my report is about one country in the world…

….one country with an ancient history…

332BC

The Achaemenian Dynasty & the Great Persian Empire which was the dominant world power for over two

centur.ies…550BC Cyrus the Great established the First World Empire525BC Persia conquers Egypt332 BC Alexander the Great conquers Egypt and Persia323 BC The Seleucid Dynasty was established by one of generals of

Alexander the Great247 BC

The Parthians conquered the Seleucids 

224 AD The Sasanian Dynasty570 The Prophet Mohammad was born632 The Prophet Mohammad died and his teachings were

compiled into the Koran, the name of the holy book of Islam642 The Arab Caliphate

The Elamite Empire, 2500 - 644 Before Christ (BC)

… history and powerful geography…Achaemenian Dynasty & the Great Persian Empire (559 - 332BC)

1220 Mongol Era when Persia conquered by Gangis Khan

1271 The explorer Marco Polo journeyed through Persia en route to China

1295 Ghazan Khan becomes the first Mongol leader to convert to Islam

1501 (1501-1524) Safavid Dynasty founded by Shah Ismail I who united all of Persia under Iranian leadership

 1795 Qajar Dynasty1851 (1851-1906 )- The Qajars lost central Asian provinces to the

Russians and were forced to give up all claims on Afghanistan to Great Britain

 1925 1925-1940 - Pahlavi Dynasty1979 The Shah was overthrown by the

Islamic Revolution ending 2,500 years of monarchy1980 July 29: The Islamic RevolutionJuly 29: The Islamic Revolution

one country where the history made changes…

…After Christ -> The Islamic Revolution (1979)

The first human habitathuman habitat belonging to about 10,000

years ago has beenfound in the northwest of northwest of Iran Iran in the form of tents

and mud houses…The first agricultural tools

including mill and also storage for grains and simple

ceramics can be found…

Tool making techniques; Gathering and storing food; Production and rural settlement.

…changes in the country and in the world

Neolithic age which has started after the Meta-Paleolithic age in the

Iranian PlateauIranian PlateauRural areas -> UrbanizationRural areas -> Urbanization

Ali Tapeh – Kamarband - Ganjdareh - hills in Harsin - Tapeh Sarab…

… geography and one rich land…

…changes in the world, because of the strategic position…

…change, the world saw…

…Tehran

…in 1979…

…in 2005 ->

…one country…

…one country and the international relations

…what the world can see now…

Foreign trade and its importance in the economy of Iran in the international sanctions context

Eduardo Oliveira Eduardo Oliveira

OctoberOctober 2010 2010University of MinhoSchool of Economics

and Management

Contents Contents Overview (from the past to the

present);Introduction;

Demography;Economy; Trade partners;

The players;US and Iran sanctions;Conclusion.

Demography (brief) Demography (brief)

July 2010 the population of Iran was of 67.037.517 people (71.481.577 according with

Encyclopedia Britannica).

Iran’s

economy

--Main secto

rs and

trade partners

Petroleum

Natural Gas

Germany

Switzerland

Agriculture products

Manufacturing

International Trade

Japan

China

France

Main sectors and trade partnersMain sectors and trade Main sectors and trade partnerspartners

Table 1 - Oil production in 2009 (top 10 and Malaysia position). bbl/day1 Russia 9,932,0002 Saudi Arabia 9,764,0003 United States 9,056,0004 Iran 4,172,0005 China 3,991,0006 Canada 3,289,0007 Mexico 3,001,0008 United Arab Emirates 2,798,0009 Brazil 2,572,00010 Kuwait 2,494,00027 Malaysia 693,700Source: CIA, 2010

Economy (brief) Economy (brief)

Table 2 - Oil export in 2009 (top 10 and Malaysia position). bbl/day1 Saudi Arabia 8,728,0002 Russia 4,930,0003 United Arab Emirates 2,700,0004 Canada 2,421,0005 Norway 2,383,0006 Kuwait 2,349,0007 Nigeria 2,327,0008 Iran 2,210,0009 European Union 2,196,00010 Venezuela 2,182,00030 Malaysia 511,900Source: CIA, 2010

Economy (brief II) Economy (brief II)

High oil and gas income

Government surpluses and private wealth

Capital deploymentInternational investment

International spending

Increase importance in global markets

Local investment

Local government spending

Local consumption

Stimulate local economy and promote additional private sector investment

The role of the oil The role of the oil industryindustry

Source of Illustration 1: Rehaman (2008: 40). Adapted.Source of Illustration 1: Rehaman (2008: 40). Adapted.

