Iran Economic Sectors

By | December 15, 2021

The main effect of the 1979 revolution was to drastically reduce the industrialization programs initiated by the Shah Reẓā Pahlavī and to modify the structure of foreign trade to the advantage of imports of food and other basic products; despite the decline in exports as a result of the war with Iraq, hydrocarbons continue to be the main source of foreign currency. The economic crisis that accompanied the birth of the Islamic Republic (39% of the active population were unemployed and underemployed in 1986) was aggravated by regional conflicts that brought a mass of refugees to Iran second only to that accepted by Pakistan: half a million Iraqis and 2.3 million Afghans, according to the 1986 census. Agricultural production stagnates,

Until the ceasefire of August 1988 in the war with the ‘Irāq, economic activity was penalized by war requirements, as well as by the uncertainty deriving from the ten-year debate on the role of the state, initially hoped for by the more progressive sectors, and then sharply downsized by the will of the more conservative religious leaders, who also blocked the radical agrarian reform planned immediately after the revolution.

Agriculture. – The agricultural sector, which absorbs 29% of the active population and supplies 21% of the gross domestic product, can count on 17.5 million hectares of irrigation, mostly subject to three-year rotation. Production (58 million q of wheat in 1991, 26.4 of beet, 36.5 of sugar cane, 25 of barley, 12.2 of rice), which guaranteed food self-sufficiency until the late 1960s, was currently insufficient, so much so that imports of foodstuffs, with 20 ÷ 30 million q of wheat per year, are in third place, after machinery and semi-finished products.

Noting the failure of the grandiose reclamation projects initiated by the Shah with the participation of foreign companies, the republican regime has aimed at a better yield of the land already cultivated, without being able to stop the exodus from the countryside (which have lost another 5 million residents between 1982 and 1990, after Teherān alone had attracted 1.5 million peasants in the first year of the revolution), or to reduce dependence on imports. The failure to implement an agrarian reform capable of putting an end to the uncertainty following the spontaneous land occupations that occurred in 1979 and subsequently partially disavowed by the republican regime continue to weigh on the efficiency of the sector, and the divergences of views between the proponents of a at least partial collectivization of

Subsoil products. – The economy continues to stand on the hydrocarbon sector whose workers, paralyzing exports with a series of strikes, made a decisive contribution to the fall of the Shah. The new regime immediately (March 1979) put an end to the privileges enjoyed by the Consortium formed by the major Western oil companies, offering crude oil directly on the world market, but at prices such as to reduce demand, also discouraged by the political pressures exerted by the States. United. THERE. it has therefore increasingly targeted developing countries and planned economies. At the same time, production levels (on the 250 million tons per year before the revolution) were drastically reduced: production increased to 93 million tons in 1986 and 166 in 1991.

The Iraqi aggression in September 1980 knocked out the Ābādān refinery, but could not reduce Iranian crude exports from the H̱ārg terminal to zero. However, the Gulf War made clear the need for less dangerous alternative routes: an oil pipeline was therefore designed to connect the Iran southern, through Turkey, with the port of Dörtyol on the Mediterranean, and another from H̱ārg to Bandar-i Tāherī, east of the Strait of Hormuz, which can be further extended to Ǧāsk. Once the hostilities ceased (which caused damage to the oil plants for at least 15 billion dollars), the Ābādān refinery partially returned to operation (April 1989).

New refineries are planned in Bandar-i ‘Abbās, Arāk and Bandar-i Tāherī, while the internal network of pipelines is being strengthened to reduce the need for rail and road vehicles used in the distribution of hydrocarbon derivatives. Natural gas reserves (14,000 billion m 3), which place the Iran in second place in the world, they were enriched with the discovery, in 1988, of the important ‘Asalūyeh field on the Gulf coast, 70 km south-east of Kangān.

In 1982 the Sar Češmeh (Kirmān) mine went into operation, in the heart of a 1.2 billion ton copper ore deposit, considered the second most important in the world; the production of refined copper (68,000 t in 1989) is destined to exceed 150,000 t in the 1990s. Also in the province of Kirmān, railway infrastructures are being built which are essential for the exploitation of the coal and iron ore deposits intended to boost steel production in Mobārakeh (Iṣfahān). In 1984, uranium deposits were discovered in the Saqand (Yazd) region, and the pharaonic nuclear power generation projects shelved after the fall of the Shah (who had planned to build a network of twenty nuclear power plants) are resumed on a more modest scale. with the collaboration of Argentina.

Industry. – Immediately after the revolution, only 20% of the industrial plants built during the reign of the last Shah were functioning, and at the end of 1988 most of the industry was operating at less than 50% of the potential due to difficulties in supplying from abroad and the consequences of the conflict with Irāq, which caused at least 40 billion dollars in damage to industrial plants, in particular by reducing the availability of electricity. However, cement production is on the rise (12.6 million tonnes in 1989). In 1989 the privatization of non-strategic state industries was heralded.

As regards transport infrastructures, it should be noted that in 1985 the works for the expansion of the port of Bandar-i ‘Abbās resumed. After the end of the Gulf War (which had forced the Iran to resort to plants in Pakistan, Turkey and the Soviet Union) the ports of Bandar-i H̱omaynī and H̱orramšahr were quickly reactivated.

The trade balance (excluding hydrocarbons) is clearly in deficit. Imports (18 billion dollars in 1988-89) are mainly made up of raw materials and semi-finished products, live animals and foodstuffs; they are mainly supplied by Germany (18%), Japan (10%), Switzerland, Turkey, the United Kingdom and Italy (5%). The main buyers of crude oil are the countries of Western Europe (49%), followed by those of South America (17.3%) and those of Asia (13.4%) with the exception of Japan, which alone imports 12.7% of Iranian exports.

The substantially favorable attitude to the international anti-Iraq coalition maintained in 1990-91 by Iran in the course of the crisis following the Irāq invasion of Kuwait, it led to a marked improvement in international economic relations. The dispute with several Western countries, including Italy, was resolved and the debts incurred before the revolution were partially paid, the participation of foreign companies in the development projects of heavy industry and irrigation and transport infrastructures was resumed.

Iran Economic Sectors