Iran Briefing (Exclusive Report) – IRGC’s involvement in economic activities began at the end of the Iran-Iraq War in 1988. Since then, the IRGC has consistently struggled to increase its military potential and add to its arsenal. However, budgetary allocations to the IRGC were insufficient for it to realize its ambitions. It was Ali Akbar Hashemi Rafsanjani, the former President of Iran, who suggested that in view of the need to save resources for economic development and meet expenditures, the IRGC and the Intelligence Ministry should be allowed to run their own economic enterprises to earn part of their expenditures. Accordingly, the Supreme Leader Syed Ali Khamenei allowed the IRGC to engage in economic activities. Now the IRGC claims that through its economic enterprises it has not only contributed to the national reconstruction process but has also been able to cover its own budget deficits.
Clandestine smuggling and imports of goods is one dimension of the IRGC’s entrepreneurship that has paid huge dividends to this military formation. For this purpose, the IRGC has freely used the privately-operated piers, airports, and the land frontiers that are beyond the surveillance and control of the customs and civilian authorities.
Ali Alfoneh, an expert on IRGC affairs at the American Enterprise Institute, says the IRGC’s involvement in clandestine smuggling of goods dates back to the end of the Iran-Iraq War and the presidency of Rafsanjani. According to him, nearly eighty unauthorized and privately-operated piers have been discovered that are used by the IRGC for clandestine import and export of goods.
Clandestine smuggling and illegal imports of gold from neighboring countries, particularly Turkey, have gained momentum at a time when the Western powers and the international community have slapped devastating sanctions against the Iranian banking system and its international banking transactions. Consequently, the SWIFT system broke its links with Iran in compliance with the sanctions. IRGC’s objective behind illegal smuggling of gold in exchange for oil supplies is to offset the sanctions regime and to limit the crippling effects of the falling value of the Iranian currency Rial on the Iranian economy and the wallet of the military and intelligence forces.
Reasons Behind IRGC’s Smuggling and Imports of Gold
According to a report published in the Bullion Street, the IRGC has created a vast network of privately-owned companies to achieve its objectives. Iranian companies operating in Turkey, for instance, help the IRGC to smuggle and export gold from that country to Iran. In the same way, agents and operatives of the IRGC have been deployed to escort gold consignments from different parts of the world to Iran.
The Zaman Daily of Turkey reported on July 12, 2012, that Iranian businessmen have launched a drive to buy and hoard gold in Turkey. Iranian private companies engaged in the construction industry as well as the metals and steel sectors purchase gold in Turkey and send it to Dubai through a third party. Acting as intermediaries in these transactions, these companies not only make huge profits for themselves but also help the Iranian government in thwarting international sanctions.
Most likely these companies cannot carry on their business except in collaboration with some big players like the IRGC. One informed source who did not want his identity to be disclosed, told the Iran Briefing that an Iranian wife of a famous Turkish singer who runs her own business in marine transport, steel, gold, and gold jewelry, has been instrumental in providing substantial assistance to private companies operating under the umbrella of the IRGC and in the process makes huge profits for herself.
Reuters reported in August last year that tens of tons of Turkish gold has been loaded for Iran either directly or through the Dubai route. According to this report, express parcels of gold bars worth millions of dollars are packed in the suitcases of the couriers boarding the Istanbul-Dubai flights. Informed sources say the final destination of such consignments is invariably Iran.
The report adds that the total value of such gold bars is enormous. According to official Turkish statistical estimates for the month of August 2012, the approximate value of gold bars purchased by the Iranians and shipped to Dubai is $2 billion.
Reuters reported that such transfers greatly help the Iranian Government in managing its economic affairs in the face of financial sanctions imposed by the Western powers. The agents of the IRGC take delivery of such consignments at the Imam Khomeini International Airport at Tehran without any inspection by the authorities and without payment of custom duties. Turkey is not the only source of acquisition of gold as gold is also imported from India and Dubai in exchange for supplies of crude, which is managed entirely under the supervision of the IRGC.
By a resolution passed in 2009, the Iranian Parliament exempted imports of gold and silver from custom duties. This cleared the way for the importation of gold bars by the IRGC and thereby these military organizations derived huge monetary benefits. In Turkey too exports of gold are duty-free, and the government does not interfere with them.
Because of the secretive nature of the gold smuggling by the IRGC, nobody except the top-level commanders of the IRGC are aware of these activities. So far, no government functionary has publicly spoken about it. However, news websites associated with the IRGC have reported the news of huge profits going to the government of Iran from the import of gold. Fars News Agency, affiliated with the IRGC, has for instance reported that the Iranian Government earned a value of $ 4.2 billion during 2010 and in the following year this value increased manifold.
IRGC’s quest for neutralizing the ever-increasing harsh sanctions against the economic activities of these organizations has heightened of late. The IRGC has adopted smuggling and importing gold as a strategy to break out of the sanctions. The IRGC desires to keep its assets in the form of gold to minimize the impact of the falling value of the Iranian Rial on its economic activities. In the opinion of experts, the IRGC aims at using its gold reserves for military preparations to launch a war against the West, particularly the US and Israel.
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