The trade, the sanctions and The trade, the sanctions and the players the players

The economic sanctions on Iran were originally started by US President Jimmy Carter in 1979 and have been more or less in effect in various forms until the present time.

1) 1979;2)President Clinton used economic sanctions for dual

containment of Iran and Iraq during his administration. In April 1995, he tightened the sanctions by announcing

comprehensive trade and investment embargoes against Iran;

Reasons: Iran’s continued support for terrorism, pursuit of access to

nuclear weapons, and supporting groups that use violence to oppose the Middle East peace process. Surprising to many observers, the US did not include the clerical regime’s abuse of human rights as one of the official reasons for imposing the embargoes.

US and Iran sanctions US and Iran sanctions (Carter/Clinton/Bush)(Carter/Clinton/Bush)

Now: the main reasons -> Nuclear Now: the main reasons -> Nuclear programmeprogramme

The literature on sanctions and The literature on sanctions and the impacts:the impacts:

Sanctions policies are generally ineffective in the post-Cold War era.

Sanctions can be an effective foreign policy tool when targetedsmartly on the ruling decision makers.

Richard D. Farmer, 2000

Cortright and Lopez, 2002

US sanctions have not produced the anticipated results or transformed the Islamic regime (Iran).

Jahangir Amuzegar, 1997

The literature on sanctions (II):The literature on sanctions (II):

Sanctions have not persuaded Iran to change its behaviour..

Patrick Clawson, 1998

US can better achieve its goals through some sort of dialogue with Iran.

Kamran Dadkhah and Hamid Zangeneh, 1998

Claims that the net assessment of the economic impact of US sanctions on Iran is negative and believes the US should unilaterally lift the sanctions.

Ernest Preeg, 1999

Trade and international relations:Trade and international relations: Before the Iranian revolution in 1979, the United States was one of Iran’s major trade partners.

Torbat, 20051978

US: 16% share of Iran’s imports;Germany: 19% share of Iran’s imports;

After the revolution

Group of students on 4 November, 1979,

detained 52 American hostages in 52 American hostages in the US the US Embassy’s compound

1979

US AlliesThe US expected its allies to support the sanctions by boycotting purchase ofIranian oil, but none of them did. They did not want to change their commercial relations with Iran as the US wished…

US sanctio

ns

Their trade volumetrade volume with Iran was substantially higher higher compared to the UScompared to the US.

GermanyGermany exported four times more to Iran than the US; Japan Japan twice as much; ItalyItaly twice as much; FranceFrance slightly more than the US.

Moreover, they did not believe the sanctions could have that much political impact on Iran’s behaviour;political impact on Iran’s behaviour;. In 1992, the EU had adopted the so-called ‘critical ‘critical dialogue’ policydialogue’ policy, which meant criticising the Islamic regime’s behaviour on some issues of concern while having diplomatic and economic relations with it;

: Struwe, 1998.

Trade and international relations:Trade and international relations:US Allies reaction sanctions in 79’

TradeTorbat, 2005

US Export Sanctions;US Non-oil Import Sanctions;US Oil Import Sanctions;Financial system;Foreign Borrowing;Financing Oil ProjectsThe Cost of Financial Sanctions

Sanctions:Sanctions:US - Iran

Torbat, 2005

ImpactEconomic Effect:

Short-term AND long-term; Political Effect;

Terrorism; Human rights;Nuclear Technology;The Middle East Peace Process;

Effects

Sanctions impact:Sanctions impact:US - Iran

Iran’s Oil Buyback

Torbat, 2005

Torbat, 2005

Adverse Impact

Torbat, 2005

Sanctions Impact:Conclusion

The trade sanctions’ effects: Iran’s non-oil exports and capital goods imports have been significant as compared to their effect on Iran’s oil exports.

