Increased Military Involvement in Iran's Road Construction Projects; Widespread Unemployment in the Private Sector

The Secretary of the Association of Investment Companies in Highways states that in addition to the Islamic Revolutionary Guard Corps (IRGC) and Astan Quds Razavi, contracting companies from the police, army, and Ministry of Defense have also entered road construction projects. Khodayar Khashaei said on Tuesday (July 30) in an interview with ILNA that '90 percent' of the 300 private companies in the road construction sector in Iran are either 'unemployed' or 'lack suitable projects and are working below their capacity.' Previously, multiple reports had been published about the economic and construction activities of the Khatam al-Anbiya Headquarters of the IRGC as the 'largest contractor of government projects in Iran.' The activities of this headquarters in various sectors, from the oil industry to road construction, continue under Hassan Rouhani's government, and the IRGC claims it is not only not a competitor to the private sector but has taken on various projects due to the lack of 'motivation' and 'capital' in this sector. According to ILNA, Mr. Khashaei pointed out that Astan Quds Razavi has entered construction projects, including the Golestan-Bojnourd-Mashhad railway project, adding that this organization not only undertakes construction projects but also 'carries out partnership projects in highways and its companies are candidates for railway projects.' He stated that private companies cannot compete with these institutions, adding, 'It is not right to assign projects to governmental, semi-governmental, and military entities because they have better and more suitable facilities than private sector companies.' The Secretary of the Association of Investment Companies in Highways emphasized that these institutions can 'easily win tenders' in competition with the private sector and do not face the 'problems' of the private sector. Khashaei noted that 'the reality is that the private sector does not have the financial capacity compared to military institutions in some tenders. On the other hand, the contracting companies of those institutions are connected to government facilities.' He also explained that 'we have no objection to the entry of contracting companies affiliated with these institutions,' but 'our problem is that the conditions for assigning projects are not equal.' He criticized the 'decrease in investment' in the road construction sector during Rouhani's two administrations due to 'budget cuts' and lack of motivation in the government, stating that 'people are paying the price for the decrease in investment in road construction with their lives' as road fatalities have increased in the past two years. In Bahman 1396 (January 2018), Ismail Kowsari, the then-deputy commander of the IRGC's Quds Force, stated that the construction activities of this military institution are carried out with the permission of Ayatollah Ali Khamenei. Kowsari claimed that the IRGC 'has never entered economic activities and has only engaged in construction activities within the framework of the constitution.' In response to remarks by Amir Hatami, Iran's Minister of Defense, regarding Khamenei's request for the General Staff of the Armed Forces to pursue the transfer of economic enterprises in the army and IRGC, he expressed ignorance. Mohammad Saleh Jokar, the parliamentary deputy of the IRGC, also announced that he has no information about Khamenei's order for the transfer of economic enterprises of the IRGC and does not know on what basis the Minister of Defense made this statement. Hassan Rouhani has repeatedly criticized the economic activities of the armed forces, stating that this leads to a lack of 'courage' in the private sector to enter economic competitions. Earlier in July last year, he criticized the presence of military institutions in Iran's economy, saying, 'We handed over part of the economy from a government without guns to a government with guns.' These remarks provoked a strong reaction from a range of IRGC officials, who accused Rouhani of trying to weaken the IRGC.