The Islamic Republic of Iran is based on a complex interaction of Islamic principles, social justice, and democracy that have stood the test of time since the Revolution.

Political observers and commentators used to finding similar governmental structures around the world are often stumped when understanding the unique political structure of Iran. Yet, once the underlying principle of this system is figured out all the complexities disappear: The system is based on a combination of the principles of Islam on the one hand, and of participatory democracy on the other. As the people of Iran, who make up the electorate, determine the future of the country by voting for the legislative and executive branches of government, other institutions ensure that these policies correlate with Islamic principles and legal precedent.

The Constitution that consolidated the Islamic Republic was ratified by the Iranian people in a referendum held in 1979. This Constitution foresees a positive role for the government to reveal the country's true economic and social potential. In other words, the government is obliged to conduct favorable policies and take the necessary measures to expose and continuously improve the wealth of the country. Another characteristic of the Islamic Republic is the mandate to provide mechanisms for the participation of the people in the decision-making processes of the government. These participatory mechanisms were strengthened in 1999 following changes that mandated the popular election of city and village councils for the first time in the history of the country. The Constitution also ensures a rational separation of powers between the different branches of the government, so as to avoid the accumulation of power in any one hand so that the Islamic democracy preserves its sustainability.


According to the Constitution of the Islamic Republic, the highest-ranking government official is the Supreme Leader (or Rahbar) who is mandated to oversee the policies of the government so that they correlate with the principles and requirements of Islam. The Supreme Leader is not much involved in the daily affairs of state, as he only intervenes in the formulation of macro-policies to ensure the compliance of government policies with Islamic principles. The Supreme Leader is also the Commander-in-Chief of the Armed Forces and also appoints the Head of the Judiciary. The Supreme Leader is elected by the Assembly of Experts and serves a lifetime term of office. The current Supreme Leader, Ayatollah Ali Khamenei, was appointed to succeed Ayatollah Khomeini in 1989 after having served as president of the country for eight years. Ayatollah Khamenei is a supporter of efforts to empower the private sector in the country. In 2007, he requested that the government make more intense efforts to speed up the privatization process and strengthen property rights by establishing special commercial courts under the auspices of the Ministry of Justice.

The Assembly of Experts is an 86-member body consisting of the country's leading jurists and scholars of Islamic jurisprudence. Mandated to fill any vacancy in the post of leadership and monitor the Supreme Leader's performance, the members of the Assembly are elected by popular vote for an eight-year term. The current speaker of the assembly is Ali Akbar Hashemi Rafsanjani, who served as President of the country between 1989 and 1997.

The President, who is responsible for the formulation and execution of the macro-policies of the state and implementation of the Constitution, is popularly elected for a four-year term. No person can act as the President for more than two consecutive terms. The President is also Head of the Council of Ministers, which comprises 21 ministers responsible for various public services and policies.

The current President of the Islamic Republic is Dr. Mahmoud Ahmadinejad, who was first elected in 2005 and again in 2009, with 62.4% of the votes in the second round of the presidential election. President Ahmadinejad's priorities in economic policy include decreasing state control over the economy and achieving a more equitable distribution of wealth and opportunities for Iran's citizens. The current program conducted by the government in privatizing state assets is testament to this, with an extensive range of formerly state-owned companies sold off in the program and the provision of “Justice Shares", which are ceded to the lower strata of the community. The steps taken by the government to decrease red tape and attract more FDI to the country are other indicators of President Ahmadinejad's policies.

The Parliament of Iran (or Majlis) consists of 270 deputies elected every 4 years. The Parliament makes laws concerning every aspect of governmental and social affairs. Regarding economic policy, the Parliament plays an important role as the body that investigates and approves the detailed and extensive FYDPs that later guide the economic policies of the government. As an effective measure of scrutiny of the cabinet by the representatives of people, all members of the Council of Ministers must be approved individually by the Parliament, and the Parliament can call for the dismissal of any number of the government's ministers at any time. The current speaker of the Parliament is Ali Ardeshir Larijani.

In the governmental system of Iran, the Council of Guardians plays a role similar to that of the constitutional courts found in other countries as it inspects the laws passed by the Parliament to determine whether they are in compliance with Islamic legal principles and the Constitution. The Council has 12 members, six of whom are appointed by the Supreme Leader and the remaining six are nominated by the judiciary and approved by the Parliament. Another important task of the Council of Guardians is in overseeing the presidential and parliamentary election process. The current Chairman of the Council of Guardians is Ahmad Jannati.

The Expediency Council mediates between the Parliament and the Council of Guardians should there be a difference of opinion between the two institutions regarding legislation. The Judiciary is independent of the executive and legislative branches of government, and the Head of the Judiciary is appointed directly by the Supreme Leader for a five-year tenure.


The structure of local government in the Islamic Republic strikes a balance between effective administration and popular participation in decision-making processes. The country is divided into 31 provinces (ostans) whose governors are appointed centrally by the Ministry of the Interior. The allocation of financial resources to the provinces is determined by the central government. The provinces are further separated into 324 counties (shehrestans), each of which includes a city with a population of 50,000 or more as well as smaller towns and village agglomerations. Cities and villages within shehrestans have their own local councils, whose members have been directly elected by the electorate since 1999. This popular election of local officials constituted an important political milestone in the history of the country as it was the first time the people were able to exercise control over local affairs.

City and village councils perform a broad range of functions including the election of mayors, the supervision and auditing of the budget of municipalities, as well as the planning and coordination of economic, social and educational issues within their local constituency. The councils consist of five to 11 members depending on the size of the population living in the city or village, but this number can increase up to 15, as in the case of Tehran. Another important figure for the local governance system of Iran is the Imame Jomeh (the leader of Friday prayers) who is appointed to every city and village by the Supreme Leader.


Benefitting from the accelerated levels of globalization and economic integration, one of the characteristics of the Ahmadinejad government has been the improvement of Iran's economic relations with a diverse range of countries around the globe. Latin America, although geographically distant, has become a closer trading partner: IMF figures suggest that Iran-Latin American trade soared 209% in 2008, totaling $2.9 billion. These countries included Brazil, whose Foreign Minister Celso Luiz Amorim described Iran as being the “new geographic partner of the country". Ahmadinejad and Lula da Silva, the former President of Brazil, announced a trade volume goal of $25 billion with increased cooperation between both countries, particularly in the fields of industry, trade, energy, and technology.

Another country whose ties with Iran have been developing fast is China. The two sides are committed to expanding their level of economic cooperation, with Chinese Vice-Premier Li Keqiang describing China as “Iran's main economic partner". Chinese companies are already involved in energy exploration and production projects in Iran worth about $29 billion, and in refining and other industrial activities valued at $10 billion.

Other countries in the region neighboring Iran are also among those with which the country has strong ties. Syrian President Bashar al-Assad visited Iran in October 2010 and together with President Ahmadinejad declared that they were targeting a trade volume of $5 billion between the two countries in the medium term, up from the $336 million recorded in 2009-2010. Iranian firms are currently involved in many construction projects in Syria, while Iran's largest automotive producer, IKCO, has established vehicle assembly facilities in Damascus.

Turkey is also very much interested in improving its economic ties with Iran. The Turkish Prime Minister Recep Tayyip Erdoğan and Iranian First Vice-President Mohammad Reza Rahimi jointly declared that the medium-term target for the volume of trade between their two countries is $30 billion. In 2010, the annual volume of trade is estimated to have increased to $10 billion. Trade is expected to encourage mutual direct investment in the form of joint ventures between the two countries' private sector interests, especially in the sectors of industry, finance, and tourism.