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COUNTRY BRIEFS


INTRODUCTION

Australia has maintained a continuous diplomatic presence in Iran since our Embassy opened in Tehran in 1968. Iran opened an Embassy in Canberra in 1971 and has maintained a presence in Australia since then.

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POLITICAL OVERVIEW

The 1979 Islamic revolution transformed Iran, abolishing the monarchy and establishing an Islamic Republic. The political system now comprises both elected and unelected institutions. The Supreme Leader is Iran's highest political authority and is chosen by the Assembly of Experts, a body of 86 clerics (elected on a regional basis). The President, the unicameral Islamic Consultative Assembly (or Majlis) and municipal councils are elected every four years on the basis of universal suffrage. Electoral candidates are vetted by the Guardian Council, which consists of six clerics appointed by the Supreme Leader, and six legal figures, appointed by the Head of the Judiciary and approved by the Majlis.

The Supreme Leader is responsible for choosing the head of the judiciary, setting general state policy, declaring war and peace, commanding the armed force (including appointment of commanders, control of intelligence and security agencies) and holds the authority to initiate changes to the constitution.

The Majlis has the power to initiate bills but the Guardian Council must approve all bills passed by the Majlis as consistent with Islamic law and the Iranian Constitution. The Expediency Council (with ex officio members including the President and members appointed by the Supreme Leader) can, however, pass a Majlis bill into law, overriding the Guardian Council.

Reformist President Khatami was elected in 1997 and re-elected in 2001. While he sought to increase social freedoms and modernise Iran's economy, implementation of the reform agenda was largely frustrated by conservative forces. Elections in June 2005 saw Mahmoud Ahmadinejad, a conservative, elected as President. In his early presidency, Ahmadinejad presented himself as a restorer of the revolutionary ideals of Ayatollah Khomeini. Ahmadinejad was re-elected on 12 June 2009, his re-election drew unprecedented public interest in Iran and gave rise to protests and claims of election fraud from opposition candidates.

Iranian security forces violently suppressed anti-government protests in Tehran and other cities following the disputed presidential elections in June 2009 and on the Ashura religious holiday on 27 December 2009. Dozens were killed and thousands detained.

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ECONOMIC OVERVIEW

Iran is a significant regional economy with a large and fast-growing population (estimated at around 74 million people) and some of the world's largest oil and gas reserves.

The economy is heavily dependent on hydrocarbon exports and dominated by the oil industry, economic growth is strongly influenced by oil market developments. Around 80 per cent of total export earnings are generated from oil revenues. A goal of Iranian economic policy over the last 20 years or so has been diversification of the economy away from dependence on oil earnings.

Large state-owned enterprises dominate key industry sectors, and organisations controlled by charitable religious foundations also account for a significant share of GDP. The private sector is generally confined to small and medium enterprises. The IMF has recommended that earlier efforts at economic reform be renewed to improve economic performance. President Ahmadinejad was elected on the promise of improved income redistribution but has not advanced this systematically to date. Low oil prices in recent years have resulted in slower economic growth, declining from 7.8 per cent in 2007 to 2.3 per cent in 2008 and 1.8 per cent in 2009, and sustained high levels of unemployment and inflation. (Inflation was 25.4 per cent in 2008, but moderated significantly to 10.3 per cent in 2009.)

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BILATERAL ECONOMIC AND TRADE RELATIONSHIP

Iran remains an important market for Australia in the Middle East. Traditionally, Iran has been one of Australia's leading wheat export destinations and has also attracted interest from a range of Australian exporters and investors. Other Australian agricultural exports to Iran include barley, animal oils and fats, meat and butter. Coking coal is Australia's major non-agricultural export to Iran.

Australia's exports to Iran amounted to AU$595 million in 2009. Primary export items included wheat, coking coal and passenger motor vehicles. It is likely that a portion of Australia's exports to Iran are transshipped through Dubai and are not captured by these figures. Imports from Iran amounted to AU$50 million over the same period. Inorganic chemicals and liquefied propane and butane have dominated Australia's imports from Iran. Trade in services, particularly education, has been an area of recent growth.

Australians considering commercial or other dealings with Iran should familiarise themselves with the operation of the United Nations Security Council Resolution-mandated sanctions regime (http://www.dfat.gov.au/un/unsc_sanctions/iran.html) and Australia's autonomous sanctions, and seek independent legal advice before making commercial decisions.

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Last Updated: June 2010

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