Corruption of the Islamic Revolutionary Guard Corps in Iran's Economy

Three months after the victory of the Islamic Revolution, Ayatollah Khomeini ordered the formation of the Islamic Revolutionary Guard Corps (IRGC) to support the Islamic system against chaos, coups, and Marxist-Leninist guerrillas and the Islamic Marxist Mujahideen (May 1979). The Guardian Council then included this institution in the constitution and approved it in the referendum on December 2. During the war with Iraq, the IRGC took the initiative from the conventional army and defeated guerrilla groups within the borders. Subsequently, by taking control of the Basij forces, creating secret prisons, and intelligence organizations, it seized the lever of security-military control of the country and directly suppressed protesting citizens. Furthermore, with the support and organization of Shia militia groups in Iraq, Lebanon, and Yemen, it expanded its power beyond borders. After gaining dominance in security and military fields, the IRGC gradually emerged in politics and economics, especially since the presidency of Akbar Hashemi Rafsanjani and the newly established leadership of Ayatollah Khamenei, two figures who were always collaborators and rivals of the system. In the final years of Mohammad Khatami's presidency and especially during Mahmoud Ahmadinejad's presidency, IRGC generals occupied many high-ranking positions and, with this political power, seized many economic privileges. Thus, an unfortunate but effective cycle allowed the IRGC to become the largest rent-seeking force in the country; economic privileges enabled the IRGC to attract more followers and engineer the system's elections in their favor. Political power also allowed them to formally and legally seize economic privileges. Economic power was behind political power, and political power sheltered economic power. This article describes this story. First, I will explore the emergence of the IRGC in the political sphere, then its emergence in the economy. We will also take a look at the IRGC's hidden activities. The emergence of the IRGC in Iranian politics. After the war, it was decided that the IRGC would be organized like other armies in the world based on ranks. However, there was no room for high ranks for all IRGC members who had participated in the war with relatively similar backgrounds and experiences, and lower ranks did not satisfy them. Therefore, on the one hand, commanders competed fiercely for high ranks, and on the other hand, many of them sought political and economic privileges outside military ranks. The IRGC did not tolerate joining the army and its organizational chart. Because in this way, they would lose many of the special privileges of the IRGC and their place. Thus, when, after the war with Iraq, Hashemi Rafsanjani, then Speaker of the Islamic Consultative Assembly and Deputy Commander-in-Chief, called for the IRGC to join the army (on September 6, 1988), within ten days, IRGC commanders reacted sharply by forming the "General Assembly of IRGC Commanders and Officials" and announced that the war was a continuation of the revolution and reconstruction was a continuation of the war, and therefore the commanders of the revolution and war should also participate in reconstruction. Tension between Hashemi Rafsanjani and IRGC commanders continued. Hashemi Rafsanjani did not want the IRGC to participate in politics, while IRGC commanders sought just that. In this struggle, Ayatollah Khamenei, the new successor of Ayatollah Khomeini and Commander-in-Chief, clearly supported the IRGC and stated that the IRGC is the guardian of the ideological borders of the system and the country's resources primarily belong to the army and the IRGC. It was clear that the IRGC could no longer limit itself to supporting political currents and sought a larger share in the political sphere of the country. Therefore, in the fifth parliamentary elections (1996-2000), seemingly with the support of the leader, they distributed a list called "Ansar Hezbollah" and sought political power. In this parliament, conservatives led by Ali Akbar Nategh-Nouri, Hassan Rouhani, and Mohammad Ali Mohammadi-Kermani were dominant and managed to impeach Ataollah Mohajerani and Abdollah Nouri in the reformist government of Mohammad Khatami and remove them from office. However, the fifth presidential election and the sixth parliament slipped from the IRGC's hands, and Mohammad Khatami was elected by a wide margin in June 1997 instead of Hashemi Rafsanjani, and the reformists gained most of the seats, challenging the IRGC's biased presence and interference in politics. The IRGC reacted sharply, and Yahya Rahim Safavi, the IRGC's Commander-in-Chief, in an open letter to Mehdi Karroubi, the Speaker of the Sixth Parliament, stated that participating in the country's politics