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Iran is a Middle Eastern nation, bordering the Gulf of Oman, the Persian Gulf, and the Caspian Sea. Iran also borders Iraq to the west, Afghanistan, Pakistan, and Turkmenistan to the east, and Armenia, Azerbaijan, and Turkey to the north. Known as Persia until 1935, Iran became an Islamic republic in 1979 after the Shah Mohammad Reza Pahlavi was overthrown. Despite considerable interdiction efforts and anti-trafficking measures along the Afghanistan border, Iran is one of the primary transshipment routes for southwest Asian heroin to Europe. It has among the highest rates of opiate addiction in the world, and the use of synthetic drugs has recently increased.

The drug identified most closely with Iran is opium, the large-scale production and export of which began in the mid-1850s. Iran was a major source of opium smuggled into states that prohibited its import until 1955, when a prohibition on consumption and production was rigorously enforced. The 1955 ban was rescinded in 1969 when the state regulated the production and sale of opium. Prohibition was re-enacted in 1979 by the new Islamic regime. For seven months a draconian policy against producers, distributors, and consumers was enforced, followed by a relaxation of prohibition until 1988, after which repressive intervention continued. Since 1988, significant resources have been expended on interdiction. However, recent years have witnessed a growing acceptance of treatment and harm reduction, alongside repressive law enforcement. Methamphetamine consumption and manufacture are increasing.

Industrial-scale opium production for export began in the 1850s. It remained an important source of export revenue until 1955; however, the state lacked control over the trade and was unable to extract maximum taxation. A state-run monopoly, established in the 1920s, controlled at most two-thirds of the product. The lack of control of the final destination of exports meant that Iran constituted a significant source of opium within states that had prohibited its importation. In the 1940s the League of Nations reprimanded Iran for laxity, reporting that 76 percent of the opium it produced was unaccounted for. By the early 1950s it was reported that Iran illicitly supplied the European, Middle Eastern, American, and southeast Asian markets. Further, 7 to 11 percent of the population was addicted to opium, and the consumer population was potentially as high as 80 percent in major production areas.

Iran is the world's largest consumer of illicit opiates. The World Health Organization documented this Iranian addict using opium.

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In 1955 opium production and consumption were prohibited. “Anti-opium” pills were distributed to consumers and forced detoxification centers were established. The United Nations reported that the opium-addicted population had diminished to 1 percent. However, a black market of Afghan and Turkish opium was established. The ban was rescinded in 1969 partly due to the human and financial cost of engaging with armed traffickers. After 1969, the state stringently regulated production and procured all opium at a price set to deter theft; it sold it to old and sick consumers. While state action against unregulated trade was strict, and largely reduced opium production, heroin consumption increased because of growing domestic manufacturing.

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