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Iran

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Last reviewed: 19 March 2009

Country information

ECONOMY

Basic Economic Facts

GDP (2006): $184.5 billion
GDP per capita: (2008) $5.247
GDP Growth (2006): 4.7%
Inflation: (est)11.2%
Unemployment: (est) 11%
Major Industries: Oil provides about 80% of export earnings and 50% of government revenue. Other main trading areas are gas, petrochemicals, mining,agriculture, car manufacturing, mineral products, metal fabrication, and food processing Major trading partners (OECD): Germany, Japan, France, Italy, UAE, China, UK, and South Korea.

Nuclear

Summary

Since 2003 the UK, along with Franceand Germany (the “E3”) and with strong backing from the EU and othersin the international community, has been engaged in a diplomaticprocess to encourage Iran to co-operate fully with the InternationalAtomic Energy Agency (IAEA) and take steps that would assure theinternational community that its nuclear programme is exclusively forpeaceful purposes.

The “E3 plus 3” group of countries (China,Russia and the US joined the E3 in diplomatic efforts in 2006) hasargued that these steps must include, crucially, suspension of alluranium enrichment-related and reprocessing activities (low enricheduranium can be used as a fuel for nuclear power reactors; highlyenriched uranium can be used as the fissile material for nuclearweapons). This principle has underpinned five Security Councilresolutions 1696, 1737, 1747 1803 and 1835, all of which require Iranto suspend these activities and cooperate with the IAEA, and three ofwhich impose sanctions.

We have made clear that we do notdispute Iran's right to a civil nuclear power generation programme, andthat provided Iran puts in place and sustains an acceptable suspensionwe could negotiate long-term arrangements on the basis of a generousoffer backed by the E3 plus 3 group. However, to date Iran has not beenprepared to meet these terms and has not suspended its enrichmentrelated activities.  We will continue to urge Iran to suspendenrichment and come to the negotiating table, but will apply morepressure to Iran if it fails to do so.

Background

On 15November 2004, Iran approved an agreement with the E3 about its nuclearprogramme, in which it agreed to suspend fully all enrichment-relatedand reprocessing activities and to sustain the suspension whilenegotiations took place on long-term arrangements which would provideobjective guarantees that Iran's nuclear programme is exclusively forpeaceful purposes, and lay the groundwork for wider nuclear, economicand technological co-operation.

On 5 August 2005, the E3presented proposals to the Iranian government, as foreshadowed in ameeting in Geneva on 25 May 2005 between E3 Foreign Ministers andHassan Rouhani, the senior Iranian negotiator at the time. Thefollowing is a summary of those proposals and is self explanatory.

E3 EU Proposals for a Long term Agreement

Followingthe election of a new hardline President, Mahmoud Ahmadinejad, Iranresponded by breaking off the negotiations. First it resumed conversionof uranium ore into the feed material for enrichment centrifuges(uranium hexafluoride or UF6) and then, in February 2006, fullenrichment of uranium. The UK, France and Germany (with EU support)have since worked closely with US, China and Russia (the E3 plus 3) topersuade Iran to reinstate the suspension and return to talks. Themeasures requested of Iran in IAEA Board and Security Councilresolutions would not affect Iran's pursuit of nuclear energy. However,Iranian suspension of these activities would restore the internationalcommunity's confidence that Iran is not seeking the know-how to makefissile material for weapons.

2006 Offer

In June 2006,Javier Solana on behalf of the E3 plus 3 presented Iran with afar-reaching package of proposals and made clear that if Iran took thesteps required by the IAEA Board as expressed in several resolutions,we would hold off further action at the UN Security Council('suspension for suspension'). Our proposals offered Iran everything itwould need to develop a modern nuclear power industry, such as helpbuilding power stations, guaranteed supplies of fuel and cooperation onnuclear research. Iran would also get trade benefits that wouldstimulate the investment it needs to provide jobs for a growingpopulation. In a genuinely historic decision, the US said it would joinany talks and consider, in a final agreement, lifting sanctions on Iranfor the first time since 1979 in areas where Iran's needs are mostacute, such as civilian aircraft and IT. However Iran chose not toaccept the 2006 proposal. And rather than suspend enrichment - a legalobligation since the adoption of UN Security Council Resolution (SCR)1696 on 31 July 2006 - it has continued its activities ever since.

