Iran at a Glance
Geography

Located in the strategic expanse of land between the oil-rich Persian Gulf and the Caspian Sea, Iran borders Turkey and Iraq in the west and north-west, Armenia, Azerbaijan and Turkmenistan to the north and Afghanistan and Pakistan to the east. Spread over a total area of 1.648 million sq km (or roughly five times the size of Norway), Iran is one of the largest countries in the Middle East and shares land or water borders with 15 other nations.

Topographically, Iran is a mountainous country with the Zagros mountain range stretching from northwest to southeast and the Alborz mountain range extending from north to north-east. Iran is also largely semi-arid with two major deserts in the center-east of the country known as the Dasht-e Kavir and Kavir-e Lut. The northern region of the country around the Caspian Sea, which is the world’s largest lake, is a lush green area with subtropical rainforests and a wide range of wild-life. The southern region around the Persian Gulf has fertile plains which stretch from the southern coast to the Khuzestan plains in the south-west

Geographical Statistics of Iran

Total Area: 1.648 Million km²
Total Land Area: 1.636 Million km²
Total Water Area: 12,000 km²
Coast Line: 2,045 km. on the Persian Gulf and 765 km. on the Caspian Sea
Land Boundaries: 6,055 km.
Land Border Countries: Afghanistan (945 km.), Armenia (48 km.), Azerbaijan (759 km.), Iraq (1,609 km.), Pakistan (978 km.), Turkey (511 km.), Turkmenistan (1205 km.)
Lowest Point Caspian Sea: -20 m
Highest Point Damavand’s Peak: 5,671 m

Iran’s weather conditions range from bitter cold winters with temperatures reaching as low as -20°C in northern provinces to as high as +50°C in Khuzestan Province and the Persian Gulf coast. This great variance means that throughout much of the year one can ski in one province and scuba dive in another. Humidity also varies greatly ranging from very high along the Caspian coast and other regions near large bodies of water to very low in central areas of the country lacking significant surface water.

Population

One of the significant aspects of Iran's 70 million people is the age structure. After the Islamic Revolution the government promoted a high birth-rate and as a result the population has doubled, with the growth rate averaging 3.2% during 1980-1990. The birth-rate dropped off to 1.5% in the 1990's as the socio-economic implications of uncontrolled population growth became apparent and a successful birth-control program was implemented.

Iran's population is very urban with 68% living in cities, nearly 25% in the metropolitan areas of the seven largest cities including Tehran, Mashad, Esfahan, Tabriz, Karaj, Shiraz and Ahvaz. Although the rate of urbanization has decreased from 3.2% in the 80’s to 2.2% between 2000-2005, accommodating such large numbers in urban areas with inadequate housing, services and infrastructure has been a problem for the government. This combination of a young and urban population has made Iranian society very dynamic.

Population Statistics of Iran

Population: 70,472,846
Population Growth Rate: 1.61%
Birth Rate: 18.02 births/1,000 inhabitants
Death Rate: 5.27 deaths/1,000 inhabitants
Net Migration Rate: -4.29 migrant(s)/1,000 inhabitants
Infant Mortality Rate: 38.12 deaths/1,000 live births
Male: 38.29 deaths/1,000 live births
Female: 37.93 deaths/1,000 live births
Total Fertility Rate: 1.71 children born/woman
Life Expectancy Total: 70.56 years
Male: 69.12 years
Female: 72.07 years
Literacy Rate Total: 84.61%
Male: 88.77%
Female: 80.34%
Source: Iran Public Census carried out in November 2006

Iran is a very ethnically diverse country and includes the following groups: Persian (51%); Azeri (Turkish-speaking Iranians) (24%); Gilaki and Mazandarani (8%); Kurdish (7%); Arab (3%); Lur (2%); Baluch (2%); Turkmen (2%); and Others (1%). Persian (Farsi) is the country's official language although a range of languages associated with the ethnic groups above are spoken. Although ethnic minority groups don't enjoy full cultural and linguistic rights, in Iran inter-ethnic ties are amicable and intermarriage between the largest ethnic groups is common. Iranians from different backgrounds share a strong sense of history and many cultural traditions going back thousands of years. Religiously the majority of Iranians are Shiite Muslims (88% of the population) while Sunni Muslim make up 10% of the population and other religious groups, including Christian, Jewish and Zoroastrian make up the remaining 2%.

Politics

Iran as a political entity goes back at least 2500 years to Cyrus the Great who founded the Achaemenid Empire in 558 BC. Iran took the form of an Islamic Republic after the Islamic Revolution of 1979 when a coalition of social and political groups led by Ayatollah Ruhollah Khomeini toppled the Pahlavi Dynasty.

