ABSTRACT
The American interest in Iran is a vital one. Iran represents strategically, both in an economic and political sense, a vital cog in the system. In November 1979, President Jimmy Carter placed a trade embargo on Iran as a reaction to the hostage crisis. Continuation of trade relations, and its gradual increase from 1983 onward, can be explained by two factors: Iran’s dependence on oil income, which constituted about 75 percent of government revenues, and its technical dependence on imports of certain US-manufactured military and non-military goods and spare parts; and the United States’ desire to keep the doors open for possible future normalization of relations. Competitors from India, Pakistan, and the People’s Republic of China have been able to fill the gap created by the interruption of trade with Iran. The declining price of oil and other export goods is not the only factor responsible for the deterioration of the terms of trade for Iran in world markets.
