LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE
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Increasingly strict sanctions on Iran sanctions that primarily target Iran s key energy sector and its access the international financial system have harmed Iran s economy to the point where Iran s public and some of its leaders appear willing to accept some international proposals to limit Iran s nuclear program to purely peaceful purposes. The June 14, 2013, election as president of Hassan Rouhani, who ran on a platform that included achieving an easing of sanctions, is an indication of the growing public pressure on the regime. Oil exports fund nearly half of Iran s government expenditures, and Iran s oil exports have declined to about 1.1 million barrels less than half of the 2.5 million barrels per day Iran exported during 2011. The causes of the drop have been a European Union embargo on purchases of Iranian crude oil and decisions by other Iranian oil customers to obtain exemptions from U.S. sanctions by reducing purchases of Iranian oil. Twenty countries that buy Iranian oil have exemptions. The loss of revenues from oil, coupled with the cut-off of Iran from the international banking system, has caused a sharp drop in the value of Iran s currency, the rial raised inflation to over 50, reduced Iran s reserves of foreign exchange and caused much of Iran s oil revenues to go unused in third-country accounts. Iran s economy shrank slightly from 2012 to 2013 and will likely do so again during 2013. There have also been unintended consequences, including a shortage of some advanced medicines. Iran has tried, with mixed success, to mitigate the effects of sanctions. Government-linked entities are creating front companies, and Iranian importers and exporters are increasingly using barter trade and informal banking exchange mechanisms. Iran is also increasing non-oil exports or exports of hydrocarbon products other than crude oil, such as gas condensates.
- Economics and Cost Analysis
- Government and Political Science