Revolutionary Guards Have Financial Interest in Keeping Iran Isolated

Karim Sadjadpour, associate, Carnegie Endowment for International Peace
Bernard Gwertzman, Consulting Editor

May 29, 2007

Karim SadjadpourKarim Sadjadpour, an Iranian-American who worked for several years in Iran with the International Crisis Group, says he increasingly believes elements within Iran’s Revolutionary Guards have an economic motivation in keeping Iran relatively isolated in the world, and in encouraging the latest domestic crackdowns. “Whenever there is the prospect of a U.S.-Iran dialogue or improved Iranian relations with the West, hardliners do their very best to torpedo such efforts,” he says.

There have been several developments in Iran that have aroused considerable concern in the United States, particularly in academic circles. One is the arrest of a prominent American-Iranian scholar, Haleh Esfandiari, who has been a leader in encouraging Iranian-American academic exchanges, and who was in Iran to visit her mother. She’s been accused, as have the others, of plotting to bring about a “velvet revolution” in Iran, and of working for Israel and the United States. Her arrest has led to the condemnation of Iran from all sorts of people. What’s causing this latest crackdown on people who are interested in better relations in Iran?

Well, I don’t know if we can say there’s one precise reason behind the crackdown. I think it certainly was in the realm of possibility that the government in Tehran is trying to send a very stern signal to the Bush administration to cease any democracy promotion effort in Iran. At the same time, the government in Tehran is trying to send a very clear signal to Iranian-Americans and all those who work on issues of civil society or internal politics in Iran that they should tread very carefully. But I’m also increasingly coming to the conclusion that there’s a small but very powerful clique within Iran, among the political elite, who actually have entrenched political and financial interests in retaining Iran’s isolation. And whenever there is the prospect of a U.S.-Iran dialogue or improved Iranian relations with the West, they do their very best to torpedo such efforts.

You say they have a “financial interest” as well. Could you elaborate?

You have hardline elements within the Revolutionary Guard, who right now have enormous financial assets, and they maintain a kind of a private mafia. And the last thing they want is Iran to open up to the rest of the world, to join the WTO. I think their logic is that right now Iran is a closed society, and the less open the merrier.

“Whenever there is the prospect of a U.S.-Iran dialogue or improved Iranian relations with the West, hardliners do their very best to torpedo such efforts.”

Explain a little bit about the Revolutionary Guards. Is this a very large organization?

The Revolutionary Guards comprise about 150,000 in number. They’re not a monolithic group. There’s a common perception right now that the Revolutionary Guards are very closely aligned with President Mahmoud Ahmadinejad. But I would say it’s the opposite. President Ahmadinejad has to pander to the Revolutionary Guards to project his own power, because he doesn’t have a very strong popular base. And it’s difficult to describe them as a group of 150,000 hardliners because in 2001 three-quarters of them voted for the liberal Mohammed Khatami’s re-election as president. In some ways, the Revolutionary Guards are more reflective of the Iranian society than we think. They also want change and reform to take place. But again, when I talked about this powerful clique with entrenched political and financial interest, I don’t think that they’re large in number. I think they represent a minority, a small minority of Iran’s political elite. But they do an outstanding job of consistently playing the spoiler.

And are they involved in the ministry of intelligence which has been responsible for the arrests?

I would say about those who want to retain Iran’s isolationist status—it is not just for financial interests, but it also fits their political worldview. They’re very xenophobic, and many of them still adhere to the old adage from Ayatollah Khomeini, the leader of the Iranian revolution in 1978-79, that the relationship between the United States and Iran is like that between a wolf and a sheep. They’re extremely mistrustful of U.S. intentions and they don’t believe that having a more open Iran is in their own political interests.

“It’s difficult to describe the[Revolutionary Guards] as a group of 150,000 hardliners because in 2001 three-quarters of them voted for the liberal Mohammed Khatami’s re-election as president. In some ways, the Revolutionary Guards are more reflective of the Iranian society than we think.”

Do some of these Revolutionary Guards own businesses? Are they in the oil business?

