歐盟的貿易
 

伊朗伊斯蘭共和國是中東的一個國家，勞動力和資源豐富。這個區域是美國國家安全政策集中和關注的領域。美國已指定伊朗政府作為贊助恐怖主義的國家。 2006年在美國國家安全戰略中，政府觀察到，美國可能無法單獨應對來自其他國家的任何更大的挑戰，它有來自伊朗的威脅。美國還認為，在整個中東地區，伊朗已被證明是最大的不穩定因素;美國也表示對伊朗的國際及本地區域（所羅門，杰; Farnaz Fassihi，2010）的影響越來越嚴重關切。 
 

研究問題
 

目前進行研究目的是參照其交易以及影響其經濟發展，同時也關系研究伊朗的地緣政治的方式。目前的調查研究將主要集中在歐盟和伊朗之間的交易，有時對伊朗和世界或伊朗和其他國家之間的貿易。本文將主要處理關于最近一段時期（2001-2012）的信息和數據。關于伊朗的貿易流動，其雙邊關系和條約中的信息，以及石油部門在該國的重要性將在被研究和探討。此外，本文還將討論禁運和禁止影響的交易對伊朗的影響。
 

The Trade Between The Eu Economics Essay

 

The Islamic Republic of Iran is a country of the Middle East that is labor-rich and resource-rich. This region is the area of focus and attention of the national security policies of the United States. The U.S. has designated the government of Iran as a state that sponsors the terrorism. The Administration of 2006 in the U.S. National Security Strategy observe that the United States may not be able to counter any bigger challenge from any other country individually that the threats it has from Iran. The U.S. also contends that, in the entire Middle East, Iran has proven to be the biggest destabilizing force; United States also expresses serious concerns regarding the increasing influence of Iran internationally as well as in the local regions (Solomon, Jay; Farnaz Fassihi, 2010).

 

Research Problem

 

The current research is undertaken with an aim to study Iran in a geopolitical manner with reference to its trading and relations that influence its economy and development too. The current research study will primarily focus on the trade between the EU and IRAN, and sometimes on the trade between IRAN and the world or Iran and another country. The paper will predominantly handle the information and data about the recent period (2001-2012). The information regarding the Iran's trade flows, its bilateral relations and treaties, and the significance of the oil sector in the country will be researched upon and discussed. Moreover, the paper will also discuss the influence and impacts of the embargo and bans on the Iran are trading.

 

The information in the current study will be undertaken to be researched from various journals of economy, databases, online libraries, and from the factsheets about Iran. The geography, demographics, currency, revolutions, GDP, and numerous other economic and political factors will be undertaken to discuss. The current research will present a good amount of data and information for the public and the readers regarding the recent impacts and influence regarding the Iranian government. It will also form the basis of the researches on the Iran's future and making prediction about it in the future studies.#p#分頁標題#e#

 

2. Iran

 

Introduction

 

Iran was known as Persia till 1935. Persia was one of the greatest kingdoms during the ancient era. The year 1979 saw Iran become a unique Islamic state after the kingdom was overthrown in a coup. Religious scholars and clerics took control of politics under the guidance of the supreme leader Ayatollah Khomeini. Ever since the coup, the country has gone through a war with its northern neighbor Iraq that spread across eight years from 1980 to 1988. During this time, Iran was going through internal struggles for power, civil unrest, violations of basic human rights and economic chaos. After the death of Ayatollah Khomeini in 1989, Ayatollah Ali Khamenei was chosen as the lifetime supreme leader (Allen, 1979).

 

Following the change of regime in 1979, Iran, with the help of its conservatives and hard-liners has isolated modernists and reformers. The modernists suffered a significant blow when in June of 2005, Mahmoud Ahmadinejad, the ultra-conservative mayor of the capital city Tehran was selected as the President of the country. Mahmoud Ahmadinejad was once more selected as president in the 2009 election which was considered controversial and rigged (Commission of the European Communities, 2001). This increased the gulf between the modernists and conservatives in the country. The country has been the subject of a number of sanctions by the European Union (EU), the United Nations and the United States in economics and exports as these entities believe the Persian nation is actively sponsoring terrorism and developing weapons-grade nuclear arsenal. The Security Council of the United Nations has passed numerous resolutions that demand Iran to discontinue its uranium development program and nuclear processes (Commission of the European Communities, 2001).

 

The Republic of Iran is the third biggest producer of oil in among the OPEC nations and owns approximately 10 percent of the global oil resources. Iran also enjoys the second biggest share of natural gas resources in the world, behind only Russia. The country’s economy is heavily reliant on the hydrocarbon sector that generates the largest amount of revenue (85 percent) and has a contribution of 30 percent to the gross domestic product (GDP). Over the past few years, the country has been able to sustain significant rates of growth largely due to the international oil market conditions and the government’s expansionary policies.

 

However, with the government controlling most economic activity, imprudent public-sector spending, subsidies, price controls, corruption, and inefficiency have weighed down the economy and undermined the potential for private-sector-led growth (Posch, 2010).

 

Like other oil-producing countries in the region, Iran was not spared by the global economic crisis. Given its very high dependency on the oil sector, Iran’s real GDP growth slowed substantially in 2008 and 2009 with sharply falling oil prices, while the fiscal position was also adversely affected. In response to the crisis, the government tightened fiscal and monetary policies, which helped stabilize macroeconomic conditions. Inflation declined in the context of falling world commodity prices, and the non-oil fiscal deficit narrowed due to a reduction in government spending. In late 2009, the parliament approved an ambitious energy price reform aimed at strengthening the fiscal and external positions, enabling higher investment in the energy sector, and supporting higher and more sustainable growth (Smith, & Fellow, 1997).#p#分頁標題#e#

 

Through the bill, the country would gradually end subsidies that the upper class and the middle class found favorable. Over the following three to years, the government would replace these subsidies by making cash payments to the country’s lower class. But fears over public reaction to higher prices led to the program being delayed repeatedly throughout 2010. Finally, by December 2010, the adoption of price hikes in energy items, wheat and public transportation were accounted to have made up for approximately 15 percent of the GDP which, monetary terms amounts to $60 billion in yearly indirect subsidies that were directed toward commodities, as reported by the IMF. During the same time, the consequential disbursement of revenues has been essential in decreases inequalities in the society, raising the standard of living and complementing domestic demand of the economy (Esfahani & Mohaddes, 2009).

 

Iran’s oil export revenue climbed by at least $10 billion in 2010 compared with 2009, boosted by energy price increases. This helped offset some of the financial impact of international sanctions despite the side effect of higher inflation. In late June 2011, the United States moved to impose sanctions by blacklisting the country’s national airline, Iran Air, and the biggest port operator, as a measure to exert pressure on the Persian state to put an end to its nuclear development program. On the political front, the government was faced with mounting pressures from the international community, including United Nations sanctions, over Iran's nuclear program. In the second half of 2011, the U.S. government slapped Iran with sanctions in an effort to prohibit nearly all trade and investment with the country (Smith, & Fellow, 1997).