The financial sanctions’ impact :Has been greater than those due to the trade sanctions. The financial sanctions have curtailed Iran’s ability to borrow funds and to finance its oil development projects. Because of the sanctions, Iran has paid higher rates of interest on its loans and has guaranteed excessively high rates of return on investment on its oil buyback projects. On the whole, the trade and financial sanctions’ cost to Iran was estimated to be about 1.1% of Iran’s GDP; this is a significant hindrance to Iran’s economic growth, which has been at a rate of 4.7% per year on average over the last five years.

The political impact: Has not been quite so notable. However, recently some progress has emerged on the targeted issues about which both the US and the EU have common concerns.

US sanctions have had some economic success by

causing damage to the Iranian economy:

Vorgelegt von, Diplom-Kaufmann, Naser Hekmat, Assessment of the Economy of Iran and Statistical Analysis of the most important Indicators especially during the Past Three Decades with special focus on Foreign Trade along with short term Forecast of some Economic Indexes (2005).Ali Gheissari, Contemporary Iran, Economy, Society, Politics (Oxford, 2009).Steven Kinzer et al., Iran - The Essential Guide to a Country on the Brink (Encyclopedia Britannica 2005).Rehaman, Aamir A., Dubai & Co.: Global strategies for doing business in the Gulf states (Mc Graw-Hill 2008)Henderson, Joan C., “Tourism in Dubai: overcoming barriers to destination development” International Journal of Tourism Research. 8 (2) (2006): 87–99.Sedigheh Atrkar Roshan (2007), “Export linkage to economic growth: evidence from Iran”, International Journal of Development, Vol. 6 (1): 38-49.Jalali-Naini, Ahmad R. (2006), “Economic Growth and Economic Policy in Iran: 1950–2003”, Contributions to Economic Analysis, Vol. 278, Chapter 9:267-305Moghadam, Fatemeh Etemad (2001), “Iran’s new islamic home economics: an exploratory attempt to conceptualize women’s work in the islamic republic”, The Economics of Women and Work in the Middle East and North Africa, Vol. 4 (s/n): 339–360.Torbat, Akbar E. (2005), Impacts of the US Trade and Financial Sanctions on Iran.Blackwell Publishing Ltd 2005, USA.Kronstadt, K. Alan (Coord.) and Katzman, Kenneth (2006), “India-Iran Relations and U.S. Interests”, Congressional Research Service - The Library of Congress.Katzman, Kenneth (2006), “The Iran-Libya Sanctions Act (ILSA)”,Congressional Research Service - The Library of Congress. Valadkhani, Abbas (2004), “What determines private investment in Iran?”, International Journal of Social Economics, Vol. 31 (5/6): 457-468.Doessel, D.P. and Valadkhani, Abbas (1998), “Economic development and institutional factors affecting income distribution: the case of Iran, 1967-1993”, International Journal of Social Economics, Vol. 25 (2/3/49: 410-423.Guillaume, Dominique and Zytek, Roman (2010), International Monetary Fund - Islamic Republic of Iran, Selected Issues, Middle East and Central Asia Department.Bahmani-Oskooee, Mohsen (1999),“The long-run relation between a black market exchange rate and the trade balance Evidence from Iran”, Journal of Economic Studies, Vol. 26 (2): 121-129.Akhavan, Peyman and Jafari, Mostafa (2008), “Towards learning in SMEs: an empirical study in Iran”, Development and Learning in Organizations - Emerald group publishing limited Vol. 22 (1):17-19.

ReferencesReferences

CreditsCredits I am Eduardo Oliveira, from Portugal. I’m doing

a MSc. in Marketing and Strategic Management, in the

School of Economics and Management, University of Minho, final year.

My dissertation is about “Networks and Place Branding: Minho as International Brand”. Until December, I will stay in Malaysia as exchange student in University Sains Malaysia (USM) with a scholarship from the European Union. In USM, I attend courses in International Political Economy and Political and Decision Making in European Union and also courses in Marketing. I reserved my free time to do some research in destination marketing and place branding, my favorite topics and improve my skills in global issues, like climate change, sustainable development and explore the most controversial topics in the international political economy context. My main goal is to understand the economic and local markets, the consumers’ needs in the global economy and search for new ways to achieve a sustainable world.

Email address: eduardo.hsoliveira@gmail.comURL: http://www.eduardoo.pt.vu In Malaysia: +601 25 792 867In Portugal: +351 91 70 60 153