Iran Energy News Oil, Gas, Petrochemical and Energy Field Specialized Channel
Related Articles
Since the establishment of the Islamic Republic in 1979. there have been many discussions about Iran`s approach towards the foreign countries.
After the end of Iran-Iraq war in 1989. Iranian politicians began to pay extreme attention to foreign policy issues in order to improve Iran`s deteriorated relations with European countries.
Iranian leaders have learned from their traumatic experience of the war that good diplomatic relations with other countries especially European countries would have political. economic and even cultural consequences for Iran.
Among Iran`s policy makers. President Hashemi Rafsanjani`s foreign policy and its effect on Iran`s economy is so important.
Rafsanjani`s Experience
In 1989. Akbar Hashemi Rafsanjani. as a pragmatist political figure. was elected as president of the Islamic Republic. His administration recognized that Iran has paid high price due to its confrontational and dogmatic foreign policy and they sought to repair those damages.
The main aim of his administration was how to transform the Islamic Republic of Iran to regional power. the largest. and the strongest economy in the Middle East.
Islamic Republic of Iran. during Hashemi Rafsanjani’s presidency. decided to restore its political relations with the European Union and develop its economic relations with influential regional institutions.
These breakthroughs in diplomatic relations were based on mutual understanding and cooperation. Even before the establishment of the European Union. Iran had close economic
relations with some European countries especially Italy and Germany.
During his presidency. Iran formally applied for membership of the WTO on several occasions. In 1995. the Islamic Republic of Iran submitted a request for WTO observer status.
Hashemi Rafsanjani’s administration drew up a five-year economic development plan to reconstruct Iran’s economic system.
The plan had several parameters including: privatization of domestic sector. deregulation of economic activities in banking and financial service. encouraging foreign direct investment in the national economy. receiving foreign loan. creation of free economic zones around the country. development of Tehran Stock Exchange. devaluation of Iranian currency (Rial). gradual elimination of subsidies. and to encouraging Iranian specialists to come back from Abroad.
Prior to his presidency. oil export fell to 500.000 bpd during the summer of 1986
and his administration could not increase oil production. While oil production was about 2 million bpd. the average export was about 1.3 million bpd in 1986-87. Moreover. while Iran was in needed huge money to reconstruct its economic structure. low prices minimized oil revenue.
Despite all of economic difficulties. the foreign policy pursued by President Rafsanjani led to increase in GDP from 81.2 Billion of U.S. dollars in 1989 to 110.6 Billion of U.S. dollars in 1996. In fact. his foreign policy encouraged European companies to invest in Iran. For instance. French Total Company signed a contract with the Iranian Oil National Company to develop Siri oilfield in 1995. The Company made an investment roughly $600 million in this oilfield within five years.
Furthermore. his economic policies produced some desired effect. as Iran invested in
infrastructures including building dams. airports. oil refineries. and irrigation system.
During his presidency. Iran oil export rose gradually and many other giant firms took steps against US sanctions. in July 1995. the French –based oil company Total and Iran`s NIOC signed a contract for the development of offshore oil and gas fields in Siri. The same contract had been given to the U.S. company. Conoco. earlier but was pulled out after the approval of
U.S. ILSA Act. Also. Total Company signed a $2 billion contract (together with Russian Company Gazprom andMalaysian Company Petronas) to explore the South Pars Gas field and to develop the field during Phase 2 and 3. Moreover. the Islamic Republic of Iran and France entered into a contract for developingairports. rail. land. and sea facilities for transit ofFrench goods to Central Asia. Furthermore. Germany and Iran became trading partners. mainly regarding oil imports and exports of other products to Iran. Also. Great Britain. Norway and Netherland tried to improve their economic relations with Iran. In general. Iran exported %36 of its total export to the European Union. %75 of which was oil. Iran`s external debt to the European Union (rescheduled in 1996 -1999) amounted to $ 10 billion by 2001.
Many Iranian Politicians believe that he was a man of big failures and big achievements. Rafsanjani was a very competent manager and a seasoned politician. He had been involved in politics for over half a century. They describe him as a pillar of the revolution. while his pragmatic economic and foreign policies have always appealed to many Iranians.