 

As a result, Iran was slapped with sanctions citing reason that the country was sponsoring terrorism, the country persistent refusal to open its nuclear facilities to IAEA inspections and the violations of human rights. On December 31 2011, the United States President Barack Obama signed the National Defense Authorization Act for the following fiscal year. According to this law, any foreign institution that consciously assists or conducts any transaction with the Central Bank of Iran or any other Iranian financial organization would be penalized in the form of disallowing direct access to the American financial system. In January of 2012, the EU passed the decision to outlaw imports of petroleum and crude oil from Iran and froze the assets of the Central Bank of Iran that it held in the EU.

 

In July 2012, U.S. Defense Secretary Leon Panetta claimed that Western sanctions against Iran over its nuclear program were having a serious impact “in terms of the economy of Iran,” according to Reuters. Later in the month, Iranian and Syrian officials entered into agreements on energy and water supply. Moreover, Iran’s supreme leader Ayatollah Ali Khomeni stated the Iran should look to other resources of revenue for in order to improve its economic conditions. Due to the sanctions, the country saw its exports decline gradually and by the mid of 2012 the level of exports was down from the previous 2.2 million barrels every day that it produced in 2011. This was a consequence of the sanctions imposed by the West as buyers looked to remain compliant to the new regulations (Shea, 2000).#p#分頁標題#e#

 

Geography

 

In terms of landmass, Iran is only larger than the US state of Alaska. The country spreads a distance of 636,372 sq. miles or 1,648,195 sq km. A large portion of the country is located on a plateau in a desert that is 4000 feet above the sea level and is surrounded by two mountain ranges. In the west lies the Zagros Mountain range whereas the Elburz Mountains lie in the north of the country. The highest mountain in the country, Mount Damavand reaches a height of 5671 meters and is an inactive volcano situated in the northern Elburz Mountains. The eastern side of the desert remains vastly uninhabited just like the mountains in the area. The coastal areas are narrow and link the country to the Persian Gulf and the Caspian Sea. Iran lies on a seismic crossroads and often encounters earthquakes.

 

The climate of the country varies from one area to the other. Summers in Iran typically last from June to August. From December to January, the country experiences winter. The length of these two seasons may however vary on the basis of the region. In central Iran, summers are dry, hot and long on the desert plateau. Apart from the Caspian Sea, winters in the northern region are cold. As a measure to conserve wildlife, the Iranian government has allocated land in order to preserve endangered species of animals like the lynx, desert onager and the Caspian tiger. Iran has a dense population of foxes, wolves, and bears in the forests on the mountains (Egendorf, 2006).

 

Government Functions

 

Iranian Constitution

 

The Iranian constitution of December 1979 guides the country’s economic, social and political policies and procedures. According to the constitution, the Shi’a sect of Islam would be the official religion of the country. Religious and secular scholars and leaders and councils are responsible for the governance of the country. On a number of occasions the duties of the religious and secular scholars have been witnessed to coincide. After a decade in 1989, the constitution saw amendments being made to it in order increase the authority of the President and do away with the role of a Prime Minister (Dominguez, 2007).

 

Executive Authority

 

The supreme leader or the “Rahbar-e-Moazam” is the religious leader or the “Wali Faqih” who enjoys the executive authority in the country’s decision making. In case the Wali Faqih is unable to attend a meeting, a council consisting of three or five religious leaders convenes to make the decision. According to the constitution, the council must consist of members that must be a part of the clerical establishment after reviewing their qualification and their reputation among the masses of the country. The supreme leader is selected by the Council of Experts of the “Majlis-e-Khobregan”, which is primarily a band of clerics. On December 10 1982, the first Council of Experts was chosen in order to find a successor to the Wali Faqih of the time, Ayatollah Khomeini. Generally, this Council consists of hard-liners and conservative clerics (Egor, 2010).#p#分頁標題#e#

 

In Iran, the supreme leader of the Council is regarded as the head of the nation in addition to being the commander in chief of the country’s armed forces. The supreme leader also has the authority to designate personnel for the highest judicial positions, who are all religious jurists. The Council or the Supreme Leader also designates the six members of the Council of Guardian or the “Shura-e-Nigahban”. The six members, who are all lawyers, are initially designated by the Judiciary High Council and are later given approval by the Islamic Consultative Assembly or the “Majlis-e-Shura-Eslami”. The Shura-e-Nigahban approves the hopeful candidates for the country’s Presidency and the general assembly and also supervises the general elections (Moradi, 2008).

 

The President, the head of the government, is elected by universal suffrage for a term of four years by gaining majority of the votes and is responsible for the works of the executive functions of the state. It is in the powers of the President to appoint and oversee the Council of Ministers or the cabinet members. He also is the coordinator for the governmental decisions and chooses the policies that are to the brought before the general assembly (Nikou, 2010).

 

Legislative Authority

 

The Islamic Consultative Assembly or the Majlis-e-Shura-e-Eslami is made up of 290 members that are elected for a period of four years. The Council of Guardians is responsible for reviewing the legislations presented by the assembly.

 

Judicial Authority

 

Iran’s legal or judicial system is based on the principles of the Shari’a or the Islamic law. The four members of the High Council of the Judiciary and the Supreme Court have the judicial authority that is granted by the constitution. These two institutions have coinciding duties but are headed by one person. Working together, they have the responsibility of supervising the application of the laws of the land and also to establish legal and judicial regulations and policies (Osullivan, 2011).

 

The Iranian Revolution of 1979

 

The Iranian revolution of 1979 overthrew the Pahlavi dynasty and established an Islamic republic. In 1953 when it appeared that the monarchy was about to be overthrown, the Central Intelligence Agency (CIA) helped to orchestrate a countercoup that kept Shah Mohammad Reza Pahlavi in power. Iran, under the shah, was closely allied with the United States and in the cold war Iran was a staunchly pro-Western buffer on the southern flank of the Soviet Union. Iran was used as a base for United States military and intelligence gathering aimed at the Soviet Union. The United States also supplied considerable assistance to the shah (The Council of the European Union, 2010).

 #p#分頁標題#e#

In 1961 the shah announced an ambitious plan of development known as the White Revolution. The six-point plan included improvements in women's rights, healthcare, and education, as well as privatization of state-owned factories and land reform. The proposed nationalization of land owned by the clergy and landed elites led to major demonstrations against the government. The shah repressed all political opposition, and his secret police, SAVAK, imprisoned and often tortured opponents of the regime, especially members of the Iranian communist Tudeh Party (Tocha, 2009).

