Over the past decade, a significant portion of Iran’s economic institutions have been handed off to the office of the Supreme Leader under the guise of “privatization.”
The driving force behind this stunning power grab is the expanding sphere of influence of Khamenei's office and the Islamic Revolutionary Guards Corps (IRGC) over Iran’s economic resources.
This so-called privatization campaign is a decisive turning point beginning in 2005, when Supreme Leader Ali Khamenei and the IRGC stacked the executive with people who completely – at least initially – shared Khamenei’s strategic vision for the regime. At this point, Khamenei began to implement a profound restructuring of Iran's economy, including the ownership of a wide range of industries and institutions.
This first took the form of an official directive issued in May 2005. The government was instructed to transfer 80 percent of its economic enterprises to "non-government public, private and cooperative sectors" by the end of 2009. Among these were large mines, primary industries (including downstream oil and gas), foreign commerce, banks, insurance, power generation, post, roads, railroads, airlines, and shipping companies. By some estimates, close to $12B in shares were transferred over just three years, from 2005 to 2008.
The beneficiaries of the bulk of these transfers were the Supreme Leader’s office and its various tentacles, including the dominant Setad, the armed services, and the infamous bonyads or foundations. The implications are better grasped in light of the fact that these institutions exercise virtually absolute control over all decision-making, legislative mechanisms, intelligence gathering, and access to significant budgetary commitments. The resulting powerhouses that have arisen act as the main players and the gatekeepers for western companies into the Iranian economy.
The newly published Rise of the Revolutionary Guards' Financial Empire: How the Supreme Leader and the IRGC Rob the People to Fund International Terror released by the U.S. office of the National Council of Resistance of Iran highlights 14 economic powerhouses directly or indirectly controlled by Khamenei, the IRGC, or their affiliates. Setad's holdings alone total about $95 billion, according to a recent Reuters calculation. All these entities are tax-exempt while some also receive annual government funding.
The Supreme Leader and the IRGC control at least 50 percent of Iran’s GDP.
But where do the profits go? They end up funding the conflict in Syria, terrorism and sectarianism in Iraq, the war in Yemen, the nuclear and missile programs, the security apparatus in Iran, and fundamentalist operations around the world. In the end, Iran’s national economy has been made to serve the domestic suppression, warmongering, export of fundamentalism, and terrorism.
Tehran is spending between $15-20 billion annually to fund the war in Syria, including at least $1B in salaries to its proxies. IRGC Qods Force commander Qassem Soleimani spends billions of dollars in Iraq to fund the Shiite militias and instigate sectarian violence. At least one billion dollars is provided to Hezbollah in Lebanon annually, and Tehran has poured at least 1.3 billion dollars into the coffers of Hamas.
Western companies would like the deals they make with Iran to be seen as transactions with the “private sector.” However, behind the official banks and companies lies a web of institutions controlled by the IRGC.
Western companies, governments, and the citizens they represent cannot avoid the reality that today those running Iran’s economy are those who suppress the Iranian population and export the terrorism and fundamentalist ideology that threaten the West.
To do business with Iran is to do business with Khamenei and the IRGC.
The Trump administration now has a unique opportunity to help cut off resources to the IRGC and impose limitations on its profit-making, terror-funding operation, by designating the IRGC for what it is: a Foreign Terrorist Organization.
Congress would certainly agree with this bipartisan issue.
Alireza Jafarzadeh, the deputy director of the Washington office of the National Council of Resistance of Iran, is credited with exposing Iranian nuclear sites in Natanz and Arak in 2002, triggering International Atomic Energy Agency inspections. He is the author of "The Iran Threat" (Palgrave MacMillan: 2008). His email is Jafarzadeh@ncrius.org.