Like many of the world's political systems Iran has three main branches of government: the executive, the legislature and the judiciary. A unique feature of the Iranian system is the inclusion of a Velayat-e Faqih (represented by the Vali-e Faqih), or the Guardianship of Islamic Jurists, which combines religious and political authority in the Office of the Supreme Leader, superseding all three branches of government. Despite the perception in some countries that Iran is undemocratic, nearly every high office of state (with the obvious exception of the judiciary) is either directly or indirectly elected by the electorate. The Supreme Leader, who determines the general guidelines of domestic and foreign policy, has considerable powers of appointment, can veto legislation and acts as the commander in chief of the armed forces and all security organs, is himself chosen by the Assembly of Experts (Majles-e Khobregan-e Rahbari).

The most senior political body in Iran is the Assembly of Experts, composed of 86 clerics elected through a general vote. This body has the role of electing, supervising and, if necessary, dismissing the Vali-e Faqih. The Assembly of Experts is elected for a term of eight years. Although in theory the Leader is subservient to the electorate through the Assembly of Experts, in practice the Leader exercises influence over every elected office and legislative bill through the body known as the Guardian Council.

The 12-member Guardian Council supervises elections by vetting candidates and determines the constitutionality and conformity to Islamic principles of all laws passed by the Majles, or Parliament, thus playing both a judicial and legislative role. The Council is made up of six theologians appointed by the Leader and six Islamic jurists nominated by the head of the Judiciary (appointed by the Leader) and approved by the Majles.

The Executive branch of government is headed by the President who is the second most important figure of state after the Leader and may be elected for a maximum of two consecutive four year terms by popular vote. The President is responsible for selecting a Cabinet with the approval of the Majles, implementing the constitution, determining policy except where the Leader is concerned and acting as the Chairman of the Supreme National Security Council (SNSC). The current president of Iran is conservative Mahmoud Ahmadinejad (elected June 2005).

The Legislature, known as the Majles, is a 290-seat single chamber body. Members are elected for four-year terms on a multi-member constituency basis. The Majles ratifies legislation, vets ministerial candidates and may impeach the President with a two-thirds majority vote. The Majles cannot constitutionally be dissolved by any body.

The Expediency Council was created in 1988 on a personal decree by Ayatollah Khomeini. It acts as a mediator and arbitrator between the Majles and the Guardian Council.

The Judiciary, like the presidency and the Majles, is an independent power, but with the difference that the chief judge is directly appointed by the Supreme Leader. Iran's legal system is based on the French Civil Code but adheres to fundamental Islamic principles. In addition to the array of courts typical of most legal systems, the Iranian system has a Revolutionary Court which deals with offences to the ideals and principles of the Islamic revolution and the government. The current head of the judiciary is the conservative Ayatollah Mahmoud Shahroudi. The Clerical Court, a special court for members of the clergy, is independent of the judiciary.

Two other players in Iranian politics are worth noting. The first is the Islamic Revolutionary Guards Corps (IRGC), a military force dedicated to the internal security of the Islamic Republic and loyal chiefly to the Supreme Leader. Having played a major role in the Iran-Iraq war, the IRGC has managed to get key members elected to the Majles, local town and city councils and recently the presidency. Political maneuvering has thus enabled the security establishment to indirectly play a role in Iranian politics and allowed the IRGC to benefit themselves through access to lucrative government contracts. The second group is known as the Bonyads (foundations).

Economy

Constitutionally Iran's economy is divided into state, cooperative and private sectors, with the state sector mandated to dominate all strategic industries, cooperatives to serve local needs and the private sector to supplement the state and cooperative sectors. The Constitution has for the most part determined the nature of the Iranian economy since the Revolution with 60% economic activity controlled by the state and another 10-20% by semi-governmental religious foundations known as Bonyads.

Macroeconomic Indicators of Iran

Indicators Iranian year 1386 (2007/08):
GDP: $280.3 bn
GDP growth: 4.8%
GDP per capita: $3,913
Inflation official (and unofficial): 11% (20.8%)
Liquidity growth: 36.8%
Population (million): 70.4
Active work force (out of the total population): 42.6%
Unemployment Official (and unofficial): 10.6% (15.2%)
Oil & gas exports: $57.1 bn
Non-oil export (incl. services and petrochemicals): $15.0 bn
Imports: $49.4 bn
Trade balance (incl. crude sales): $22.7 bn
Budget deficit: $10.2 bn
Foreign debt: $28.6bn (by the end of 2007)
OSF Balance by September 2007: $6.3 bn
Av. exchange rate (IRR/US$) $1=IRR 9,350
Main Sources:
1. Central Bank of Iran (CBI)- Macroeconomic data calculated by the CBI
2. Statistical Center of Iran (SCI) – Population and employment statistics
3. Iran Economic Magazine – OSF Balance