 

Conservative businessmen in the Tehran bazaar, traditionally a major force in Iranian politics, and the clergy were also offended by the lifestyles of the elite, who emulated Western dress, consumed alcohol (forbidden to Muslims), and practiced open relations between the sexes. Even the Iranian middle class was dismayed by the extravagant expenses of the 1967 formal coronation of the shah and his wife and the 1971 celebration of the 2,500th anniversary of the Peacock Throne at Persepolis. In the 1970s Iran became a regional power when the shah used increased revenues from petroleum to buy sophisticated armaments, mostly from the United States (Waltz, 1979).

 

A number of Iranian intellectuals laid the groundwork for the revolution in books and treatises critical of the Pahlavi regime. Samad Behrangi (1939–68) wrote popular folktales that were in fact veiled critiques of the shah's regime. He also wrote against what he called "west struckedness," or intoxication with all things Western. Jalal Al-e Ahmad (1923–69), a writer from a clerical family, described those Iranians who copied the West as diseased. Ali Shari'ati (1933–77) was the most influential Iranian social critic. A sociologist, Shari'ati was educated at the Sorbonne. He was familiar with Marxist thought but fused it with Islam, arguing that independent reasoning should be applied to interpreting the Qu'ran to create a new society. A prolific writer, Shari'ati was a major influence on a new generation of Iranian students. In an attempt to halt his writing and political activity, the government arrested Shari'ati, who was tortured, released, and then placed under house arrest. His books were banned, and he died in exile in London (Moridi, 2004).

 

Economic Performance

 

Iran enjoyed strong economic performance in recent years, largely supported by favorable oil market conditions as well as expansionary fiscal and monetary policies. Real GDP grew 5.7 percent in 2005, and accelerated to nearly 7 percent in 2006 and 2007. However, real GDP growth slowed to below 3 percent in 2008 and 2009 and an estimated 1.6 percent in 2010 as a result of the global economic crisis. Higher world commodity prices drove inflation to almost 30 percent in 2008, but fell rapidly to around 15 percent in 2009 and an estimated 10.8 percent in 2010. A decline in oil revenues led to a deterioration in the fiscal account, from a surplus of 2.7 percent of GDP in 2007 to a balanced position in 2008 (Vreeland, 2006).4. Trade between Iran and EU Partners#p#分頁標題#e#

 

Formation of trade agreements, regional trade agreements and trade organizations is expected to increase trade. Countries try to achieve or get closer to free trade (theory of second best) by reducing or eliminating the tariff with members of the trade agreement (TA) and maintaining it with the non-members (Gheissari, 2009). Floor (2011) analyzed the trade creating and diverting effect of trading arrangements more broadly with contrasting results. Based on empirical evidence of trade creation and diversion, the results ranged from more trade creating than diverting effect for an average country signing a new regional agreement to trade diversion becoming trade creation with an eventual reduction of tariffs.

 

If the formation of TAs is significantly related with political factors or economic policies of member countries, which are also related with trade volume, then these other factors must be accounted for in order to correctly understand the relationship between FTAs and trade volume. For example, empirical work has shown that most of the increase in trade among European countries in 1960s and 1970s could be explained by the EC members’ size, level of development, proximity, common borders, and common languages Similarly, the rapid growth Iranian economy was also found to be sufficient to explain the increase in their trade shares from 1965 to 1990 (Amid & Hadjikhani, 2005). By contrast, El-Agraa (2011) argued that even after accounting for most of the important influences on trade flows, TAs were still found to increase member countries’ trade about 86 percent on average after 15 years since the implementation of the TAs.

 

Share of EU countries in Import of Oil from Iran

 

The European Union is the main trading partner and after 2003, the year in which the international community has discovered the alleged secret plans of Iran to acquire the atomic bomb, European exports have increased instead of decline: between 2003 and 2005 there was a 29% increase in exports to Iran. According to the International Monetary Fund (IMF ) for 2005, more than 40% of Iranian imports come from EU countries with a volume of over 14 billion euro, which in turn account for about 10 billion euro or one quarter of total exports of Iran (Mousavian, 2008). While Great Britain and France have interests in Iran that is mainly related to energy supply, Germany, Italy and Netherlands provide vital investments for the Iranian economy. Europe, Germany in particular, exports its 90% of machinery to Iran. It is also important to know that these trade relations are growing. In fact, Italy is also seen as one of the main partners of Iran with approximately 4.5 billion euro in export credits for Italian companies. The biggest share of exports to Tehran, after the European Union, it is for the United Arab Emirates and China, both with only 8, 3% each. Russia has a market share of 4.8%, India 3.6%, Japan 3.4% (Mousavian, 2008).#p#分頁標題#e#

 

In 2008, over 25 automakers in Iran were actively producing both light and heavy vehicles, yet it is remarkable to observe the growth of the auto production after the September 2010 sanction, when CISADA was imposed. Iranian automakers are in collaboration with several popular international automakers such as Nissan (Japan), Chery (China), Peugeot and Citroen (France), Proton (Malaysia), Toyota (Japan), Volkswagen (Germany), and Kia Motors (South Korea). Many other established producers of light and heavy vehicles such as Daewoo and Hyundai (South Korea), B.M.W. and Mercedes Benz (Germany), and Renault (France) have emerged since 1991 (Mousavian, 2008). The Italian automaker Fiat has also announced plans to begin production of its Siena sedan in Iran in 2008. It is also interesting to point out that under Iran’s Automotive Industry (IAI) regulations any foreign company who would like to export cars to Iran, are supposed to comply with IAI’s guidelines; establishing a minimum of one repair shop for each 500 cars, and providing warranty on spare parts and repairs for duration of ten years is mandatory (Mousavian, 2008).

 

The most important thing to know is that the United States has no business relationships with Iran as Iran is facing economic sanctions by the United States. Today, the sanctions imposed by the UN Security Council in December 2006 include the freezing of assets of many Iranian businesses in relation to Iran's nuclear project. The role of some European countries like Italy and Germany is very important in this regards as Italy took a different position in relation to the requests for economic and commercial embargo against Iran. The current exposure of the SACE billion euro also presents a major risk (Mousavian, 2008). In case of further exacerbation or worsening of the international situation, it is difficult to imagine what scenarios would open and how the SACE, and then the Italian government could manage an exposure of billions of euro. Researchers believe that Iran Europe trade relations are of wavy in nature where it is difficult to predict any long term consistency due to the political situation of Iran and the concerns of international community for its nuclear program (Mousavian, 2008).