E3 proposal June 2006

TheUN Security Council adopted SCR 1737 on 23 December 2006. TheResolution extended the range of sensitive nuclear activities Iran islegally obliged to suspend, required Iran to give additional access tothe IAEA, banned the export of certain goods relevant to sensitivenuclear and missile programmes, imposed an asset freeze on listedentities/individuals and introduces a variety of other targetedsanctions against those involved in nuclear proliferation relatedactivities.  The Security Council then adopted SCR 1747 on 24 March2007 , which listed more individuals and entities, including somelinked to the Islamic Revolutionary Guard Corps (IRGC), imposed a banon exports of arms from Iran and placed restrictions on exports to Iranof heavy weapons and related services.

On 3 March 2008 theSecurity Council adopted SCR 1803 which imposed travel restrictions,and in some cases full travel bans, against named Iranian entities andindividuals, called on member states to exercise vigilance on theactivities of named Iranian banks, added more dual-use items to embargolists, and requested member states to inspect cargoes to and from Iranoperated by Iran Air Cargo and Iran Shipping Line.

UNSCR 1737

UNSCR 1747

UNSCR 1803

E3 Plus 3 Offer 2008

On14 June 2008 EU High Representative Javier Solana, accompanied by E3plus 3 Political Directors (minus the US), visited Tehran and presenteda revised E3 plus 3 offer to the Iranians. On 19 July Solana met theIranian negotiator Saeed Jalili in Geneva to hear the formal Iranianresponse. This time he was accompanied by all 6 Political Directors,including the US representative. The terms of the E3 plus 3 offer againincluded a firm indication from the Iranian side that they wereprepared to suspend their enrichment related and reprocessingactivities, which would then enable the start of a process of dialogueleading to full negotiations. The Iranians did not address thesuspension issue at the Geneva meeting and have failed to give apositive response to the E3 plus 3 offer.

A Fifth UN Security Council Resolution

On27 September 2008, the UNSCR passed a further resolution whichreaffirmed the commitment of the Security Council to diplomatic effortsto resolve the Iran nuclear issue, and called upon Iran to comply fullyand without delay with its obligations to the UN and the IAEA.  Theresolution was agreed unanimously.

UNSCR 1835

AllUN Security Council Resolutions have offered Iran a way out, ie that ifIran suspends enrichment-related, reprocessing and heavy-water relatedactivities, the Security Council will suspend the sanctions process foras long as Iran maintains its suspension (so called 'doublesuspension').  The E3+3 has also offered Iran a "freeze-for-freeze" asa route into suspension.  If Iran suspends its enrichment-related,reprocessing and heavy-water related activities, the E3+3 will freezethe discussion of all new sanctions against Iran at the UNSC.  Thiswould last for no longer than six weeks, at which point Iran would haveto suspend its programme, and the E3+3 would in turn suspend sanctions.

Howeverthe most recent report of the Director General of the IAEA, DrEl-Baradei, released on 19 February 2009, makes clear that contrary tothe requirements of the Security Council, Iran continues to enrichuranium and is still failing to give the IAEA the access andcooperation it needs to fulfil its duties.  The IAEA has been unable tomake any progress on concerns about the possible military dimensions ofIran’s nuclear programme because of Iran’s lack of cooperation.

Present

TheE3 plus 3 offer remains on the table and diplomatic efforts continue. Officials from the E3 plus 3 met in early 2009 and restated theirunity and commitment to finding a diplomatic solution to the Irannuclear issue.  The choice facing Iran is clear: suspend enrichment,take up the generous E3+3 offer and enjoy a transformed relationshipwith the international community; or continue on the path ofconfrontation, increasing isolation and tougher and expanded sanctions.


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Iran

Address:

Embassy of the Islamic Republic of Iran
16 Prince's Gate
London SW7 1PT

Consular Section:
50 Kensington Court
London W8 5DB

Telephone:

(020) 7225 3000
(020) 7937 5225 Consular

Fax:

(020) 7589 4440
(020) 7938 1615 Consular

Website: www.iran-embassy.org.uk