Iran country brief

Overview

Australia has a mature bilateral relationship with Iran. Australia has maintained a continuous diplomatic presence in Iran since our Embassy opened in Tehran in 1968. Iran has maintained a diplomatic presence in Australia since opening its Embassy in Canberra in 1971.

Political overview

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 88 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 forces (including appointment of commanders, control of intelligence and security agencies) and holds the authority to initiate changes to the constitution. Iran’s second and current Supreme Leader, Ali Khamenei, assumed the role in 1989, succeeding the ‘father’ of the 1979 revolution, Ruhollah Khomeini.   

Elections in May 2017 saw Hassan Rouhani, a centrist, re-elected as President (he was first elected in presidential elections in June 2013).  The next presidential election is scheduled for 2021.

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 in 2016.The next Majlis elections are scheduled for 2020.

Joint Comprehensive Plan of Action

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, the lifting of a number of UN, US and EU sanctions stipulated in the agreement, and the entry into effect of UN Security Council Resolution 2231 which endorsed the JCPOA. Australian autonomous sanctions were also eased (see ‘Bilateral relations’ below).

The JCPOA has sought 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.

On 8 May 2018, US President Donald Trump announced that the US would cease participating in the JCPOA and would re-impose sanctions suspended under the agreement. The first tranche of re-imposed US sanctions was re-introduced on 7 August 2018, and the second tranche on 5 November 2018. While the US initially extended waivers to eight key importers of Iranian oil to allow them to transition to other oil sources, on 22 April 2019 Secretary of State Pompeo announced that no further waivers would be granted once they expire on 2 May 2019.

On 15 December 2018 Prime Minister Morrison announced, following a without prejudice review, that Australia would maintain its support for the JCPOA, subject to Iran’s continuing compliance. Australia’s position of support serves our interests in nuclear non-proliferation and reinforces a rules-based international system. The review also noted that the JCPOA does not address a range of Iranian activities of concern to Australia, including its destabilising activities in the Middle East and beyond. Further detail can be found in the Prime Minister’s speech to the Sydney Institute.

Bilateral relations

Australia's bilateral relationship with Iran is long-standing, and includes a long-running trade relationship. We continue to engage in dialogue on a range of important issues, including people smuggling, terrorism, regional issues and human rights.

The value of Australia's two-way goods and services trade with Iran was $572 million in the 2017-18 financial year. Traditionally, Iran has been one of Australia's leading wheat export destinations, and other primary exports include wool and meat. During his September 2016 visit to Iran, former Trade, Tourism and Investment Minister Ciobo formally re-opened the Australian trade promotion office in Tehran, managed by Austrade.

In line with the JCPOA nuclear deal, in January 2016, Australia eased its autonomous sanctions, including the removal of sanctions in relation to:

  • doing business in the oil and gas, banking and finance and transport sectors
  • providing services to the shipping, petrochemical and military industries
  • exporting gold, other precious metals, banknotes and coinage, certain equipment and vessels for the oil, gas or petrochemical industries and naval equipment and technology.

Since the implementation of the JCPOA, Australia has also lifted a number of designations of individuals and entities for targeted financial sanctions and has removed restrictions on providing assets to a number of specified Iranian entities. Pursuant to UN Security Council resolution 2231 (2015) and Australia’s autonomous sanctions regime, Australia continues to implement certain sanctions in respect of Iran.

Australians considering commercial or other dealings with Iran should familiarise themselves with the operation of remaining UN Security Council sanctions, Australia's autonomous sanctions, the sanctions laws of other countries, and seek independent legal advice before making commercial decisions. For more information, please see the Iran sanctions regime page.

Human rights

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. In 2017, Australia resumed a bilateral officials-level Human Rights Dialogue with Iran. The first of these was held on 24 August 2017 in Canberra, with a subsequent Dialogue held on 19 August 2018 in Tehran. These private dialogues provide an opportunity for Australian and Iranian officials to discuss human rights issues, and differences, in a frank and constructive way. Australia’s engagement was informed by side consultations with interested NGOs and civil society.

Economic overview

Iran is a significant regional economy with a large population (estimated to be over 80 million) and ranks second in the world in natural gas reserves and fourth in proven crude oil reserves.

The economy is heavily dependent on hydrocarbon exports and dominated by the oil industry. As a result, economic growth has traditionally been strongly influenced by oil market developments. 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. This effort is ongoing.

Large state-owned enterprises dominate key industry sectors, and organisations controlled by 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 prudent 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.

Following the US withdrawal from the JCPOA and reimposition of US sanctions, the IMF has predicted that Iran’s economy will contract by 6 per cent in 2019. At the same time, the IMF has reported that Iran’s annual rate of inflation reached 37.2 per cent in April 2019.

Last Updated: 3 May 2019