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Iran-US trade ties: claims and realities

Business Materials 6 December 2017 17:20 (UTC +04:00)

Baku, Azerbaijan, Dec. 6‎

By Umid Niayesh– Trend:‎

In recent years, there were always claims in Iran that the Islamic Republic’s trade ties surged under ‎the ex-president Ali Akbar Hashemi Rafsanjani and Washington became Tehran’s first trade partner ‎during the administration of the pragmatic president, who was at office from 1989 to 1997.‎

The claim was first raised in the 1990s by Asr-e-Ma, an analytical weekly, established by left-hand ‎Organization of the Islamic Revolution Mojahedin (OIRM), which later became one of the core ‎parties of the reformist wing in Iran.‎

The speculation raised again by hardliner conservatives during the Hassan Rouhani presidency, after the ‎Islamic Republic reached a historic nuclear deal with the US-led Western powers in 2015, which paved the ‎path to removal of international sanctions against Tehran.‎

What the claims say:‎

According to the claims, the US increased its annual trade with Iran to $5 billion during the ‎Rafsanjani period and became Tehran’s “first trade partner,” in particular in 1991-1995, in a bid to ‎dominate the Islamic Republic economically and make Tehran dependent on Washington.‎

The US oil firms were purchasing 30 percent of Iran’s crude directly and bringing into account the ‎indirect crude purchases, almost 50 percent of Iran’s export was sold to US firms and nearly 35 ‎percent of Iran's foreign exchange earnings were provided through the United States.‎

However, in 1995 a total embargo on dealings with Iran by American companies was imposed by ‎then president, Bill Clinton. This ended trade, which had been growing following the end of the ‎Iran–Iraq War (1980-1988). The next year, the American Congress passed the Iran-Libya Sanctions ‎act, designed to prevent other countries from making large investments in Iranian energy.‎

The official figures

Despite the “$5 billion turnover” and “first trade partner” claims, indirect business is ‎not included in two countries trade turnover. ‎

The official statistics indicate that before the Islamic Revolution, the mutual trade between Tehran and ‎Washington experienced the highest value in 1978, when the US exports to Iran accounted to $3.7 ‎billion. The same year Iran’s imports from the US reached $2.9 billion. On the verge of the ‎revolution, the US and West Germany were Iran’s top trade partners.‎

The US was exporting technology, industrial equipment as well as agricultural and consumer goods to ‎Iran.‎

Tehran and Washington broke off diplomatic relations following the seizure of US embassy staff in ‎Tehran in the months after the 1979 revolution. Fifty-two American diplomats and citizens were ‎held hostage for 444 days (Nov. 4, 1979-Jan. 20, 1981), after a group of Iranian students supporting ‎the Iranian Revolution took over the embassy.‎

In 1981, the first year after releasing the hostages, US exports to Iran accounted to $300 million, ‎against $64 million worth of imports.‎

In the following years, the mutual trade between the two countries was changing, going up and down, ‎but never again witnessed record figures registered before the Islamic Revolution.‎

The US energy firms, reportedly continued crude oil purchase from Iran, worth $3.5 billion per year, ‎via their subsidiaries till the mid-1990s, when sanctions were broadened.‎

Three decades of trade ties

In the years following the Islamic Revolution, the Iran-US mutual trade fluctuated from year to year, ‎experiencing the highest value in 1987, but it registered a sharp fall and came down to zero, in 1996, after ‎the Clinton administration imposed new sanctions against Tehran in 1995.‎

The trade was restored in 2000 when bans on carpets and caviar imports from Iran were lifted.‎

In 2008, bilateral trade totaled over $787 million, registering a 148 percent increase, ‎which was followed by a sharp fall the next year, when Mahmoud Ahmadinejad became ‎Iran’s president for the second term.‎

Removal of international sanctions against Tehran in 2016 only contributed to Iran’s imports to US, ‎which experienced a 700-percent rise year on year to ‎$88 million, meanwhile the overall trade stood at $260 million, 11 percent less than the preceding ‎year.‎

The latest statistics released by the United States Census Bureau reveal that the condition has worsened compared to 2016.‎

Mutual trade turnover between the two countries stood at $159.7 million during the first ten months ‎of 2017, 23 percent less year on year.‎

The US exports to Iran reached $109.8 million in the 10-month period (18 percent less year on year), ‎meanwhile Iran’s export to US decreased by about 3 percent to $49.9 million in the same time span.‎

The table below covers the trade information between Iran and the US in 1985-2016 (based on data from the US Census Bureau):

Year

Exports (million USD)

Change (%)

Imports (million USD)

Change (%)

Balance (million USD)

Trade turnover (million USD)

Change (%)

1985

74

-

725

-

-651

799

-

1986

34

-54

569

-22

-535

603

-25

1987

54

58

1668

193

-1,613,5

1722

185

1988

81

49

9

-99

72

90

-95

1989

55

-31

9

-4

47

64

-29

1990

163

194

7

-21

156

169

165

1991

528

225

231

3293

297

758

348

1992

748

42

1

-100

747

748

-1

1993

616

-18

0

-86

616

616

-18

1994

329

-47

1

700

328

330

-47

1995

277

-16

0

-75

277

278

-16

1996

0

-100

0

-100

0

0

-100

1997

1

450

0

-

1

1

500

1998

0

-100

0

-100

0

0

-100

1999

48

-

2

-

46

50

-

2000

17

-65

169

6929

-152

186

269

2001

8

-52

144

-15

-136

152

-18

2002

32

299

156

9

-124

188

24

2003

99

210

161

3

-62

260

38

2004

85

-14

152

-6

-67

237

-9

2005

96

13

175

15

-79

270

14

2006

86

-10

157

-10

-71

243

-10

2007

145

68

173

10

-28

318

31

2008

683

372

104

-40

579

787

148

2009

280

-59

65

-38

216

345

-56

2010

211

-25

95

46

117

306

-11

2011

233

10

1

-99

232

234

-23

2012

251

8

2

110

249

253

8

2013

308

23

2

5

306

310

23

2014

187

-39

0

-100

187

187

-40

2015

282

51

11

271

293

57

2016

172

-39

88

712

84

260

-11

Follow the author on Twitter: @UmidNiayesh

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