Iran’s strongEconomystrong - Foreign Press Centers.pdf

Order Code RL34525 Iran’s Economy Updated June 12, 2008 Shayerah Ilias Analyst in International Trade and Finance Foreign Affairs, Defense, and Trade Division Iran’s Economy Summary The Islamic Republic of Iran, a resource-rich and labor-rich country in the Middle East, is a central focus of the U.S. national security policy. The United States asserts that Iran is a state sponsor of terrorism and that Iran’s uranium enrichment activities are for the development of nuclear weapons. To the extent that U.S. sanctions and other efforts to change Iranian state policy target aspects of Iran’s economy as a means of influence, it is important to evaluate Iran’s economic structure, strengths, and vulnerabilities. In terms of external challenge, Iran has long been subject to U.S. economic sanctions and, more recently, to United Nations sanctions. Partly due to the sanctions, some foreign countries and companies, particularly in Europe, have curbed trade and business with Iran. Iran also has faced challenges in obtaining foreign investment for development of its energy sector. Iran has turned to new trading partners, such as China and Russia, and has focused more heavily on regional trade opportunities. A significant internal challenge is domestic economic mismanagement. With the election of President Mahmoud Ahmadinejad in 2005, Iran’s economic policies have worked to reduce regional and class disparities through oil wealth redistribution. Mr. Ahmadinejad has tried to reduce unemployment and poverty through expansionary monetary and fiscal policies, including large energy subsidies