Proponents of the Iran nuclear agreement say assisting Iran out of its economic isolation could help prop up more moderate elements within the Islamic Republic. By any standard, the Islamic Revolutionary Guards Corps, or IRGC, fails the moderation test: it is Tehran’s ideological vanguard, responsible for exporting the revolution abroad and enforcing its rule at home. Nonetheless, the Iranian Revolution Guard Corps (IRGC)’s clout in Iran’s economy means that post-deal, even those projects which those proponents deem innocuous – such as building dams and roads – will serve mainly to fill the guard’s coffers.
The Obama administration is adamant that the IRGC “hates the deal,” because it supposedly opens up market previously cornered by the Guards to competition. The truth is rather different: the deal delists many companies that aided the IRGC in its proliferation efforts, its support for terrorism, and its involvement in the Syrian civil war. Though the deal keeps in place U.S. sanctions against the IRGC, it removes sectoral bans against areas of Iran’s economy that the IRGC dominates. The Guards, as Iran’s economic “gatekeeper,” will have ultimate say on how the country’s post-deal windfall will be spent.
Khatam al-Anbia is the IRGC construction giant that is the “unrivalled king” of Iran’s private sector economy and may be the country’s largest firm outright. The firm employs over 135,000 people, works with over 5,000 contractors and has over 800 reported subsidiaries. Its portfolio includes 51 contracts with the Oil Ministry worth some $17 billion; the $2-billion Bakhtiari Dam, slated to be the tallest in the world; the $3-billion “shrine-to-shrine” highway connecting Qom and Mashhad; a $7 billion special cooperation contract with the city of Tehran; $400 million contract to build Mashhad metro line 3; and the $1.3-billion NGL 3200 construction project in the West Karoun oil fields and even a Tehran metro line.
Even as Khatam al-Anbia is technically under EU sanctions for eight years and under U.S. sanctions for longer, its primary constraint until now was Iran’s failing economy itself. With Tehran’s economy on the rebound, and a budgetary rise to $3.7 billion earlier this year, the organization’s prospects have never looked brighter. More business coming into Iran means more construction, so even if the company is still under sanctions they’ll still make money.
Another sector in which the IRGC stands to enjoy a post-deal windfall is petrochemicals. Over the years, the guards have expanded their portfolio to include large shares of Iran’s publicly traded petrochemical companies – today the IRGC is the second-biggest petrochemicals shareholder after the Iranian government itself.
Third, the IRGC’s already hefty portfolio at the Tehran Stock Exchange stands to grow further still. The guards’ stocks will benefit from a rise in their companies’ market value, as foreign and domestic investors pour capital into the country’s financial markets. Higher stock values and revenues will likely yield more robust dividends to shareholders – first and foremost, the IRGC.
Evidence is already emerging that the administration’s certitude on this matter stands on shaky grounds. As the Wall Street Journal recently revealed, a subsidiary of Italy’s Finmeccanica recently signed a contract worth $560 million with Ghadir Investment Group to build a power plant. The U.S. Department of Treasury has identified Ghadir as a subsidiary of the Execution of the Imam Khomeini’s Order, the Supreme Leader’s business empire. Ghadir is in fact jointly owned by the IRGC, the Supreme Leader, and other military foundations. They are reaping benefits even before the deal’s implementation begins.
In the words of Director of National Intelligence James Clapper, “The lion’s share of the funding that will be freed up with the sanctions relief will go to things economic.”
Iran will no doubt invest in “things economic,” but it will be the IRGC that gets the lion’s share.
Emanuele Ottolenghi is a Senior Fellow at Foundation for Defense of Democracies, where Saeed Ghasseminejad is an Associate Fellow.
