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Iran’s Islamic Militia Inc

The extent of the Islamic Revolutionary Guards’ control over the Iranian economy is apparent as soon as you enter the country.

world Updated: Feb 20, 2010 23:08 IST

The extent of the Islamic Revolutionary Guards’ control over the Iranian economy is apparent as soon as you enter the country. They run the main international airport, and the manner in which they acquired it was a bruising demonstration of the way big business is now done in Iran.

The contract for managing Imam Khomeini airport, south of Tehran, was given to a Turkish-Austrian consortium in 2004. But on May 8, opening day, guardsmen took it over, blocking the runways with their vehicles, and closing it down. Inbound flights had to be hastily diverted.

The guard declared the involvement of foreigners posed a security risk because of an alleged link to Israel. But it was clear the foreign consortium’s mistake was to try to cut the corps out of its business model.

Ever since, excluding the guards has been exceedingly difficult, if not impossible, from Iran’s economy.

The guard, born as a volunteer militia in the 1979 revolution, is now unrecognisable from those early beginnings. It has grown into a behemoth which dominates both Iran’s official and black economies. It’s impossible to gauge its market share, but Western estimates range from a third to two-thirds of Iran’s GDP.

CORPS INC

But the Iranian economy has changed the guards as much, if not more than, they have changed it.

“The corps is really a corporation. It is a business conglomerate with guns,” said Ali Ansari, an Iran expert at St Andrews University. “This is not a military junta. I see it as a collection of business and religious interests. I don’t think they have the cohesion to move as one unit.”

Through holding companies, front companies, and “charitable foundations” the guard is a big player in the construction business, oil and gas, import-export, and telecom. Its company subcontracts work to foreign firms, and its subsidiaries bid for contracts abroad.

The guard’s control over a string of jetties along the Persian Gulf coast, as well as terminals in Iranian airports, allows it to trade and smuggle without paying duty.

“If you want to get things to and from Iran without paying excise duty, they are the people to go to,” said Meir Javedanfar, an Iranian-Israeli analyst. “No big businessman in Iran is truly independent of them or the government.”

Mohsen Sazegara, an exiled Iranian dissident who helped found the guard, calls it “a very strange and unique organisation”, comparing it to the KGB for its extensive intelligence wing. “It’s like a huge investment company with a complex of business empires and trading companies, while also being a de facto foreign ministry through the Qods force, which controls relations with countries in the region. They are involved in smuggling drugs and alcohol.”

HISTORY

Former President Akbar Hashemi Rafsanjani is now the guard’s greatest political rival, but in the aftermath of the Iran-Iraq war, it was he who encouraged guardsmen to get involved in construction as a way of rebuilding the country and funding the corps.

The guard operate in part through Iran’s bonyads, charitable foundations that operate as huge holding companies. Under the shah they were a way of channelling wealth to favoured courtiers. After the revolution they were vehicles for self-enrichment by the ayatollahs. Now, the guard is the dominant force through Bonyad e-Mostazafan, the Foundation of the Oppressed.

Arguably the most powerful guard body today is Khatam al-Anbiya, a giant holding firm with control of more than 812 registered companies inside or outside Iran. It has received 1,700 government contracts. Last week, the US treasury froze the assets of its head, General Rostam Qasemi, and four subsidiary companies.

President Mahmoud Ahmadinejad has handed Khatam al-Anbiya a succession of huge no-bid contracts allowing its economic influence to balloon exponentially over the past few years. Its security credentials have allowed it to corner the market for tunnelling contracts, underground rail systems, and the nuclear and missile programme. But it was also awarded a $1.3 billion contract to build a natural gas pipeline running nearly 560 miles from Bushehr province to Sistan-Baluchistan. To this was added a $2.5 billion contract to build infrastructure in the South Pars oilfield.

DIRTY DEAL

Last September, Etemad-e Mobin, a consortium close to the guard, bought a 51 per cent share in Iran’s telecommunications business, minutes after it was privatised. At $5 billion it was Iran’s biggest ever business deal — and the main competitor was disqualified at the last moment for “security” reasons. Three months later, the head of the consortium, Majid Soleimanipour and his wife, were found dead in their home. Reportedly they died of gas, but this has been treated with scepticism by the public.

The telecoms deal has deepened the corp’s near-monopolistic hold on the economy while at the same time giving it potential access to every phone conversation in the country. “Using their whole economic base, they are expanding control over areas of what they see as the ‘soft war’, like the telecommunications field, to confront the threat they see,” said Mark Fowler, a former CIA Iran specialist.

The main motive for the sanctions of the US and its allies is to drive a wedge between the corps and the Iranian people. Hillary Clinton’s claim Iran is heading to military dictatorship was probably intended to throw a spotlight on the gulf. But analysts say the reach of the guards and the murky nature of corporate ownership will make it very hard to know where to aim that wedge.