Yes, they’re getting billion dollar contracts right now, and they essentially operate as contractors. They don’t have the technical know-how whether it’s in the oil industry, or in major infrastructure projects, but they get non-competitive bids, and then they outsource the project. They also have a lot of jetties, or “free-trade ports” where the average Iranian businessman who wants to import or export items is subject to heavy tariffs. The Revolutionary Guards, in turn, operate their own free-trade port, so they’re not subject to tariffs.

I didn’t realize that. And how do the Revolutionary Guards relate to the Iranian army. Revolutionary Guards suggests sort of a militant group. You’re indicating they’re not just a military outfit.

At the onset of the Revolution, there was a lot of concern that the Shah’s army couldn’t be counted on to be loyal to the newly established Islamic republic. So the Khomeinists started the Revolutionary Guards to be the protectors of the revolution. That was the original idea for their existence. But over time they’ve grown in number and they’ve grown in stature, and now there’s a lot of concern that as their economic interests have grown over the years, so have their political ambitions.

Let’s move on to another subject. There’s been a crackdown in Iran, not only on those interested in the United States and the West, but on women’s rights groups. Can you elaborate?

I think Iranian women are among the most progressive women in the Middle East. They’re very capable. We have Shrin Ebadi, the Nobel Prize winner. We have great artists, painters, and doctors and professionals. I would say that despite, not because of the Islamic Republic, Iranian women have still managed to assert themselves in a very important way in Iranian society. And I think their defiance is fairly subtle and fairly apolitical, meaning they’re not so much marching in the streets protesting, but it’s just daily acts of defiance. They are increasingly entering the workforce and going to university. Sixty percent of the universities are women, many not adhering to the strict dress code that was imposed upon them in the early days of the revolution. I would say that those who are political and out marching in the streets for women’s rights are not large in number as a percentage of the population, but they’re not negligible either. And the fact that the regime is choosing to crack down on them, shows that it is  concerned about this women’s rights movement.

Talk about the university students. Now if I read the political reporting correctly, there was a major effort by young intellectuals or reformers to boycott the last presidential election in 2005. Do they now regret this? There seems to be a lot of opposition to President Ahmadinejad among the university students these days.

At the time, their rationale for not wanting to participate in the elections was this: “We went out to the polls en masse in 1997 to overwhelmingly elect Mohammed Khatami, but he wasn’t able to effect change the way we wanted him to. So over the course of the next five years, we elected a very reform-minded parliament, and when that wasn’t able to deliver change, we even went and reelected Khatami in 2001. We renewed his mandate and we turned out in Scandinavian turnout levels, 70-80 percent of the population voting, and we gave Khatami mandates of maybe 80 percent.”

But after some eight years of not being able to effect changes via the ballot box, I think it’s very natural that many people decided that voting in Iran is an exercise in futility. As one secular intellectual once put it to me, “It’s like going to the gym every day for six years and not losing one pound. Pretty soon you’re going to stop exercising.” I think the rationale for not participating in the election was at the time sound, but I think now, in retrospect, those people who used to say, “Why should we vote, it doesn’t make any difference,” now realize that actually voting does make a difference, because you can go from kind of an unpleasant situation to a very negative situation. And you can go from someone like Khatami to someone like Ahmadinejad.

Now is there an election coming up for the Majlis, the parliament, in February 2008. Could there be a groundswell of opposition to the president in this election?

“President Ahmadinejad’s mandate when he was elected was extremely clear… I never encountered one person who said ‘I voted for Ahmadinejad because he’s going to take a hard-line nuclear posture or he’s going to take a hard-line against Israel.’  His mandate was extremely clear, and that was to improve people’s economic lot.”

President Ahmadinejad’s mandate when he was elected was extremely clear. I covered those elections very closely, and I never encountered one person who said “I voted for Ahmadinejad because he’s going to take a hard-line nuclear posture or he’s going to take a hard-line against Israel.”  His mandate was extremely clear, and that was to improve people’s economic lot. Now the way he’s been comporting himself both domestically and internationally has led to capital flight and to diminished foreign investment. And he’s created a very unfriendly economic atmosphere, and he hasn’t delivered on his lofty economic promises. So I think it would be logical that in the parliamentary elections, those who are aligned with President Ahmadinejad probably won’t do that well, because they haven’t delivered on any of their promises.

