CRS Report for Congress
Prepared for Members and Committees of Congress
Iran’s Economic Conditions: U.S. Policy Issues
Shayerah Ilias
Analyst in International Trade and Finance
June 15, 2009
Congressional Research Service
7-5700
www.crs.gov
RL34525
Iran’s Economic Conditions: U.S. Policy Issues
Congressional Research Service
Summary
The Islamic Republic of Iran, a resource-rich and labor-rich country in the Middle East, is a
central focus of U.S. national security policy. The United States asserts that Iran is a state sponsor
of terrorism and that Iran’s uranium enrichment activities are for the development of nuclear
weapons. To the extent that U.S. sanctions and other efforts to change Iranian state policy target
aspects of Iran’s economy as a means of influence, it is important to evaluate Iran’s economic
structure, strengths, and vulnerabilities.
Since 2000, Iran has enjoyed broad-based economic growth. However, strong economic
performance has been hindered by high levels of inflation and unemployment and low levels of
foreign investment. Some contend that President Ahmadinejad’s expansionary monetary and
fiscal policies have worsened unemployment, inflation, and poverty in Iran. Iran’s economic
growth is expected to slow in 2009.
Iran has long been subject to U.S. economic sanctions, and more recently, to United Nations
sanctions, over its uranium enrichment program and purported support for terror activities. Such
sanctions are believed by some analysts to contribute to Iran’s growing international trade and
financial isolation.
Iran’s economy is highly dependent on the production and export of crude oil to finance
government spending, and consequently is vulnerable to fluctuations in international oil prices.
Although Iran has vast petroleum reserves, the country lacks adequate refining capacity and
imports gasoline to meet domestic energy needs. Iran is seeking foreign investment to develop its
petroleum sector. While some deals have been finalized, reputational