 

5. FDI in Iran

 

Foreign direct investment (FDI) refers to all kinds of direct investments being made into the business and production sectors of a particular country by a entity based company from another country across the globe. FDI could be made by directly purchasing the company’s major portion of shares in the target country or by starting new company or expanding the existing operations of an existing business in the target country. Foreign direct investments in general has many significant advantages for the target country to receive the substantial amount of investments as well as revenue resources in the form of collective tax revenues though the fact remains that foreign companies are offered many tax exemptions and cheaper wages in order to encourage them to invest in business and production sectors (Moghaddam & Redzuan, 2012; Askari et al., 2012). Hence, FDI in particular provide advantages to the foreign based companies to avail the cheaper wages or for special privileges avail the benefit of the tax exemptions offered by the direct company. In this way, foreign based companies gain the incentive of tariff-free access to markets of the target country and its regions (Medvedev, 2012) and hence researchers such as (Askari et al., 2012) emphasized that this plays the significant role in attracting substantial foreign investment in the target country as well as provide economic advantage to the companies of foreign countries leading to mutual business interests. As a result, both countries enjoy the substantial benefits of growth and economic development from the foreign direct investment which is positively influencing the production and business sector development and increase in per capita income of people.#p#分頁標題#e#

 

Also, researchers such as (Javorcik & Spatareanu, 2011; Lee & Mitchell, 2012) stated foreign direct investments have more significant and positive influence on the economic and trade development of the country as compared to indirect investments such as portfolio flows or investments which are directed as the passive investments being made in the target nation’s stock exchange such as securities, bond stocks. As the matter of the fact, foreign direct investments as the part of national accounts of the country is defined as Y=C+I+G+(X-M) as national income equation. In essence, I in the equation refer to all interments including the foreign investments and hence FDI is measured as the balance or net inflows of investments resulting from investment inflows minus outflows. In addition, FDI is the summation of all kind of capitals including short-term, long-term and equity based capital as shown as the balance of payments (Galego & Caetano, 2012). Moreover, Askari et al. (2012) asserted that FDI usually involves the participation in the management, expertise, transfer of technology and joint-venture. Apart from that, there are two major types of foreign direct investments that are outward and inward that ultimately provide the figure of net FDI inflow and stock of foreign direct investments within a given period.

 

The available literature suggested that foreign direct investments play a significant role in international trade of Iran with other countries across the globe especially those concentrated such as Iran and EU (Askari et al., 2012). Nevertheless, the country is struggling with major obstacles in maintaining its position on the global scale in terms of FDI (Moghaddam & Redzuan, 2012). In this regard, the following sections of this chapter would explore the potential or Iran in terms of FDI as well as highlight the major obstacles country is currently facing with.

 

Why invest in Iran?

 

Iran is increasingly experiencing the unprecedented economic development and growth on the map of the world (Galego & Caetano, 2012). The country is also booming wit increasing young population with more than 65% of the population in year 2012 is reported to be under the age of 35 years (Javorcik & Spatareanu, 2011). Apart from that country is currently experiencing growth in its Tehran Stock Exchange which in year 2012 is considered as the fifth best performing market on the global scale to the date (Medvedev, 2012).

 

Various researcher and world economists advocated that Iran is highly potential country in terms of foreign direct investments in the continent of Asia (Galego & Caetano, 2012). The country is currently ranked as the 18th largest economy in terms of PPP (Purchasing Power Parity) on the global scale. Moreover, the country inherits the broad industrial base and diversified economy and hence entails more than 40 different industries as options to invest (Moghaddam & Redzuan, 2012). Also, Lee & Mitchell (2012) examined that Iran is highly potential for the indirect investments in the Tehran Stock Exchange which is ranked to include the largest industrial base companies in the MENA region. Furthermore, researchers such as (Javorcik & Spatareanu, 2011) emphasized that Iran is labor-rich as well as resource rich economy, with large domestic market and large base of young and educated population in the entire region of Asia.#p#分頁標題#e#

 

In addition, Javorcik & Spatareanu (2011) in their research explored that Iran is highly potential market for oil exports for the European countries and non-oil exports for Middle East countries. Moreover, Medvedev (2012) asserted that country is highly has developed infrastructure in terms of telecommunications, transpiration, security systems and energy resources. Further, Iran is considered by many researchers as strategic location which is surrounded by 15 land sea neighbors and hence can provide lucrative transit and trade route in both east-west and north-south directions (Medvedev, 2012). Finally, numerous researchers asserted that Iran in comparison to many other countries provide many trade incentives and tax exemptions to both domestic and foreign investments and hence put forward country as highly potential for foreign direct investments (Medvedev, 2012).

 

History of FDI in Iran

 

From the very beginning, the foreign direct investment has very strong history in Iran in impacting its economic development in such fields as mine and natural resources. However, since year 1931, Iran is being facing with the numerous challenges to depict the positive picture of foreign investment within the country. Notwithstanding the challenges Iran is currently facing in maintain the positive picture of foreign investments within the country, researchers such as (Javorcik & Spatareanu, 2011) stated that FDI in Iran has experienced the turning point in history in year 1955 with approval of law of encourage and attraction of foreign investments in the form of foreign private investment by the companies from different parts of the Asia and Europe in the Iran. In addition to that, Askari et al. (2012) examined that foreign investments in Iran has seen unprecedented growth in year 1956 where law is widely implemented across the country which eventually attracted more and more countries from the foreign countries as well as increased the number companies registered with foreign private stockholders already operating within country. In addition to that, some researchers such as (Askari et al., 2012) examined that FDIs in Iran has seen growth through encouragement and protection of the foreign investments in the year 1962 in the country as it was ever before. Eventually, Iran reported that its foreign investments from the cumulative period from 1956 to 1978 have been increased with 1,641 Iranian companies registered with foreign private stockholders from other countries in Iran which skyrocketed in highest figures pertaining to 498 registered companies in 1975 and 338 registered companies in 1976.

 

The foreign direct investments in Iran after year 1978 have been significantly faced with many challenges and consequently downturn to the extent that despite the rectification of a law for the efforts of encouragement and protection of foreign direct investments in Iran and the matter of that during the recent years, very few new investments have been made reported as expected (Askari et al., 2012). Researchers such as Moghaddam & Redzuan (2012) however asserted that despite the fact that there is still a huge gap of new investments to be in Iran there is still unprecedented growth observed in the existing foreign companies’ investments from other countries in main sectors of Iran.#p#分頁標題#e#

 

Evolution of FDI in Iran

 

Researchers such as Askari et al. (2012) examined that Iran foreign direct investments in Iran have constantly faced unsettled position over the last couple of years as it was ever before. They examined that Iran’s foreign direct investments have been subject to face numerous deterrents by complex and unfavorable operating requirements in the country as well as the placement of the international sanctions over the last couple years. Moreover, Moghaddam & Redzuan (2012) argued that despite the efforts of Iranian government in the early 2000s with regard to liberalization of investment regulations in the country, evidences are not showing any reduction in the complex and unfavorable operating requirements for the foreign countries which eventually failed in attracting more and more foreign countries for the foreign direct investment in the production and business sectors of the country.

