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Though Iran-Spain relations date back to past centuries, they officially commenced in 1841 when an official Iranian delegation visited the Ottoman Empire. In this year, the Iranian delegation, while meeting with Ottoman officials, held talks with a Spanish delegation in Istanbul. After this meeting, the first Agreement on Irano-Spanish Friendship and Trade was signed.

Despite the existence of this agreement and the provisional establishment of Iran's Embassy in Madrid, bilateral economic and commercial relations did not develop much. The level of these relations was very low compared to Iran's ties with many European countries, such as Germany, Britain, France, the Netherlands, and Portugal.

Finally, in the year 1954, the first official Iranian delegation visited Spain. Concurrent with the reopening of Iran's Embassy in Madrid, the first official Commercial and Economic Co-operation Agreement was signed by the two countries in the 20th Century. After this agreement was signed, the two countries' ties became more dynamic, and economic co-operation was enhanced day-by-bay.

In 1975, Spain's Minister of Economy and Finance arrived in Tehran and held comprehensive talks with his Iranian counterpart. The two sides expressed agreement to set up the first joint commercial and economic co-operation committee. Afterwards, in the same year, the Spanish Minister of Industries, heading a 25-man delegation, arrived in Tehran and signed a protocol with his Iranian counterpart.

The two sides also surveyed avenues for Irano-Spanish co-operation in the fields of shipbuilding and tourism. It was agreed that an Irano-Spanish expert delegation was to explore avenues for promotion of such co-operation.

On the whole, the economic co-operation between Iran and Spain was enhanced between the years 1959 to 1978. Spain exported light machinery, household appliances, woollen and synthetic fibber cloths to Iran. In addition, Spain commenced relatively extensive co-operation with Iran in the fields of construction projects, shipbuilding in the Persian Gulf, breakwater, land reclamation, dredging of the rivers and southern sea, and marine transportation.

In the post-revolution era, the two countries' economic relations have mainly been influenced by their political ties. The economic ties have had ups and downs in tune with the cordiality or frigidity of political relations.

Even though before the victory of the Islamic Republic, Spain took part in some agricultural activities in Iran such as drainage and dredging, these relations were never active and extensive both before and after the revolution.

Nonetheless, in the exchange of visits by economic and commercial delegations of the two countries, limited discussions have been held on agricultural co-operation including fisheries, cultivation, industries, and animal husbandry. However, no agreement or memoranda of understanding (MOU) has been signed by the two parties.

Unlike the ties in the agriculture sector, Irano-Spanish relations in the field of industry and energy comprise the major part of the two countries' economic and commercial relations. The background of these relations can be sought in the pre-revolution industrial relations and agreements reached between the Seat Automobile Factory and Iran National Automobile Factory.

In the early years after the victory of the Islamic Revolution, the two countries' industrial relations were limited with the cancellation of many treaties and agreements (especially by Iran) and the nationalization of automobile factories.

In 1983, Spain's Minister of Industries visited Tehran. During the visit, agreements were reached on industrial co-operation including shipbuilding, transportation (especially meeting the needs of the railways), and the manufacture of automobiles.

A high-ranking Iranian delegation visited Spain in 1987. During the meeting, Iran and Spain agreed to set up a joint economic commission and also signed a memorandum of understanding for economic-industrial co-operation (especially in shipbuilding).

In the second half of 1988 and concurrent with the end of the Iraqi-imposed war, Spain's Minister of Industries and Energy arrived in Tehran at the head of a ranking industrial and economic delegation.

The Spanish Minister met with the Iranian Minister of Energy, discussing reconstruction and facilitation of the power plants. He also met with the Iranian Minister of Industries about financing joint projects (with long-term repayments), constructing the Hormuzgan Cement Factory and transferring technology for the manufacture of different types of medicine and pulp. In a meeting with the Iranian Minister of Heavy Industries, the issues of refinery construction, automobile manufacturing, and purchase of industrial parts and machinery were discussed.

At the end of his visit, the Spanish Minister signed a Memorandum of Understanding with Iran with the following highlights:

A. Agreement between the Organisation for the Promotion and Renovation of Iran's Industries and Yeni Firm for the full implementation of projects related to power plants, refineries, industrial and automobile manufacturing factories.

B. Agreement to purchase steel plates and steel from Spain and to sell casting parts, profile pipes, and other (non-oil) exports goods of Iran.