to combat saboteurs and those acting against the Islamic Revolution was one of the IRGC's missions and demanded control over the extreme behaviors of some representatives. The IRGC also warned President Khatami about the student movement in July 1999 and took action to suppress it. The IRGC intervened forcefully and systematically to replace the reformist government and parliament and eventually seized political power. The Basij forces, under the "Basir Plan" and under the IRGC's supervision, went to the polls and monitored them. Thus, 70, and arguably 100, IRGC members entered the seventh parliament and took control of 12 committees, including the key "National Security and Foreign Policy" committee, out of a total of 23 committees, seizing legislative-political power. After controlling the seventh parliament, the IRGC sought to engineer the ninth presidential election to replace the reformist government of Mohammad Khatami. In this election, out of eight candidates, four were high-ranking IRGC members: Mohsen Rezaei, the IRGC commander during the war, Mohammad Baqer Qalibaf, former police chief, Mahmoud Ahmadinejad, a member of the IRGC's special brigade in overseas operations and combat engineering, and Ali Larijani, Deputy Minister of the IRGC and Deputy Chief of Staff of the IRGC in the 1980s. It is true that these candidates had different goals and approaches, and each represented a different faction. However, they were all IRGC members, indicating a shift in the Islamic Republic system. Among them, Mahmoud Ahmadinejad, an IRGC member, eventually became president and immediately appointed Ismail Ahmadi-Moghaddam, the commander of the Tehran Basij, who played a decisive role in the elections, as the Commander-in-Chief of the police. Ahmadinejad also selected six of his ministers from among the IRGC commanders. During his presidency, 20 out of 30 provincial governors were from the IRGC. With Ahmadinejad's presidency in 2005, the IRGC, which was unrivaled in the military sphere, also seized political power, especially with the electoral coup of 2009, ensuring that this power would not slip from its grasp. General Zolqadr, the then-deputy commander of the IRGC, implicitly acknowledged the existence of these interventions and stated at a conference of administrative and labor Basij commanders that conservative forces managed to attract the majority of people's support for more effective service to them. The IRGC's intervention in the ninth presidential election could not fail to provoke reactions from other factions, especially the unsuccessful candidates of the same election, such as Hashemi Rafsanjani and Karroubi, both of whom were high-ranking figures in the system. However, there was nothing they could do anymore. Thus, the IRGC had no other task left but to achieve as many economic privileges as possible. Of course, the IRGC has always had a hand in economic activities, but with dominance in the military, political, and legislative institutions of the country, it could remove any resistance and seize the largest economic privileges. The IRGC's rent-seeking in the country's economy. The IRGC's economic activities began when the generals returned from the war front. They expected a worthy reward, but the bankrupt economy had no other options. Therefore, Hashemi Rafsanjani, who became president after the war, allocated a considerable amount to strengthen their military capabilities to calm the IRGC and prevent them from interfering in politics, and he also awarded large projects such as the Karkheh Dam and the Saveh Highway to the IRGC without formalities and tenders. The President of the Reconstruction Government also allowed IRGC commanders to freely import and export goods by building special docks and ports along the southern coast of the country, away from any customs control. Rafsanjani's calculations were mistaken. He became notorious for wastefulness and generosity towards insiders and also increased the political power of his IRGC rivals. The IRGC's privilege-seeking continued and even increased after Hashemi Rafsanjani's presidency. During Khatami's presidency, the Kowsaran Institute, one of the IRGC's companies, managed to undertake the development project of an 8,800-hectare irrigation network in Omidiyeh, Khuzestan. The IRGC generals used tanks and artillery to force the Khatami government to cancel contracts with Imam Khomeini Airport and the Turkcell mobile operator and to prosecute the "Kish Oriental" company to seize all these privileges for themselves. Let's examine each of these. The IRGC, under the pretext of opposing the presence of foreign contractors in the operation of Imam Khomeini International Airport, which had legally won the competitive tender of Khatami's government, occupied the airport through military operations, as in a coup, and prevented