 

According to a recent report of the World Economic Forum (2011), Iran is ranked as 62nd favorable country in terms of global competitiveness out the total 142 countries involved in the analysis of World Economic Forum 2011. Researchers argued that this is considerably low ranking of Iran in comparison to the ranking of 2010 where Iran as the sixth competitive country on the global scale in attracting the foreign direct investments in the country.

 

Types of FDI in Iran

 

There are two different types of FDI in Iran that governs the laws through which foreign companies can invest and operate within Iran (Askari et al., 2012). The first FDI is governed by the Foreign Investment and Protection Act (FIPPA) that is directed towards direct investments of foreign companies within Iran. While the other FDI is directed towards the certain general laws that provide certain articles or laws related to investments of the foreign companies within the country such as Labor and Taxation Law (Javorcik & Spatareanu, 2011). According to the researchers such as (Lee & Mitchell, 2012), the first FDI also falls under the category of “Horizon FDI” through which pointed out that existing firms registered with foreign entity based companies operates within Iran using the same value chain stage through FDI.

 

On the other hand, second FDI, governing the general laws, falls under the category of “Vertical FDI” that not only the general laws and regulations to new foreign companies regarding the business in Iran but also provide them direction that how a firm through FDI moves downstream or upstream within different value chains in vertical fashion in Iran. In addition, the general laws FDI category entails three different FDIs which include contract work, direct sales and investments. The Direct sales involve that any foreign company can directly sell its products and services to Iranian customers based on Usance or letters of Credits. The contract work on the other hand allows the foreign company to engage in any project or contract work in Iran through a registered branch or office in Iran. Finally, Investments holds that any new company can invest in newly established industries and factories and are also allowed to own 100% of the share of businesses within the free economic zones.#p#分頁標題#e#

 

Reasons, Obstacles and Benefits

 

Researchers asserted that different options in Iran, in accordance with the terms of FIFPA and general laws, have been placed to encourage more and more investors as well as ensure the protection of their investments within country (Javorcik & Spatareanu, 2011). The diverse options of foreign direct investments in Iran enable the countries across the globe to avail the benefits of cheap labor, growing markets and tax exemption according to their own convenience (Lee & Mitchell, 2012). However, numerous obstacles are stilled remained in the place impeding the efforts of the country to encourage more and more new foreign investors within country. Lee & Mitchell (2012) examined that major obstacles of FDI in Iran are certainly directed towards complex and unfavorable operating requirements as well as international sanctions where both types of FDI itself pose hindrances for the foreign investors to think about investing their money within country.

 

Lee & Mitchell (2012) examined that there are many social and cultural constraints that are hindering these options of FDI to be effective within country. This includes absence of efficient information communication networks, lack of incentives of hardworking people, lack of suitable technology, traffic problems in major cities and lack of suitable technology concern. Moreover, Javorcik & Spatareanu (2011) examined that despite Iran being the place of inexpensive labor force as the skilled labor and raw materials is still largely lacking in providing creativity, innovation, technical assets as well as required infrastructures and telecommunication systems which significantly hinders the foreign investments to come within country. In addition, Javorcik & Spatareanu (2011) asserted that insecurity has remained the significant obstacle for Iran in encouraging the foreign investments which has been existing historically within the country. All researchers in the available show consensus that addressing these barriers would certain enable Iran to attract more and more foreign investments in accordance with FIFPA and general laws FDIs.

 

Sectors of FDI in Iran

 

Researchers such as Javorcik & Spatareanu (2011) and Askari et al. (2012) collated the reasons that Iran is facing obstacles in attracting the foreign direct investments because of the limited concentration of country within few sectors of economy. The limited sectors of Iran where foreign direct investments are currently occurring include vehicle manufacturing, foods and pharmaceuticals, oil and gas industries, copper mining and petrochemicals markets. Notwithstanding these challenges, the evidences in the recent literature and reports indicated that the country has been successfully able to absorb and attract substantial amount of foreign investments in the sectors and has documented figures of foreign investments US$34.6 billion for 485 projects from 1992 to 2009 in comparison US$24.3 billion from 1993 to 2007.#p#分頁標題#e#

 

6. The Oil Sector in Iran

 

Iran has the third largest oil reserve and the second largest natural gas reserve in the world. Iran is in constant competition to use its energy resources more effectively in the face of subsidization and the need for technological advances in energy exploration and production. The energy consumption in this country is extraordinarily higher than international standards. With an economy that is expected to maintain a rate of growth about 1 to 4 per cent for decades, Iran's role in the world energy market becomes increasingly influential. This makes it important to predict Iran's future demand and supply for energy. The objective of this paper is to apply the Bayesian vector autoregressive (BVAR) methodology to forecast Iran's energy consumption and to discuss potential implications. The slower growth of energy consumption leads to a slower economic growth and in turn, causes a decline in energy consumption due to the structural changes in the Iran economy (Bamberg, 2000).

 

Oil, gas and electricity, as resources of energy with their ever growing role in world economy and their multi-purpose application in production and consumption, have gained special attention. Through the development of societies and growth of economical activities, these sources become more effective on corporations and their services. Corporations use these sources as production factors. Also, families directly or indirectly rely on gas, oil and electricity. Thus, energy consumption determines their and the society's economic welfare (Meyer, 2008).

 

Iran, as one of the Organization of the Petroleum Exporting Countries' founding members, holds the world's third largest proven oil reserves and the world's second largest natural gas reserves. In 2008, Iran was the world's fourth largest producer and third largest consumer of natural gas. With the population exceeding 70 million people and an average economic growth around 3 per cent over the past two decades, Iran's demand for energy has surged to fuel its rapidly expanding industrial and commercial sectors. Today, Iran is the larger producer of energy in the world behind Saudi Arabia. In 2009, Iran accounted for 26.5 per cent of oil consumption, 26.7 per cent of electricity consumption and 36.8 per cent of gas consumption in the Middle East. Indeed, the growth of energy consumption has been so strong since the early 1980s that it has outpaced growth of domestic energy supply which led to a substantial expansion in Iran's energy consumption, mainly gasoline and gas (Kinzer, 2003).