What is the economy like in Iran now?

Well, I think the economy in a country like Iran which is so rich in natural resources and so rich in human capital is really underperforming. You had a baby boom when the revolution occurred in 1979. Ayatollah Khomeini encouraged people to go out and have many children in order to produce this robust Islamic society. Now these children of the revolution are entering the labor market, but they’re not finding jobs. So you not only have unemployment, but you have a lot of underemployment. Young men and women who are educated are not finding jobs, and having to work at jobs for which they’re overqualified. They are driving taxis; architects are selling pizza. And there is heavy inflation. And any time you have a populist president like Ahmadinejad whose solution to problems is simply to inject cash into the economy, it’s natural that it leads to rising inflation.

U.S. policy toward Iran seems to have two aspects. One is this rather modest program, the equivalent of the Cold War cultural program funding broadcasts and money to help out in exchanges. And the other is this cover activity that keeps going on. A lot of the commentators have sort of blamed the U.S. for the arrests in Iran. What do you say about that?

Well, I don’t think we can blame the United States for the cruelty of the Islamic Republic. The Islamic Republic has been behaving in cruel fashion since 1979. For example, the punishment of stoning women to death for adultery existed before the neocons came to power in Washington. But that being said, I think the perception in Tehran, especially the perception of Ayatollah Khamenei, the supreme leader, is that the U.S. problems with Iran are not about Iran’s external behavior, but about the very character of the Iranian government. Khamenei believes deep down that Iran’s patch of real estate bordering the Caspian Sea and the Persian Gulf, a strategic location with natural resources, is so important that he believes that the United States really wants to go back to a relationship with Iran which they had in the time of the Shah. This was essentially a patron-client relationship. So when the U.S. appropriated $75 million for civil society and democracy promotion in Iran, this simply reinforced the world view of those in Tehran who believe that the United States is out to change the character of the Iranian government.

And of course, the major foreign policy confrontation continues to be the nuclear enrichment program that Iranians continuing in the face of two series of sanctions in the Security Council, and probably another set will be coming up shortly if the Chinese and Russians agree. Is there any discomfort in the leadership over this sort of international isolation they’re getting themselves into?

There are plenty of people like Ali Larijani, the nuclear negotiator, who doesn’t appreciate Ahmadinejad’s approach.  I think they appreciate the need for Iran to retain good ties, for example, with the Europeans and not solely rely on Chinese and Russian support. But I think right now the leadership in Iran is banking on the fact that China and Russia won’t sign up to any substantial sanctions. And without China and Russia on board, European resolve is going to waver. The regime believes that if Iran continues to be persistent, this entire coalition is going to unravel. So I think they’re banking on the fact that if they hold strong, eventually, they’re going to be able to win out. At the same time, many Iranians feel, especially those like Ayatollah Khamenei, that they’re still in a difficult position because they think that if they compromise as a result of the pressure, it’s not going to get them out of trouble, but it’s going to invite even more pressure, it’s going to validate this hard-line approach against them. Someone like Ayatollah Khamenei doesn’t want confrontation—and certainly doesn’t want to have military confrontation—but he’s also averse to accommodation.

I would think he’s making a mistake. I would think any sign of a compromise by Iran would be very welcome in the West.

Well, again, we go back to his worldview. He really believes that it’s not about Iran’s external behavior, that it’s about the character of the Iranian government, which the United States has a problem with, and I think he believes that if he compromises as a result of the pressure, it’s not going to strengthen the argument of those in the State Department who argue for a conciliatory approach to Iran. It’s going to strengthen the argument of people like [Vice President] Dick Cheney who say, “See, the pressure’s working, let’s turn up the heat even more.”

I would think the next presidential election in the United States would be very important for Iran. I don’t see any sign of any of the Democratic candidates wanting to have a softer view on Iran, do you?

I think if you’re a U.S. politician, you don’t win any points by saying, let’s engage Iran, especially when you have a president in Iran who has called for wiping Israel off the map and questioned that the Holocaust happened. I think in the context of domestic U.S. politics it doesn’t win you any points by saying, let’s engage with Ahmadinejad.

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