Sep 13, 2010 Politics Comments Off
The IRGC (“Sepah Pasdaran” in Persian) was established to preserve the newly-formed Islamic Republic which emerged from the 1979 Iranian Revolution. During the Iran-Iraq war, it played an important role in driving out the invading forces. Today, the IRGC has transformed into an economic behemoth which is quickly devouring Iran’s economy.
In the past few months, the IRGC has made a number of huge business contracts, including the purchase of a 50% stake in Iran Telecommunications. Hamid Behbahani, Minister of Transportation, said that the Khatam al-Anbiya (the engineering arm of the IRGC) has been awarded $2.5 billion to build a railway route linking the southeastern port of Chabahar to the Iranian rail network.
Khatam al-Anbiya: The Engineering Arm of the IRGC
The engineering firm Khatam al-Anbiya, winner of this $2.5 billion project, has more than 800 registered companies. This giant holding firm has worked on more than 1500 projects in Iran. It formed in 1990 at the order of Ayatollah Khamenei, the Supreme Leader of the Islamic Republic, and with authorization from Hashemi Rafsanjani, the president at the time. It was founded so that the IRGC, then under the direction of Mohsen Rezaee, could acquire funds and take part in the country’s construction projects. Since then many of the freeway, tunnel, and dam constructions, as well as oil and gas projects, have been granted to the IRGC. The Gharb-e-Noh, Hara Institute, Rahab Institute, Sahel Institute, Omran Institute, and Makin Institute are subsidiary companies either owned or controlled by Khatam al-Anbiya.
From Water and Electricity to Oil and Gas
As the years passed, the IRGC became increasingly dominant in Iran’s national economic [and political scene]. When Khatami’s reformist administration entered negotiations with the Turks in order to finish part of the Imam Khomeini International Airport, a direct confrontation within government ensued, escalating to the extent that three IRGC fighter jets performed military maneuvers over the airport. Due to the efforts of hard-line MPs in the conservative-dominated 7th Majlis, Khatami’s reformist minister was sacked.
Meanwhile, Mahmoud Ahmadinejad, then mayor of Tehran, was signing contracts with the IRGC. In 2009, Ahmadinejad became President through “a complicated process,” according to Commander Zolghadr. Hashemi Rafsanjani wrote a letter to God against the perceived election fraud and went into silent protest, but Mehdi Karroubi wrote an open letter to the Supreme Leader and without hesitation described the roles the IRGC and Basij had played in Iranian business. After the Ahmadinejad administration was established, huge contracts were awarded to the IRGC and the Khatam al-Anbiya firm,in some cases without following the recognized bidding process. Notwithstanding the IRGC’s influence throughout levels of the ministries and their affiliations, more than 100 projects were allocated to the IRGC during the first year of the Ninth Government. Some of the deals the IRGC acquired in the oil and gas areas included receiving a $2.2 billion contract for the oil pipeline from the Sistan province to Pakistan, developing part of the South Pars gas field for $2.5 billion, developing the Chabahar railroad and a number of huge oil projects valued at more than $7 billion. Over and above its control of road construction and the distribution of water and electricity, the IRGC has officially seized control over oil and gas, the heart of Iran’s wealth.
Telecommunications in the IRGC’s Clutches
It was late September 2009 when news of a financial bombshell broke out: the purchase of 50% stake in the Telecommunications Company of Iran in an $8 billion contract. The winner was Mobin Trust Consortium, formed from three companies. The Mobin Trust and Shahriyar Mahestan investment firms are IRGC controlled firms under the Setad Ejraee Farman Emam. The two companies were formed during a merger in 2006 and 2007 and have no substantial background. The Mobin Trust Consortium started its own activities in 2004. It is interesting that Mobin Trust’s rival Mehr Eghtesad Iranian is active in the stock exchange which is under the Basij’s control. The purchase of the 50% share in Iran Telecommunications was the biggest business deal in Tehran’s 41-year history of stockholding. It was all done in half an hour, minutes after Telecommunications was privatized.
Only days after news of the $8 billion contract broke out, Bahmani, head of the Central Bank, announced the transformation of one of the IRGC’s known satellite economic institutes, the Ansar Institute of Finance and Credit into a bank. He also announced that the Mehr Institute of Finance and Credit, known to be under Basij control, was on the threshold of becoming the IRGC’s second bank. [This news in the banking industry] appears to be following the same trajectory as Ghavamin Gharz al-Hasane which has been linked to the police. In addition to these institutions, the IRGC conducts a wide range of of economic activity through a number of subsidiaries and trusts.
Everything said up to this point has only related to the known and reported projects of the IRGC. On the other side of the coin, the IRGC as the biggest undercover mafia also controls a vast shadow economy of illicit enterprises. Mehdi Karrubi, as Speaker of the Sixth Majlis under President Khatami, officially announced that the IRGC was operating 60 illegal jetties in the country without government supervision. Until that point, because of censorship and fear of the IRGC, only one or two brave reformist newspapers had reported on the 60 illegal jetties. Ali Ghanbari, another Sixth Majlis member, followed suit, arguing that one-third of imported goods are delivered through the black market, underground economy and illegal jetties.
Mirhossein Mousavi: IRGC Economic Activities Dangerous for the Country
In early September 2010, Mirhossein Mousavi, one of the Green Movement leaders, in his first full interview after the post-election events, pointed out the IRGC’s presence in the economy and said, “One thing the Imam was really sensitive about was the financial issue. At one point in the country, this debate began about the financial needs of the armed forces, and thus the need to have [the armed forces] participate in economic activities. I opposed such action, and I believed that this national issue would confront other various issues. [The proponents] were saying that the police wanted to do some construction activities. I said that the police’s occupation with the cost [of such endeavors] would hinder their ability to perform their duties and would instead spread corruption. I totally believe that awarding billion dollar contracts to the IRGC is not in our country’s financial interest, and certainly not to the IRGC’s or the entire military’s advantage. Such action would only place our country in danger.”
Ahmadinejad: IRGC Presence is Trustworthy
In November 2008, President Ahmadinejad attended the opening ceremony of an operation to transfer water from the Dez River in western Iran to the city of Qom. At the ceremony he said, “In order to develop our country, it is necessary to have a jihadist, hezbollahi, and religious mindset. The presence of the [Khatam al-Anbiya] sincerely reminds people that it is possible to do big things in this country—but some people express wrong opinions without having any information and say that the presence of the [Khatam al-Anbiya] in the country’s projects gives little space for other [firms]. But instead such erroneous language results from ignorance.”