 

The heavy reliance on oil in Iran is due to abundant domestic stocks of oil and gas. Today, following two decades of low economic growth and rising demand for energy products, optimization of production and consumption and also the care about future generations absorbed citizens' and authorities' attention into itself. As a result, Iran policy-makers have begun acknowledging the need of clean sources of energy, particularly natural gas and electricity. For moving in this direction, we should consider that the share of oil in Iran's total energy consumption has declined further, while the share of gas and electricity has increased substantially (Louis, 2007).#p#分頁標題#e#

 

In the past four decades, total final oil consumption has been growing at a rapid pace: from 1970–1980, as the transfer of rural population to cities and the increase in city dwelling because of an increase in economic activity during this so-called construction period of the country, total final energy consumption grew at an annual rate of 14.2 per cent. Just prior to the revolution and during the Iran/Iraq war (1977–1989), the rate of growth slowed to 5.2 per cent. Over the course of three five-year development plans, from 1990 to 2003, growth has continued at an average annual rate of 5.3 per cent. The energy mix has been evolving towards clean energies. From 1966–2003, the share of natural gas increased from 1.3 per cent to 36.3 per cent and share of electricity increased from 4.1 per cent to 25.4 per cent. The share of oil products in domestic consumption dropped from 84.3 per cent to 53.4 per cent (Vassiliou, 2009).

 

Forecasts of growth in Iran's oil consumption are important for two reasons. First, continuation of the strong growth in energy consumption in recent decades will see underlying demand and supply imbalances in Iran increasingly affect global energy markets, particularly oil and natural gas. Second, long-term forecasts are required to assess needed for future policy strategies supply and demand of oil and gas (Bamberg, 2000).

 

The Iranian economy is highly dependent on oil exports and its vulnerability to oil revenues is considerable. Oil revenues have a two-way impact on the Iranian economy. On the one hand, evidence shows that during periods in which oil revenues have moderate growth, the economic growth is high. In fact, moderate oil revenue growth reinforces economic growth either from the demand or the supply side (Meyer, 2008).

 

On the other hand, on the supply side, higher oil revenues facilitate the import of capital and intermediate goods needed by industries, increase the entry of new technologies and induce economic growth. The consequence of these two effects (demand and supply side effects) increases gross domestic product (GDP) growth during years in which oil revenues grow gradually. There is some evidence, however, that the boom in oil revenues in some periods in the Iranian economy results in the expansion of non-tradable (for instance, housing and services) sectors and the contraction of tradable (e.g. industrial and agricultural) sectors, leading to lower long-term economic growth (Kinzer, 2003).

 

For example, from 1996 to 2006, oil revenues rose more than 250 per cent, while employment statistics for the 1996–2006 census show that urbanity and unemployment have risen during last decade, with the number of unemployed reaching 3 million and urban unemployment increasing to 62.5 per cent of the aggregate unemployed. This approach is like the expected approach to Dutch disease because spending oil revenues in governmental centres results in absorbing immigrants to these regions (Louis, 2007).#p#分頁標題#e#

 

The combination of employment in different sectors of tradable goods (industry, mining, except of oil and agricultural sectors) during the general census of 1966–2006 also shows that the share of tradable sectors in employment decreased not only during low oil prices. In other periods, employment in these sectors decreased in favour of other sectors . According to the population and housing census in 2006, during 1996–2006, the industrial and agricultural sectors also had the lowest number of employed among all productive sectors (Vassiliou, 2009).

 

Government budget

 

In aggregate, government expenditure forms about 15–25 per cent of Iranian national income in different years. Oil revenue is a very important part of government income and in recent years has played an important role in reimbursing government expenditures. A look at the budgetary income of the government in recent years shows that these incomes form, on average, about 54 per cent of the general budgetary income. Statistical evidence shows that oil revenues in the Iranian economy, which has experienced many fluctuations, have always been the most influential factor on fluctuations in government expenditures (Blankevoort, 2002).

 

Thus, government budget and expenditures are one of the most important channels through which oil shocks affect aggregate demand, and without devising some mechanisms to stabilize government budgets; oil shocks would have serious effects on government budgets. Indeed, by a moderate increase in government budget during the narrow boom period for oil revenues, the economy has capacity and ability to absorb additional income and, as a consequence, national income would increase. However, an excessive increase in oil revenues and, as a consequence, excessive increase in government budget and rise in rent-seeking activities could result in a crowding out effect from increasing government budget, which in turn would put pressure on activities of the private sector and result in a higher government share and inefficiency. Thus, the higher oil revenues and the less efficient the management of excess incomes, the greater the negative effect on economic growth (EU Briefings, 2008).

 

Other important problems are the way in which government allocates incomes, the combination of its expenditures and especially the way in which excess income is spent during the period of high oil prices. Government expenditure generally includes current expenditures and civil and investment expenditures. As Devlin and Lewin (2004) argue implicitly, a modest increase in oil revenues (before covering the threshold level) is allocated to civil expenditures, investment and providing the needs of domestic firms, which can theoretically increase national income, while an excessive increase in government income (from oil export) is likely to be spent in consuming expenditures, wages and salaries, subsidies and transforming payments in an inefficient way, which in turn, can create permanent and sustainable obligations in future and can decrease economic growth (EU Bilateral Trade and Trade with the World: Iran, 2011).#p#分頁標題#e#

 

Investment

 

Increasing oil revenues by increasing government investment in economic infrastructures, increasing capital and intermediate goods and technology imports, can have positive effects on economic growth. Along with higher government investment, as a consequence of increased oil revenues, private investment would increase. Increased government investments in infrastructure result in higher efficiency (or lower production costs or transaction costs) and profitability, thus higher private investment. Furthermore, government investment increases demand for products from the private sector, thereby increasing investment in this sector. Private investment also benefits directly from cheap import of technology and intermediate and capital goods (The European Commission & Iran, 2009).

 

But the range of positive effects of excessive investment would be restricted by higher positive oil shocks. On the one hand, the economy would not have required capacity for absorbing excessive investment and along with higher increases in oil revenues, there would be more inefficiencies in allocation of financial resources to the public sector, inefficient investment and more unfinished projects. Consequently the effect of investment on the economy would diminish considerably because of inefficiency. On the other hand, as consumer goods imports increase, the competitiveness of domestic products and relative productivity of private investments decrease, and, as a result, the private sector would have little motivation to invest in the tradable products sector, which can negatively affect economic growth (Eurostat, European commission, 2011).

 

Finally, one can say that oil revenues in the Iranian economy plays a mutual role, in that oil revenues, through increasing access to foreign exchange for importing primary inputs and capital goods, expanding domestic investment and affecting government expenditure and private consumption, provide a basis for economic growth from both the demand and the supply side of the economy. However, with an excessive increase in oil revenues, covering the assumed threshold level, and, at the same time, inefficient management of excessive incomes, the negative effects would increase (Europe's Iran Diplomacy, 2008).

