Iran

J

Foreign Trade

Petroleum dominates Iran’s exports, making up 85 percent of export earnings. In 2002 Iran exported 765 million barrels of crude oil per day. Major nonoil exports include carpets, chemicals, steel, fresh and dried fruits, nuts, and animal hides. The country’s leading purchasers are Japan, South Korea, the United Arab Emirates (UAE), Italy, and China. Since the value of Iran's imports generally is less than the value of its exports, the country maintained a favorable balance of trade for most years since the 1980s. Principal imports include machinery, transport equipment, chemicals, iron and steel, and food products. Primary suppliers of imports are Germany, South Korea, UAE, Italy, and France.

Iran has had no direct trade with the United States since 1995, when the U.S. government banned all commercial and financial transactions between U.S. companies and Iranian public and private entities. The United States took this action because it believed Iran was planning to develop weapons of mass destruction and was supporting international terrorism. Iran is a member of the World Bank, the International Monetary Fund, and the Economic Cooperation Organization (an organization promoting economic and cultural cooperation among Islamic states).

K

Currency and Banking

Iran’s unit of currency is the rial. The official exchange rate averaged 8,964 rials to the U.S. dollar in 2005. However, rials are exchanged on the unofficial market at a much higher rate. In 1979 the government nationalized all private banks and announced the establishment of a banking system whereby, in accordance with Islamic law, interest on loans was replaced with handling fees; the system went into effect in the mid-1980s. The banking system consists of the central bank, which issues currency; several commercial banks that are headquartered in Tehrān but have branches throughout the country; two development banks; and a housing bank that specializes in home mortgages. The government began to privatize the banking sector in 2001, when it issued licenses to two new privately owned banks. The Tehrān Stock Exchange trades the shares of more than 400 registered companies.

VI

Government

The Safavid dynasty established Iran as a monarchy under a shah, or king, in 1501. Although the ruling dynasty changed in the 18th century, the system of government did not change significantly until 1906, when a popular revolution forced the shah to accept a constitution that limited his powers. The 1906 constitution remained law until 1979, but after 1925 it was ignored in practice by the Pahlavi dynasty shahs, who created a highly centralized government over which they ruled as virtual dictators. Beginning in the early 1950s, popular disaffection with arbitrary rule increased gradually, culminating in the 1979 Islamic revolution. This revolution replaced the monarchy with a republican form of government guided by the principles of Shia Islam. Shia clergy who had played a key role in mobilizing opposition to the shah obtained important positions in the postrevolutionary government. The principal religious figure, Ayatollah Ruhollah Khomeini, was accepted widely as the country's leader even though he did not participate in the actual governance of the country. He was succeeded by Ayatollah Seyed Ali Khamenei. Suspicious of central authority, the new rulers created a system under which the executive, judicial, and legislative branches of government were separate and could check one another's exercise of power.

---

---

Although the clergy continued to dominate the highest ranks of the government into the 21st century, it was divided into liberal and conservative factions. Liberal clergy wanted to relax some of the religious restrictions on Iranian society. At the beginning of the 21st century, liberals under President Mohammed Khatami controlled the executive and legislative branches, and conservatives controlled the judiciary and the powerful Council of Guardians. In the parliamentary elections of 2004, however, liberal and moderate candidates were barred from running, and conservatives took control of the legislature. In the 2005 presidential election Mahmoud Ahmadinejad, a conservative known for his loyalty to Khamenei, was elected by a large margin.

A

Constitution

In the summer of 1979 a popularly elected assembly drafted the constitution of the Islamic Republic of Iran; this constitution was approved in a popular referendum in December. It named Khomeini to serve as Iran’s supreme spiritual leader, an office called velayat-e faqih (guardianship of the religious jurist; the holder of the office is the faqih), and provided for an elected assembly of senior clergy to select Khomeini’s successors. The constitution also stipulated as head of state an elected president who would choose a prime minister to be head of government, subject to legislative approval. It preserved the prerevolutionary elected parliament, the Majlis, as the legislature. In 1989 voters approved 45 amendments to the constitution, the most important of which downgraded the religious qualifications for the faqih, eliminated the office of prime minister, and made the president both head of state and head of government. The Majlis set 15 as the minimum age for voting.

B

Velayat-e Faqih

The faqih generally oversees the operation of the government to ensure that its policies and actions conform to Islamic principles. The faqih is a spiritual leader whose religious authority is above that of the president and any other officials. However, in keeping with the practice established by Khomeini, the faqih is expected to refrain from involvement in the day-to-day affairs of governance. An 83-member Assembly of Experts, popularly elected every eight years, is responsible for choosing the faqih (or a council of three to five faqihs, if there is no consensus on a single faqih) from among the most politically and religiously qualified Shia clergy.

	More from Encarta
	•  7 tips for funding an online degree •  How to succeed in the fashion industry without being a top designer •  Presidential Myths Quiz •  Coffee break: Recharge your brain