Iran's Leader Orders Military to Exit Unrelated Economic Activities

Iran's Defense Minister announced that the Supreme Leader of the Islamic Republic has tasked the General Staff of the Armed Forces to pursue the transfer of 'unrelated' economic enterprises within the Islamic Revolutionary Guard Corps (IRGC), the Army, and the Ministry of Defense. Amir Hatami stated in an interview with the state newspaper Iran published on Saturday, January 20, that the General Staff will follow this directive from Ayatollah Khamenei to ensure the armed forces exit 'unrelated' economic activities. He also mentioned that the armed forces' activities in the 'construction' sector, including those of the IRGC's Khatam al-Anbia Headquarters, will continue based on government needs. Hatami refrained from disclosing the names of companies and enterprises being transferred by the Ministry of Defense, stating only that sections 'related to the capital market' will be transferred. He announced that there is no need for the Privatization Organization for these transfers, as 'this can be done in the capital market.' In recent years, Iran's armed forces have established various financial and economic institutions, including those of the IRGC, the IRGC Cooperative Foundation, and Ansar Bank. The investment company Mehr Eghtesad Iranians, affiliated with the Basij Cooperative Foundation, has also acquired shares in several companies, including Mobarakeh Steel, Iralko, Tabriz Tractor Manufacturing, Sadra, Technotaz, the Industrial Development Investment Company, and Jaber Ibn Hayyan Pharmaceutical Company. The Ministry of Defense also has numerous companies apart from military industries, including Iran Electronics Industries, Shams Omran Company, and Energy Resources Development Company. The Iranian Army has also established several economic entities, including Hekmat Bank, Qaem Construction Headquarters, industrial factories of Spadana Group, and Saba Insurance Foundation. Economic experts describe the presence of security, military, and law enforcement institutions and other entities affiliated with the Supreme Leader in Iran's economy as a serious obstacle to economic development, the presence of a genuine private sector, and attracting investment in the country. The Defense Minister's remarks about the continuation of Khatam al-Anbia Headquarters' activities come amid significant criticism of this entity's operations in recent years. In response to these criticisms, Ramadan Sharif, the IRGC spokesman, stated on December 1, 2016, that 'a bunch of crafty people' operate in the country's contracting sector. Many of Iran's infrastructure projects in various sectors, including energy, telecommunications, transportation, and dam construction, have been awarded to Khatam al-Anbia Headquarters with government approval and without tender procedures in recent years. The Tehran Municipality also signed a 20 trillion toman agreement with Khatam al-Anbia in 2014. This headquarters has sought to secure several large new contracts in the oil and shipbuilding sectors in recent years and has criticized the government for not awarding these contracts to it. Previously, some government officials have stated that Khatam al-Anbia Headquarters has failed to deliver some of its previous projects after the designated deadlines. For instance, Akbar Turkan, the Secretary of the Free Zones Coordination Council of Iran, criticized Khatam al-Anbia Headquarters in September 2014 for not attracting foreign financing for the Persian Gulf Bridge project on Qeshm Island, stating that 'the government cannot exert pressure on the headquarters.' According to him, this project, which was supposed to be completed in 2013, had only achieved three percent physical progress at the time of delivery to the new government. In this context, some political figures and members of parliament, including Ali Motahari and Ahmad Tavakoli, have criticized the economic activities of military institutions. Hassan Rouhani, the President of Iran, also criticized the presence of military institutions in Iran's economy in early July this year, stating that 'part of the economy was in the hands of a government without guns, which we handed over to a government with guns.' This statement provoked a strong reaction from various IRGC officials, who accused Rouhani of attempting to weaken the IRGC. Mahmoud Ahmadinejad, the former President of Iran, in July 2011, criticized the unregulated import of goods through illegal channels, using the term 'our smuggler brothers,' stating that they have made holes wherever they wanted and imported goods into the country from there. At that time, experts and analysts speculated that Ahmadinejad's reference was to the economic performance of the IRGC, but Mohammad Ali Jafari, the IRGC commander, dismissed those remarks as 'a diversionary topic.'