 

On the one hand, the aggregate demand of the economy will rise significantly and, on the other hand, because of limited capacity on the supply side, domestic products will not be able to meet increasing demand and, consequently, imports will increase. In such circumstances, higher foreign exchange income from selling oil will result in higher government expenditures, increased consumer goods imports, large disturbances in the allocation of financial resources, expansion of rent-seeking activities and economic corruption, greater inefficiency and unfinished projects, a rise in returns of the services sector relative to the industrial and agricultural sectors, and, consequently, contraction of the industrial and agricultural sectors, excessive appreciation of the national currency, decrease in competitiveness in international trade and so on. Thus, the larger the increase in oil revenues and the more inefficient the management of excess incomes, the greater the adverse effects of positive oil shocks, in a way that after covering a threshold level, these negative effects would cancel out the positive effects, and finally the net effect of increased oil revenues on economic growth would be negative (Gregor, 2011).#p#分頁標題#e#

 

7. Trade between Iran and Italy

 

Italy and Iran are two countries that are going through a difficult period. The first is trying to overcome a delicate economic crisis, while the second is in the throes of an embargo imposed by the United States and the EU on Iran. Both have behind important bilateral relations, a significant commercial exchange and a lasting cultural cooperation (Egger & Larch, 2011). Italy is heavily dependent on the relationship with Iran, but Tehran is less dependent in comparison of Rome because of the socio-economic factors based on oil dependence and fragility of Iranian banks.

 

The specific gravity of the Islamic Republic of Iran in the international arena is easily framed by examining three aspects of all: 1) Iran, with its 75 million inhabitants, is one of the most populous countries in the Middle East, 2) is the second OPEC oil producer with 10% of the global reserves of crude oil, 3) is the second country in the world in natural gas reserves and third in oil reserves (Egger & Larch, 2011). No doubt, this framework makes the Iranian economy greatly dependent on the performance of the price of crude oil increased export sector with 80% of the total and the financing of public sector borrowing requirement. Suffice it to say that over the last decade, the contribution of the oil industry to the composition of GDP was 15%. The revenues of oil and gas are therefore the backbone of the country's economic development and allowed expansionary monetary and fiscal policies, and the result has been an increase in consumption and investment (Esfandiary & Fitzpatrick, 2011). With regard to economic growth, Iran showed from 2000 to 2007-2008 around 4.5% rates of GDP growth (Egger & Larch, 2011). However, with the takeover of the international crisis growth has declined, reaching a rate of 3% in 2011. The structural weaknesses of the Iranian economy concern over the influential dependence on oil, high inflation, low levels of foreign investment, a lack of efficiency of the banking system and domestic demand growth weighed down by high liquidity and a system of subsidies and grants very generous. Particularly significant is the problem of unemployment in 2010 was 13.2%, and consequently increased the phenomenon of emigration of young educated and skilled. According to estimates by the International Monetary Fund, Iran has the highest rate in the world with regard to the so-called "brain drain" (Esfandiary & Fitzpatrick, 2011).

 

A decisive year for the financial sector was 1979, the year of the revolution after which all the Iranian banks were nationalized and foreign banks have been deported. Recently there have been some forms of privatization and liberalization, but basically, the financial sector continues to be dominated by large state-controlled banks. The latter, with about $ 48 billion of unpaid loans, they risk a significant crisis in the banking system (Esfandiary & Fitzpatrick, 2011). The non-performing loans account for 20% of total bank deposits, when the world average stands at 4%. The problem is the state-owned enterprises administered with the political criteria that cashing half of the outstanding debt (Blankevoort, 2002).#p#分頁標題#e#

 

Among the most painful of the Iranian reality there is the precarious situation of human rights and repression of dissent. Although Iran has signed several international conventions on human rights, there are many negatives of the rights of ethnic and religious minorities and particularly grave discriminatory laws relating to women. The critical aspect is concerned, however, the application of the death penalty: Iran is second only to China in the number of executions. In 2008 alone, 346 people were executed, including eight minors at the time of the offense, with methods including hanging and stoning (Egger & Larch, 2011).

 

With regard to children, there is a significant fact: since 1980 in Teheran executed 42 minors at the time of the offense, contradicting international obligations to prohibit the application of the death penalty for offenses committed by persons under 18. The death penalty is provided for offenses ranging from blasphemy to sexual violence, homosexuality and alcoholism. The repression of dissent concerns particularly the media: there have been many closures as well as several reformist newspapers are arbitrary detentions and harassment of journalists and bloggers. Is also apparent censorship of music, culture and art (Egger & Larch, 2011). The university system is experiencing a period of great repression and purges of professors of reformist ideas, quickly replaced by a close to the ultra-conservative (EU Briefings, 2008).

 

In 2004, bilateral cooperation between Italy and Iran has expanded the area of the fight against international drug trafficking (Esfandiary & Fitzpatrick, 2011). The Central Directorate for Anti-Drug Services (DCSA) of the Ministry of the Interior has undertaken, together with the authorities in Tehran, programs of assistance to the Iranian institutions competent in the field. For example, activities are planned anti-drug police officers for Iranian missions and the Guardia di Finanza aimed to organize analysis and strategic support. In 2005, the National Anti-Mafia Directorate our signed with the Iranian Justice a Memorandum of Cooperation in the fight against transnational organized crime, with particular attention to drug trafficking (Egger & Larch, 2011).

 

In the light of the economic relations between the two countries it is necessary to point out that the prolonged crisis policy in place with the U.S. and the EU on the nuclear issue has created a kind of economic stagnation on bilateral and international scenario that depresses foreign investment in the country. Moreover, in recent years, has slowed the choice of products "Made in Italy" on the Iranian market. This size and configuration presents a great potential for growth and is able to absorb significant sectors of the Italian offer. In addition, the trade relations between the two countries became important in the year 2010as Italy became the second largest supplier of oil machinery in Iran for an amount of 2,061 million euro (Esfandiary & Fitzpatrick, 2011).#p#分頁標題#e#

 

As part of imports, however, Italy is ranked first with an import amounted to 4,673 million euro. In fact, the exchange Italy was the first trading European partner of Iran in 2010 with a total of 6.735 billion euro. Figure recorded a historic high in trade between the two countries. 2011 was, however, a much more difficult year: in the first eight months of 2011, imports of Iran from Italy showed a significant decrease compared to the same period last year, going from 1.26 to 1.04 billion euro in the current year (-21.05%). While Iranian exports have seen a very positive trend with an increase of 14.18%, from 2.75000000000 to 3.14000000000 Euros. In terms of trade balance, and 'further strengthened the balance in favor of Iran 2.10000000000 (€ 1.49 billion in the same period of 2010). (Egger & Larch, 2011).

 

As for the consumer, there is a good recovery of transport vehicles - led by buses and minibuses IVECO, but also tractors and agricultural machinery (37,08 million € + 88.07%) -, pharmaceuticals basic and pharmaceutical preparations (22.13 million Euros + 14.23%), and perfumery and cosmetics (16.98 million euro + 70%). One of the most interesting data concerning the performance, particularly encouraging, the food and non-alcoholic beverages that are growing rapidly: 18.58 million euro (+ 259.36%).

