). Hojatoleslam Ali Khamenei was appointed to the less exalted position of rahbar (leader) and designated an ayatollah, though many senior clerics openly stated he was unqualified for the post. Hojatoleslam Ali Akbar Hashemi Rafsanjani became president.
Struggle for reform
Since that time, political debate has centred on the increasingly bitter power struggle between conservatives and reformers within the regime. From 1989 to 1997 Mr Rafsanjani sought to implement a gradual economic and political reform programme, but was in large part blocked by more conservative rivals. However, the 1996 Majlis (National Assembly) election removed the conservatives' majority in parliament, while the 1997 presidential election shocked the conservative establishment when its candidate was heavily defeated by the avowedly reformist Mohammed Khatemi. The power struggle has continued since that time, occasionally provoking public unrest, but the local elections in 1999 underlined strong popular support for the reformers' agenda.
Pressure for a redefinition of the role of the vali-e faqih has grown in recent years and has become more urgent since Mr Khatemi's election. Although debate over the issue remains constrained, a more moderate Majlis following the 2000 elections, and Mr Khatemi's re-election, could well produce an environment favourable to a redefinition of the post, reducing the rahbar's capacity to exercise absolutist power.
Important recent events
June 1989: Ayatollah Khomeini dies. The constitution is amended, Ali Khamenei becomes rahbar (leader) and Ali Akbar Hashemi Rafsanjani becomes president.
March 1992: Iran refuses to allow a United Arab Emirates (UAE) ship to dock at Abu Musa island, rekindling the controversy with the UAE concerning sovereignty over Abu Musa and the Greater and Lesser Tunbs.
June 1993: Mr Rafsanjani is re-elected president, but with considerably less support than before.
May 1995: The US president issues an executive order prohibiting US companies from trading with Iran.
March and April 1996: Elections to the Majlis result in conservatives losing their overall majority.
May 1997: Seyyed Mohammed Khatemi easily defeats the speaker of the Majlis, Ali Akbar Nateq-Nouri, in the presidential election, taking 70% of the vote.
January 1998: Mohammed Khatemi broadcasts a conciliatory "address to the American people" aimed at easing US-Iranian tensions.
February 1999: In local & municipal council elections, pro-Khatemi candidates defeat conservative opponents across the country.
July 1999: UK and Iran normalize relations, exchange ambassadors.
Week-long demonstrations by university students in support of President Khatami occur.
August 1999: Norway and Iran normalize relations.
Since the early 1990s the regime has sought to mitigate Iran's international isolation and create the diplomatic basis on which long-term economic relations may be built both regionally and internationally. Mr Khatemi has given this process an extra boost, even addressing the controversial issue of US ties, much to the anger of conservative elements within the regime. Such elements, particularly those within the bonyads (highly political, rich and influential Islamic charitable foundations) and the more extreme clerics are still able to damage Iran's diplomatic relations through their outspoken rhetoric and stance on issues such as the fatwa on the British author, Salman Rushdie. Until the leadership can control these elements, foreign relations will remain to some extent hostage of their statements and activities.
EU and Asian ties
Mainland EU and Asian states lack the contentious historical relationship that Iran has had with the US and UK. Trade relations with Japan, Germany and Italy developed and filled the post-revolutionary void left by US and, to a lesser extent, UK firms. Trade relations have provided the basis for political ties and, although political disputes have arisen between Iran and the EU, ties have nevertheless continued to improve. The EU has also vigorously opposed US efforts under the Iran-Libya Sanctions Act to block non-US firms from investing in Iranian hydrocarbons (see US sanctions below). It has received strong support in this from Asian states, which have also become important economic partners.
US relations
Against a background of continued improvement in ties with the EU and the Arab world, relations with the US-once Iran's closest Western ally-remain contentious for both sides. Some progress has been made since the election of President Khatemi. His conciliatory "address to the American people" made in 1998 via the US cable television channel CNN set the stage for academic and sporting exchanges. Worryingly for the right wing in Iran, some such events-for example, the visit of a US wrestling team to Tehran-have even elicited considerable popular support. Moreover, the readiness of moderate Arab states to embrace the new government in Tehran has undermined the US administration's oft-repeated allegations of Iranian involvement in international "terrorism" and leaves Washington's policy somewhat out of step with regional opinion. Industrial lobbies in the US have also become more vocal in their opposition to US unilateral sanctions and some progress is expected on this by the next US presidential election in 2000.
Nevertheless, there is a long way to go. Official US policy remains committed to "containing" Iran, while there are elements in both the US and Iran that are adamantly opposed to improved relations. The close relations between key parts of the US legislature and the Israeli lobby group, the America Israel Public Affairs Committee (AIPAC), for example, will undermine attempts at a rapprochement, probably more effectively than the pronouncements of radical Iranian clergy.