Since the Iran-Iraq War (1980-88) the government has been attempting to privatize most state and semi-state enterprises through the Iran Privatization Organization (IPO). However, privatization success has been mitigated by low uptake of the five percent Initial Public Offerings, the fact that the majority of entities capable of buying privatized assets are state owned, lack of transparency and foreign investor fears of possible sanctions against Iran because of the Iranian Nuclear Program. Additionally, based on the Iranian Foreign Investment Law, foreign investors are allowed to purchase only up to 10% of Iranian companies, a figure that does not enable them to place their representatives in decision-making positions. This is believed to be the greatest turn-off foreign investors face when considering to participate in Iran’s privatization process.
Although Iran has a fairly diversified economy in terms of the distribution of GDP by sector, the country relies on the oil industry for 80% of its hard currency earnings. The government also relies on oil revenues for 75-80% of its budget. Because any major drop in oil prices could severely affect the government's ability to operate, the Oil Surplus Fund (OSF) was established in the year 2000. Every year the government makes a conservative estimate of the price of a barrel of crude oil and uses this estimate to write the national budget. Any price increase over the base price estimate is stashed in the OSF which must be maintained at a minimum of $5 billion. This amount is used to supplement the budget in the event that the price of oil slips beneath the base price estimate.

Iran has had problems with high liquidity and high inflation because of unrestricted government expenditures. In 2005 President Ahmadinejad was elected on a platform of wealth redistribution. In an attempt to fulfill his promise to deliver oil revenues to the people’s tables, President Ahmadinejad has pumped huge amount of liquidity into the economy with granting low-interest loans to local and small-scale projects and the poor promised during his provincial trips. He has also set "Justice Shares" aside for the poor and invested in other poverty reduction projects. Such spending has only been possible because of significant withdrawals from the OSF, reluctantly approved by the Majles. With such significant cash flows entering the economy liquidity has been at an all time high, leading to significant inflation and, ironically, causing the opposite effect for the poor and middle classes than what the government intended.

Underemployment and unemployment are also major problems, with skilled workers and university graduates unable to obtain jobs in their fields and forced to work low-end jobs.

Business Culture

Iran is a complex country with a sophisticated culture. Successful business is based not only on a clear understanding of the economic and social climate, but also on some basic knowledge of Persian etiquette.

Iranian social customs are a very important element of the business culture. In general, Iranians are warm, friendly and generous individuals with a strong interest in foreigners and other cultures. Some of the following tips may be useful when dealing with Iranians. When visiting an Iranian household for the first time or on a special occasion it is customary to bring a small gift. Flowers, sweets or pastries are popular gift choices. Meal times in Iran vary considerably from those in Europe and the US. Lunch can be served from 1:00-3:00 PM and dinner is often eaten after 8:00 PM. Meals and other social customs in Iran are often long, drawn-out affairs. It is considered rude to refuse what is served, so visitors should accept the items offered even if they do not intend to consume them.

Along with these social customs, certain additional business etiquettes should be taken into consideration before interacting with Iranian businessmen. Although officials of the Islamic Republic are not allowed to wear a tie and proper business attire need not include a tie, it is very common for visiting foreigners to wear it. Woman must adhere to the Islamic dress code. Officials will not shake hands with a member of the opposite sex, especially in public. Extending one's hand may create an awkward situation, so it is best to refrain from doing so in all situations involving interaction between opposite sexes. The same is true for private citizens, particularly if they are religious.

It should also be noted that Iranian officials (and most Iranians) are extremely sensitive to references to the Persian Gulf, and insist that only this internationally-recognized name be used. It is highly recommended to avoid using "the Gulf" and especially "the Arabian Gulf" when addressing this body of water. With the rise of Arab nationalism in the 1960’s under the tutelage of Gamal Abdel Nasser, some Arab countries, including the ones bordering the Persian Gulf, started using the term "Arabian Gulf" to refer to the waterway. This is controversial and not commonly used outside of the Arab world, nor is it recognized by the United Nations (UN) and other international organizations. Twice, in 1994 and 1999, the UN issued editorial directives affirming the UN’s recognition of the term "Persian Gulf" as the official and standard geographical designation.

On a similar note, although it is estimated that 1-2% of the Iranian population are of Arab origin, Iranians may be offended if referred to as Arab as they are not Arabs, speak a language whose roots are not Arabic and have a uniquely different culture and history.