 

The Italian economic presence in Iran is dependent mainly to the energy sector - oil and electricity - the creation of steel plants and to industrial and civil engineering works. The most important Italian companies on the territory of Iran are: Eni, Ansaldo Energia, Danieli, Edison International, Fairy engineering, Saipem, Tecnimont and Seli. While the areas of greatest interest to the Italian offer are: fashion, metalwork, furniture and furnishings, chemical, pharmaceutical and food industries. The reason for the constant negative Italian side lies in the significant commercial imports of oil from Iran. In the grid from January to July 2011 on the main Iranian products imported from Italy (with a value of € 3.14 billion) crude oil accounts for 96% (value of 3 billion for the euro) of the total, an increase by 16% compared to 2010 (Egger & Larch, 2011). The increase in the value of imports is due to the increase in oil prices. Moreover, the Italian addiction to this resource is further accentuated by the fact that owns refineries structured specifically to work heavy crudes, as with that of Iran (EU Bilateral Trade and Trade with the World: Iran, 2011).

 

The United States and the EU have joined forces against Tehran in order to prevent the country to use industrial, technological or economic, functional advancement of the nuclear weapons program (Esfandiary & Fitzpatrick, 2011). This means, it is necessary to prohibit the sale, supply and transfer to Iran of further equipment and technology that could be used for the purpose described above. The sanctions against the Islamic country therefore contemplate: 1) interruption of imports of oil and petrochemical products from Iran, 2) freezing of relations with the Central Bank, thus making it problematic payments by persons of Iranian products purchased from European companies, and 3) financial transactions involving the Central Bank of Iran will agree in advance by analyzing specific cases, while those with Tejarat Bank will be prohibited, 4) prohibition for EU countries to invest in the petrochemical industry in Iran (Egger & Larch, 2011).#p#分頁標題#e#

 

Italy is adapting to diversify its sources of supply and the penalties has therefore stated that "the impact on the Italian economy would be negligible. However, despite assurances, Italian companies are looking with concern the embargo, and fear that the dispute could damage economic growth of Italy, which is extremely dependent on Iranian oil. It is therefore important to realize that if Iran has been a key partner for Italy, the same cannot be said to Tehran, which can direct its exports to buyers such as China and India (Esfandiary & Fitzpatrick, 2011). The procurement of a contractor alternative is a task for Italy is complex: Iran is a producer of crude oil particularly valuable, for machining of Italian refineries. Rome, therefore, the problem is to find an energy supplier that guarantees quality and quantity equivalent to Tehran, the difficulty for companies is to support the costs of adaptation of plants and the negotiation of agreements with new suppliers (Egger & Larch, 2011). No less important is also the problem of the increase in oil prices, especially if Ahmadinejad will carry out the threat to close the Strait of Hormuz.

 

A significant item that has expressed concern about the impact of the sanctions was to Michele Marseille, President of FederPetroli, who has called the Iranian embargo "a big problem for the Italian oil situation". Besides, some of the results of this international contest are already under the eyes of all: the Istat stated that, as a result of speculation and penalties, in February the price of gasoline rose by 18.7% year on year, while the diesel for transport increased by 25.4%.

 

In the short and medium term, therefore, Iran remains a key partner for the economic stability of our country, who seems called to try to maintain a voice in the thorny nuclear issue and the subtle balance in the Middle East (Gheissari, 2009).

 

Exchange between Iran and Italy

 

As far as the economic exchange between Iran and Italy is concerned, the partial data of the second two months of 2010 show a balance in favor of Italy as Iran has seen a decrease in its exports to Italy reaching a total of 0 in 2010 with a change of -100% compared to 2009. In 2011, however, the first entry in Italian import from Iran continues to be the crude oil and natural gas with over 3 billion euro (Egger & Larch, 2011). In addition, a significant increase was recorded in various sectors, such as plastics in primary forms, other organic basic chemicals and ornamental stones. However, imports of chemical products for industrial use; woven fabrics of cotton and motor fuels, mineral fuels and gases, such as after the rebound in 2005, reached level 0 again, as in 2004 (Esfandiary & Fitzpatrick, 2011).

 

The composition of national exports to Iran is constituted largely by engineering products, particularly thermal and hydraulic turbines and other machines that produce mechanical energy, machinery for the plastics and rubber and machinery for Special; machinery for mining, quarrying and construction (Egger & Larch, 2011). However, these products down compared to previous years, as was the case for the following sectors: motor vehicles, parts and accessories for motor vehicles, iron and steel products and machines for general use and other mechanical equipment. However, the exchange of pumps and compressors and hydraulic systems, machinery for metallurgy, which in 2006 recorded an increase in value of more than € 248 and 135 million, respectively (Floor, 2011).#p#分頁標題#e#

 

Italian Business in Iran

 

Economic and political relations between Italy and Iran begin, as mentioned above, since 1957 with the landing of Eni in Tehran. It is also noticeable that Agip and the NIOC founded the joint company Sirip aimed at the exploitation of the vast oil fields of Iran. The Italian economic boom was necessary to increase the energy resources (Floor, 2011). The scarcity of oil was the major problem faced by Eni Enrico Mattei. These follow two paths: the first is to buy oil from countries that sell at lower prices than those from the cartel. The second is to diversify supply. From here there will be agreements with Egypt in 1955, with Morocco and Libya and Sudan 58 in 59. The new Italian Mattei, or take 25% of the profit, has two effects. The first is that Eni will cover the full cost of research and investment risk (Egger & Larch, 2011).

 

However, Eni becomes an equal partner who offered this formula with the agreement to three areas of research. The first is in the northern part of the Persian Gulf, the second on the Zagros Mountains and the third is on the desert region of Mekran. The Sirip found three large fields in Barganshahr and Hendijan that provide 120,000 barrels of crude per day. The chief executive of Eni, Paolo Scaroni, said the intention of the Italian company to remain in the country despite the international crisis is to take advantage of the huge reserves of oil (Floor, 2011). In 2009, Italy and Iran have announced the start of the studies for the construction of a new gas pipeline between Iran and Europe that will bind Iran to Italy and Greece. Iran is the fifth partner after Russia oil Italy, Libya, Algeria and Saudi Arabia. In 2006, about 84% of trade Italy-Iran, was covered with oil and natural gas. In 2007, bilateral trade between Italy and Iran amounted to 7.5 billion U.S. dollars. Energy resources are clearly in the first place but the banking sector in the interchange between the two countries is economically highly developed (Esfandiary & Fitzpatrick, 2011).