the continuation of the activities of the "TAV" company. This confrontation even led to the removal of Ahmad Khorram, the then Minister of Roads and Transportation, from the cabinet. The IRGC, with pressure and leverage from the seventh parliament, along with a majority of representatives, reclaimed the mobile operator privilege that had been awarded to the "Turkcell" company through a government tender and transferred it to the "Irancell" company, affiliated with the Foundation of the Oppressed. The IRGC was inexperienced in oil and gas and had no activities in oil operations except for renting machinery in the South Pars gas field. Therefore, it sought to seize an efficient enterprise like the private "Kish Oriental" company, which had been established during Khatami's second term (2002) for production and trade with foreigners. Kish Oriental had signed a cooperation contract with the American company Halliburton, the oil equipment manufacturer, to implement projects in the shared oil and gas fields with Iraq, Saudi Arabia (Forozan field), and Qatar (Salman field) with the approval of the Islamic Republic government. The IRGC initially tried to pressure the board of directors of Kish Oriental to accept its members, which was rejected. Therefore, the IRGC increased the pressure and accused Kish Oriental of cooperating with the American company Halliburton until the contract between the two companies was ultimately terminated, and even an arrest warrant was issued for Cyrus Naseri, the managing director of Kish Oriental and one of the former negotiators of the nuclear file. During Mahmoud Ahmadinejad's presidency, the IRGC generals no longer needed to use an iron fist to obtain economic rents as they did during Khatami's era. The IRGC, which had sent Ahmadinejad to the presidential palace and many other IRGC members to parliament, governorships, and other institutions, could easily access the largest economic rents in the country. In the first year of Ahmadinejad's presidency, 2006, the IRGC had 247 projects underway. With Ahmadinejad's presidency, the IRGC entered the oil and gas sector through a large door and obtained a $1.3 billion contract without a tender on June 6, 2006, to construct a 900-kilometer pipeline from Assaluyeh port to Bandar Abbas and from there to Iranshahr in Sistan and Baluchestan and eventually to Pakistan and possibly to India. By extending the pipeline to the Pakistan border, the contract's value would reach $2.2 billion. On the day of signing the contract, Seyed Reza Kasai-Zadeh, the CEO of the National Gas Company, clearly stated that the contract was at the behest of the President. Kazem Vaziri-Hamaneh, the then Minister of Oil, also added that in awarding this project, "formalities were waived" and the IRGC had no competitors. Rahim Safavi, the then-commander of the IRGC, also noted that: "The IRGC ... in addition to its two missions of defending the country's security and defending the Islamic Revolution, after the war, its greatest honor has been to assist the government in the reconstruction of Iran... (and) ... is not only satisfied with defense but has entered construction with the permission of the Supreme Leader as a need of the revolution... We have never obstructed private and public contractors in the country. In cases where no contractor is willing to come to the field due to security and difficulty of work or offers a high price, we have entered the field." The point is that if there is no security, the responsibility lies with the IRGC. Moreover, beyond Sistan and Baluchestan, is there no security in other areas like Tehran, where a large metro construction contract is also awarded to the IRGC? During this period, the IRGC's presence in oil and gas projects was not limited to the Assaluyeh contract. The IRGC's Khatam al-Anbiya Headquarters secured a contract for the construction of four oil storage tanks on Khark Island in April 2006 and shortly thereafter, again without a tender, obtained a $2.096 billion contract for the development of phases 15 and 16 of South Pars on July 7, 2006. These two phases had been awarded to the Norwegian company "Iker Governor" through a tender, but after the Norwegian company exited the consortium, the contract was awarded to the IRGC. In the same first term of Ahmadinejad's presidency, the IRGC completely took over Kish Oriental's work and seized all technical equipment and facilities as well as several oil rigs of this company for the low price of $90 million (Summer 2007). In Ahmadinejad's second term, a $500 million contract for a 539-kilometer ethane pipeline was also awarded to the Khatam al-Anbiya Headquarters (September 2011) to supply feedstock for petrochemical complexes in Fars province. The IRGC easily obtained economic privileges during Ahmadinejad's presidency. However, if it was necessary...