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.
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.
Elections in June 2013 saw Hassan Rouhani, a moderate, elected as President. Rouhani has pledged greater transparency and cooperation with the international community to resolve concerns about Iran’s nuclear program, made conciliatory statements regarding relations with neighbouring states, and expressed support for improving Iran’s human rights record.
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. Majlis elections were most recently held on 26 February 2016 and the results have been widely assessed as an endorsement of President Rouhani’s administration.
On 16 January 2016 the International Atomic Energy Agency (IAEA) advised the UN Security Council that Iran had complied with the provisions of the Joint Comprehensive Plan of Action (JCPOA), which aims to ensure Iran’s nuclear program is used for exclusively peaceful purposes. This brought about ‘Implementation Day’ of the JCPOA, entailing the lifting of a number of UN sanctions and many of the sanctions imposed by the United States and Europe. Relevant Australian autonomous sanctions have also been lifted (see ‘Bilateral relations’ below)
The JCPOA seeks to constrain Iran’s nuclear program over the long term, provide verifiable assurances to the international community that Iran’s nuclear activities will be exclusively peaceful, and ensure that any attempt by Iran to pursue a nuclear weapon would be detected promptly. It includes strict IAEA monitoring, verification and inspection measures, with key elements of Iran’s nuclear program frozen or controlled for 10 to 15 years.
Australia's bilateral relationship with Iran is long-standing, with a historically strong trade relationship. We continue to engage in dialogue on a range of important issues, including people smuggling, terrorism, regional issues and human rights. Foreign Minister Julie Bishop visited Iran in April 2015 and met with President Rouhani, Foreign Minister Zarif and other Iranian leaders. Foreign Minister Zarif reciprocated with a visit to Australia in March 2016.
The value of Australia's two-way goods and services trade with Iran was $593 million in 2014. Traditionally, Iran has been one of Australia's leading wheat export destinations, and other primary exports include wool and meat. Following implementation of the JCPOA nuclear deal and the lifting of economic sanctions on Iran, there is significant potential for increased trade and investment flows.
In line with the JCPOA nuclear deal, on 17 January 2016 the Australian Government decided to lift certain autonomous sanctions, particularly economic sanctions. Key changes include removal of sanctions on the following areas:
- financial, banking and insurance
- oil, gas and petrochemical
- shipping, shipbuilding and transport
- gold, other precious metals, banknotes and coinage.
The easing of these sanctions will ensure that Australian business is not disadvantaged in pursuing opportunities in Iran.
In line with UN Security Council resolution and the EU approach, Australia will continue to enforce sanctions on arms and related material, certain metals, software and nuclear-related equipment, as well as persons and entities related to these areas.
Australians considering commercial or other dealings with Iran should familiarise themselves with the operation of the United Nations Security Council Resolution-mandated sanctions regime and Australia's autonomous sanctions, and seek independent legal advice before making commercial decisions.
The Australian Government remains deeply concerned about the human rights situation in Iran, including the use of capital punishment, in particular for juvenile offenders; violations of political and media freedoms; and discrimination against religious and ethnic minorities. The Government has repeatedly and strongly urged the Iranian authorities to respect the human rights of its citizens. Australia has expressed these concerns in multilateral fora, including the UN General Assembly and the UN Human Rights Council.
Iran is a significant regional economy with a large and fast-growing population (estimated to be over 80 million) 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, and economic growth is strongly influenced by oil market developments. Around 30-45 per cent of total budget income is 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 Rouhani was elected on the promise of improving the economy, which suffered during the administration of previous President Ahmadinejad, due to a combination of financial mismanagement and international sanctions. The economic situation remains difficult.
International sanction measures and declining Iranian oil production have contributed to a drop in Iran’s GDP growth in recent years, and the IMF projects that growth for 2015-16 will range from 0.5 per cent to negative 0.5 per cent.
For further insights, please see the March 2016 edition of Business Envoy.