C. Agreement and co-operation between an Iranian firm and Spain's Fasterviler Firm on the manufacture of power plant boilers.

D. Agreement and co-operation on the joint manufacture of locomotives and axle wheels at Pars Wagon Manufacturing Firm.

E. Agreement to establish the two countries' joint economic commission through diplomatic channels.

F. Agreement to export Iran's mineral material to Spain and to purchase the parts needed by Iran's industrial units from Spain.

In late 1992, an advisor to Madrid's Chamber of Commerce made some suggestions during a visit to Iran about investments of Spanish firms in the fields of construction, pharmaceuticals, petrochemical material, automobile manufacturing industry, and shipbuilding.

He said that the major problem besetting the promotion of industrial relations is that the foreign currency has several parity rates. At about the same time, the first joint commission (after the Islamic Revolution) of Iran and Spain was held in Madrid.

The first major commercial contact of the two countries took place in 1983. In this year, a delegation headed by the Spanish State Minister for Commercial Affairs visited Iran and met with a 30-man Iranian delegation comprised of senior economic and commercial experts in the fields of light and heavy industries, petrochemicals, agriculture, health, energy, railroads, shipping and ports, mines and metals, imports and exports.

This delegation was headed by the Commerce Minister and had eleven committees. The meetings with these committees were held separately, and ways to promote the two countries' economic and commercial relations were surveyed.

In the years that followed, no major development occurred in the two countries' commercial relations. In 1989, the Spanish ambassador to Iran met and conferred with the Minister of Commerce. The two agreed that Iran's non-oil exports--including agricultural, mineral and traditional commodities--to Spain should be enhanced.

Following a fire in one of Iran's southern ports in 1991, a Spanish captain was held responsible and was detained. After this event, the volume of the two countries' commercial relations was halved in 1992, slumping from $1.2 billion to less than $600 million.

Even though the member countries of the European Union (EU) are deemed the most important and biggest trade partners of Iran (especially in imports), the share of Spain, as an EU member, comprises a very small percentage.

At any rate, Spain's exports to Iran include diverse goods, the most important of which are in the intermediary goods sector, including petroleum and oil, automobile spare parts, bus cabins, various forms of iron plates, industrial goods such as scoured wool, metals, rolled bars, pipes, profiles, sulphates, phosphates, polymers and synthetic fibers. In the area of capital goods, these exports included turbines, steam boilers, generators, lathes, pumps, mechanical and agricultural machinery and various equipment for distillation. In the area of consumption goods, these exports included assorted cables, faucets, medicines, tires, and other commodities.

TABLE 1 indicates Spain's major exports goods to Iran in the years 1990 and 1991. On the basis of this TABLE, the major items imported by Iran from Spain in 1990 were intermediary goods. The share of these goods in Spain's overall exports to Iran amounted to more than 58 percent.

In 1991, intermediary goods still had the highest share in Spain's exports to Iran. As compared with 1990, the figures have slumped to stand at 48 percent. Contrary to intermediary goods, the share of consumption goods in Spain's total exports to Iran is not very considerable, and between the years 1990 and 1991, these exports were less than 10 percent.

As a result, one can conclude that based on international classification of goods, the highest volume of Spain's exports to Iran is comprised of intermediary goods.

4.2) TABLE 2 shows major items exported by the Islamic Republic of Iran to Spain in the years 1990 and 1991. As observed, oil is by far the most important item exported by Iran to Spain, comprising more than 90 percent of Iran's total exports.

In addition to crude oil, non-oil items comprise around 5 to 7 percent of Iran's exports to Spain. Among these, reference can be made to pistachios, dried fruits, and carpets with a 3.9 percent share in 1990 and a 6.1 share in 1991.

Other non-oil commodities exported by Iran, similar to exports to other European countries, are mainly traditional items such as spices, raisins, caraway seeds, medical and fragrant herbs, skins and hides, antiques, foodstuff such as caviar, conserved food and compotes. Their share in Iran's total exports is not very considerable.

Among the interesting points related to Iran's exports to Spain, reference can be made to the exports of considerable amounts of fish, shrimp, and caviar, a major part of which is smuggled or exported to Spain through false tariffs.

TABLE 3 shows the overall export value of Spain and the value of Spain's exports to Iran between the years 1984 to 1992. As observed, the value of Spain's exports in the years under survey has increased by more than 2.7 times, reaching $64,495 million in 1992 compared to $23,562 million in 1984.

