How the JCPOA Makes the IRGC Wealthier

The Washington-based think tank "Defense of Democracy" has recently published a lengthy article titled "How the JCPOA Makes the IRGC Wealthier." The authors of this article first discuss the historical economic presence of the IRGC and then scrutinize this military entity's involvement in various economic industries and services, ranging from shipping and banking to petrochemicals and mining. According to the article, experts estimate that between 20 to 40 percent of Iran's economy is under the control of the IRGC, and the income of this entity could account for up to one-sixth of Iran's gross domestic product. The researchers from "Defense of Democracy" state that when Ali Akbar Hashemi Rafsanjani began his presidency, the economic activities of the IRGC were limited, but by the end of Rafsanjani's term in 1997, the IRGC had become one of the main economic players in Iran. For instance, in 1990, it transformed its construction headquarters into the "Khatam al-Anbiya Construction Headquarters," and during the decade following Rafsanjani's presidency, the IRGC entered various industries and services, including telecommunications and food industries. Currently, the IRGC has a significant presence in transportation, shipping, and energy consulting and oil industry companies. The report provides various examples of how the IRGC has developed economically, including the purchase of the Sadra shipping company by the IRGC; Sadra lost a significant amount of its stock value in 2009 and was on the verge of bankruptcy. Khatam al-Anbiya bought shares of this company below market price. After this purchase, the IRGC postponed the payment of Sadra's debts. The IRGC also convinced the government to provide a $500 million loan at a low-interest rate to Sadra and awarded contracts worth $2 billion to Sadra. In 2012, the U.S. placed Sadra on its sanctions list. The article states that the IRGC has a serious presence and influence in at least 229 companies, but only about 10 percent of these companies are on the EU and U.S. sanctions lists. Saeed Ghasemi Nejad, one of the authors of this article, explains to Radio Farda why only a few of these companies were sanctioned: "EU sanctions specifically targeted companies involved in the nuclear program, and the EU's goal was not to confront the IRGC. U.S. sanctions against Iran have been broader, and although they have emphasized the IRGC's role in nuclear, missile, and human rights issues, their specific goal has not been to cripple the IRGC. However, this criticism of the U.S. is particularly valid, as, for example, when it sanctioned the IRGC's Cooperative Foundation, it did not sanction all companies under this foundation's control. Why this has not happened is also a question for me. I hope the next U.S. administration will prioritize crippling the IRGC through sanctions on companies and entities affiliated with the IRGC and their managers." For the authors of the article, the direct and indirect economic presence of the IRGC means that lifting sanctions could make IRGC-affiliated companies economic partners in domestic investments in Iran or the presence of Iranian companies in the global market. Saeed Ghasemi Nejad, in response to the question of how to sanction the IRGC's economic interests without harming legitimate companies, says, "The Iranian economy is generally under the influence of the IRGC, the institutions controlled by the leadership, the executive branch, and its controlled companies, and the private sector. The private sector in Iran is, of course, very small and weak. By sanctioning IRGC and leadership companies, the space for the presence of private sector companies actually opens up. For example, the reason foreign companies are very cautious about dealing with well-known companies affiliated with the IRGC is that they are under sanctions, while they easily contract with companies affiliated with the leadership, which are not under sanctions. Suppose the U.S. Treasury announces that any company listed on the Tehran Stock Exchange that has more than 5 percent of its shares owned by the IRGC, the Executive Headquarters, the Foundation of the Oppressed, or Astan Quds will be sanctioned; naturally, many shareholders will withdraw their investments from these companies, which would generally benefit the economy and society of Iran." The article also states, "The IRGC enriches itself through the existing corruption and the kleptocracy prevailing in the country. This is why the NGO 'Transparency International' ranks Iran 130th out of 168 countries in terms of corruption, and the Basel Institute has called Iran the worst country in the world regarding money laundering and financing global terrorism." Iranian officials have repeatedly spoken about the billions of dollars in smuggling in Iran and the inability of the government and governmental institutions to combat it. Majid Mohammadi, a sociologist and analyst at Radio Farda, states regarding organized smuggling in Iran: "A former parliament speaker (Mahdi Karroubi) and a former president (Mahmoud Ahmadinejad) have explicitly spoken about the IRGC's illegal docks for smuggling goods into the country, and these statements have had no effect on stopping the IRGC's economic activities in smuggling imports and exports." Iranian President Hassan Rouhani has also said about this issue: "When you want to produce, a corrupt apparatus that I do not want to name can import smuggled goods and prevent the country from growing. We must stop corruption and improve our customs system."