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Khamenei Orders IRGC To Reduce Controversial Involvement In Economy

IRGC's top commanders attending a meeting with Supreme Leader Ali Khamenei, undated. In this middle: Khamenei's representative to the IRGC, Ali Saeedi

Two weeks after widespread protests against economic hardship and lack of freedoms shook the Islamic Republic; its Supreme Leader has ordered the Iranian Armed Forces to reduce their involvement in the country’s economy.

In a January 20 interview with the government owned daily, Iran, defense minister General Amir Hatami said, “Based on ayatollah Khamenei’s edict, General Staff of the Armed Forces of the Islamic Republic has been assigned to pave the way for giving up those economic entities controlled by the Armed Forces that are not related to their mission”.

However, Gen. Hatami noted that the Armed Forces activities, including the Islamic Revolution Guards Corps’ (IRGC) affiliated Khatam ol-Anbia industrial conglomerate, will continue their activities in the construction sector, according to the needs of the government.

Gen. Hatami has not elaborated which businesses might be transferred to the private sector, but vaguely alluded to entities related to the “investment sector” are on the line for being transferred.

The plan, as Gen. Hatami has put it, will be implemented in the investment sector without any involvement of the government-run Privatization Organization, which can open the door to more controversies.

In the last decade, the IRGC has expanded its economic empire in different sectors, including financial services, with little transparency.

Abdollah Abdollahi, the head of the IRGC construction corporation Khatam-al Anbiya

​Furthermore, a corporation affiliated with the Baseej (a militia force under IRGC control) has bought shares in some companies and factories, including Foulad Mobarakeh (Mobarakeh steel works), Iralco, Tabriz Tractor factory, Sadra, Technotaz and Jabir bin Hayyan pharmaceuticals.

The IRGC got involved in business in the aftermath of the 1980-88 Iran-Iraq War.

At the time, President Akber Hashemi Rafsanjani supported the scheme to help implement his post-war reconstruction plans. Thus, tens of thousands of veterans, who had nothing to do after the war, would be kept busy by their involvement in lucrative businesses.

However, soon IRGC transformed itself into an economic giant in the country. IRGC spread its economic wings, laying claim to all lucrative government contracts. Whenever, IRGC was resisted, it responded with full show of its influence and force.

In 2005, IRGC stopped the official inauguration of Tehran’s new Imam Khomeini international airport by flying planes over the site. Soon, then-president Mohammad Khatami (1997-2005) relented by cancelling the airport’s security contract with the Turkish company TAV.

The contract was later awarded to an IRGC affiliated company.

During Mahmoud Ahmadinejad’s presidency (2005-2013) IRGC entered into all key economic sectors of Iran, including the oil business.

The role of IRGC in the Iranian economy became so significant that an IRGC commander and the head of Khatam-ol-Anbia industrial conglomerate, Rostam Qassemi was installed as petroleum minister, in 2011.

Nonetheless, Ahmadinejad and IRGC separated their ways during the incumbent’s last years of presidency, to the point that Ahmadinejad sarcastically referred to IRGC commanders as “our smuggler brethren”.

Ahmadinejad’s successor has also aired his dissatisfaction with IRGC’s role in the country’s economy.

Criticizing IRGC’s significant presence in Iran’s economy, President Rouhani lamented last summer, “A part of Iran’s economy used to be controlled by an unarmed government, but we delivered it to a government armed with guns”.

Iran President Hassan Rouhani meets IRGC commanders in Tehran, to mend fences, July 24, 2017

He was referring to large-scale privatization in the previous decade that resulted in many government-owned enterprises being sold to IRGC controlled companies.

Meanwhile, the Islamic Republic’s regular army has also stepped into Iran’s economic stage, but with less controversy.

Independent Iranian economists argue that the presence of the military in business is one the main problems preventing development and foreign investments in Iran. They believe that it has practically eliminated the private sector from large-scale investments.

The IRGC with its intimidating show of force on the streets and its sprawling intelligence network does not report to any authority except the supreme leader. Private companies have no chance of competing against it on a level playing field.

Moreover, popular resentment against IRGC is visible on social networks. Many say that recent widespread anti-establishment protests in more than 100 cities in Iran were partly because of the highlighted role of IRGC in almost all aspects of life in Iran.

While IRGC is present in almost all large businesses, its current or former commanders control a variety of positions, including ownership of sports clubs, news agencies and pseudo-banks.