In the meantime, the value of Spain's exports to Iran slumped from $327 million in 1984 to $106 million in 1987. But since 1988, this figure has had an upward trend, reaching the peak of $419 million in 1991.

The reduced exports of Spain to Iran between the years 1984 and 1987 were caused by reduced foreign currency incomes of Iran due to the wartime situation and strict government control over imports. On the other hand, this decrease was also due to stagnation and reduction of the level of economic relations between Iran and Spain, as well as Spain's relative adherence to the West in exerting pressure on Iran.

In the wake of the termination of the war, the improvement in Iran's economic conditions, and the exchange of visits by different political and economic delegations, Spain's exports to Iran increased in the years that followed. Nonetheless, Iran in general has not had a considerable share in Spain's exports.

This can be understood by considering the share of Spain's exports to Iran. As indicated in TABLE 3, the share of Spain's exports to Iran in the years under survey initially had an intense slump from 1.4 percent in 1984 to 0.27 percent in 1988.

In the years after the Iraqi-imposed war, the share of Spain's exports to Iran doubled, but on the whole this figure was not considerable, remaining at the level of 0.5 percent, which is very low as compared with the share of many member states of the European Union (EU).

As a result, it could be concluded that Spain's exports to Iran have not grown in tandem with the overall growth in Spain's exports. Iran's imports have increased after 1988, and Spain initially increased its exports to Iran. But on the whole, the trend of Spain's exports to Iran reflects the reduced role of Iran in this country's trade.

4.4) TABLE 4 shows the value of Iran's imports between the years 1984 to 1992 based on total imports and imports from industrial countries. As demonstrated, Iran 's total imports between the years 1984 to 1988 declined, being limited from $14,816 million to $8,171 million. (As mentioned in the previous part, this is directly related to exports and especially oil exports).

But after 1988, with the increase in foreign exchange earnings, the imports have had an upward trend, increasing from $12,746 million in 1989 to $23,196 million in 1992. (i.e., the figure has almost been doubled in four years).

In tune with the overall imports, Iran's imports from industrial states slumped between the years 1984-1988 but rose again from $5,325 million in 1988 to $16,993 million in 1992.

Consequently, as is observed, the growth of Iran's imports from industrial countries between the years 1988 to 1992 is higher than the overall growth of imports (Imports from industrial states have tripled, while overall imports have been less than threefold.)

This can be observed by considering the share of imports from industrial countries. As indicated in TABLE 4, the share of this group of countries in Iran's imports has increased following fluctuations from 67.5 percent in 1984 to 73.3 percent in 1992.

As a result, the share of EU member states in Iran's imports, with some fluctuations, rose from 42.2 percent in 1984 to 48.7 percent in 1992, while the share of the EU member states in Iran's overall imports from industrial countries slumped from 86 percent in 1984 to 66.5 percent in 1992.

One could, therefore, conclude that the model of Iran's imports in the years under study has had relative change. Despite the membership of Greece, Portugal, and Spain in the European Union, the EU's share has become more limited. Consequently, Spain's share in Iran's imports prior to membership in the EU increased with some fluctuations, so that it rose from 2.2 percent in 1984 to 2.7 percent in 1985.

But in the years following membership in the EU, this share intensely fell considerably and was limited to 1.3 percent in 1992.

On the other hand, a comparison of the growth in the imports of Iran and Spain shows lack of coordination.

4.5) TABLE 5 shows that the value of Iran's exports between the years 1984 to 1989 declined dramatically due to the Iraqi-imposed war. This figure fell from $15,576 million to $8,100 million.

After the end of the war and the increase in Iran's exports, however, this figure once again increased to reach $16,428 million in 1991 and $15,807 million in 1992.

The share of industrial countries in Iran's exports rose from $9,999 million in 1984 to $10,700 million in 1991 and $9,555 million in 1992. In other words, these figures, in terms of shares, fell from 65 percent in 1984 to 60 percent in 1988 and rose to 68.5 percent in 1989. But in the years that followed, this figure dropped to stand at 60.4 percent in 1992.

TABLE 5-The total value of Iran's exports, exports to industrial states, the European Union and Spain

In the meantime, the value of Iran's exports to the member countries of the European Union, as with the industrial states, had a relatively intense decrease between the years 1984 to 1986. This value dropped from $6,602 million in 1984 to $2,768 million in 1986.

In tune with the fluctuations of exports to the industrial states, the value of exports to the European Union increased in the following years and reached a zenith in 1991 at $7,217 million.

In relation to shares, too, the share of the European Union in Iran's exports rose from 34.5 percent in 1986 to more than 49.5 percent in 1989. But in future years, this share dropped once again to stand at 42.1 percent in 1992.

As a consequence, the increase in the share of the industrial countries in Iran's overall exports is mainly due to the increased share of European Union in the exports of this country. (See TABLE 5)

During this time frame, the share of Iran's exports to Spain, like that to the industrial countries, slumped at first from 7 percent in 1984 to 4.6 percent in 1986. But between 1987 to 1989, this share increased to stand at 6.7 percent in 1989.

But in the years that followed, the share of Spain in Iran's exports fell sharply and was limited to 2 percent in 1992.

As a result, contrary to the member states of the European Union (whose share remained relatively fixed in the period under study by standing at 42.3 percent in 1984 and 42.1 percent in 1992), the share of Spain in Iran's exports has dramatically declined to reach less than a third of the figure of 1984.

This can be further elucidated by considering the statistics of Spain's imports.

As indicated in the statistics of Spain's imports, the imports of energy and especially oil have been halved in the late 1980s and the 1990s due to their reduced prices and imports.

Since the major part (namely more than 90 percent) of Iran's exports to Spain was crude oil, the share of Iran's oil exports to Spain also dropped. (Of course, it should be borne in mind that in recent years Spain has turned toward using other sources of energy such as gas).

Finally a study of the growth of exports to Spain reflects that between the years 1984 to 1988 (i.e. when Iran had positive growth of exports), the growth of exports to Spain was higher than the average growth of the total exports.

In the same way, in the years when Iran's exports had a negative growth, the slump in the exports to Spain was more than the slump in the average total exports. Nonetheless, between the years 1990 to 1992, the growth of Iran's exports to Spain dropped in the first stage and became negative in the final two years. This is while the slump in the overall growth of exports was by far lower than the slump in the growth of exports to Spain.

4.6) TABLE 6 shows the value of Spain's overall imports and its imports from Iran between the years 1984 to 1992. On this basis, Spain's imports in the year 1984 stood at $28,832 million. With an average growth of 26.9 percent, this figure reached $98,617 in 1992.

In the meantime, Spain's imports from Iran amounted to $1,101 million in 1984, making up 3.8 percent of the country's total imports. This figure fell sharply in the next two years to reach $367 million in 1986, or just one percent of the country's total imports.

Likewise, though the value of this country's imports from Iran increased twofold between the years 1986 to 1989, its share in Spain's overall imports remained at the level of one percent due to high growth rate.

In the years following 1989, the share of Spain's imports from Iran slumped due to the drop in this country's imports of crude oil and due to the aforementioned political reasons. The resulting value of imports from Iran in 1992 was limited to $320 million, amounting for about 0.3 percent of this country's total imports.

On the whole, the average growth of Spain's imports in the years under survey was higher than the growth of this country's imports from Iran.

4.7) TABLE 7 shows the balance of Iran's commerce with the EU, Spain, and the world in general between the years 1984 to 1992. As obvious, the total trade balance of Iran in the years 1984, 1985, and 1987 had a surplus, the highest of which was in 1985 with $2 billion.

From 1988, Iran faced a constant trade balance deficit, with the figures soaring from $71 million in 1988 to $7,383 million in 1992. At the same time, Iran's trade balance with the European Union and Spain showed a surplus throughout these years.

As a result, the deficit of the years 1989 and 1990 was with countries that were not members of the European Union, and especially with Japan.

In addition, a study of the trade balance between Iran and Spain demonstrates that in the years under survey, Iran's trade balance with Spain all along was a surplus. These figures stood at $774 million in 1984, $234 million in 1986, and $533 million in 1989.

But in the years that followed, this surplus sharply fell (due to the slump in Iran's exports to Spain) and reached $29 million in 1992.

As a result, Iran's trade surplus with Spain in the years 1986, 1989, 1991, and 1992 balanced a part of Iran's trade deficit with the European Union, even though this figure in the final years under study was not considerable due to reduced Iranian exports to Spain.