Ending IRGC control over economy shell game Khamenei uses to relieve anger
The Baghdad Post, January 23, 2018 - For fear of eruption of stronger protests that will overthrow the Mullah regime and the clerical establishment in Iran, Ali Khamenei has ordered the Iranian Revolutionary Guard Corps (IRGC) to loosen its hold on the economy, raising the possibility that the paramilitary organization might privatize some of its vast holdings.
In an interview published Saturday by the state-run IRAN newspaper, Iranian Defense Minister Gen. Amir Hatami said Khamenei ordered both the country’s regular military and the IRGC to get out of businesses not directly affiliated to their work.
Trial balloon
However, observers say this move appears to be a trial balloon to test the reaction of the idea.
But whether the IRGC would agree remains unclear, as the organization is estimated to hold around a third of the country’s entire economy, they added.
The Iranian defense minister’s comments come in the aftermath of mass protests that gripped many Iranian cities since December 28th over the country’s poor economy.
According to estimates, youth unemployment stands at more than 40 percent, sluggish state-owned enterprises control significant sectors of the economy, and American sanctions prevent most international banks from providing financing or credit to Iran.
The collapse last year of the Caspian Credit Institute showed the economic desperation faced by many in Iran. Students are with no hope of employment in their fields while those lucky enough to have worked often have a second or even a third job.
Banks remain saddled with bad loans, a warning repeatedly sounded by the International Monetary Fund. Some of this stretches back to the days of nuclear sanctions, while others find themselves mired in the murky finances of the IRGC, which is estimated to control a third of the total economy.
Iran’s military forces also saw their funding increase by nearly 20 per cent in the budget to $11 billion. The same budget proposed ending cash subsidies for millions of citizens and increasing fuel prices.
At the same time, the government has allowed Iran’s currency to depreciate over the past half year, a psychological blow that resulted in inflation of certain products like a 40 percent increase in the price of eggs.
Third of economy
According to media reports, the Iranian economy consists of three distinct sectors: public, private and semi-state — which includes religious, revolutionary, military foundations and cooperatives, as well as social security and pension funds.
Experts agree that as a result of flawed privatization processes in the past three decades, the ownership of top governmental enterprises has been transferred to the semi-state sector.
Consequently, gradually the semi-state sector has become the largest constituency in the country’s economy. One of the players in this semi-state sector is the network of companies around the IRGC.
In the aftermath of the 1980s war, authorities allowed the IRGC to expand into private enterprise. Today, it runs a massive construction company called Khatam al-Anbia, with 135,000 employees handling civil development, the oil industry and defense issues. IRGC firms build roads, man ports, run telecommunication networks and even conduct laser eye surgery.
The exact scope of all its business holdings remains unclear, though analysts say they are sizeable. The Washington-based Foundation for Defense of Democracies, which long has been critical of Iran and the nuclear deal it struck with world powers, suggests the IRGC controls between 20 and 40 percent of the economy of Iran through significant influence in at least 229 companies.
The exact scope of all its business holdings remains unclear, though analysts say they are sizeable. The Washington-based Foundation for Defense of Democracies, which long has been critical of Iran and the nuclear deal it struck with world powers, suggests the IRGC controls between 20 and 40 percent of the economy of Iran through significant influence in at least 229 companies.
Business empire
The IRGC owns a business empire. The value of the companies IRGC owns is estimated at $100 billion. IRGC’s empire includes: Khatam al-Anbia that boasts of hundreds of government contracts, Iran Telecommunications Company - 50% stake bought in government privatization scheme, Angouran - the largest lead and zinc mine in the Middle East, Bahman Automobile Manufacturing Group - (manufactures the Mazda brand) - 45% stake and Iranians' Mehr Economic Institution - financial institution with hundreds of branches (one of the largest banking networks in Iran).
The guard is by far the largest investor on the Tehran stock market. From car manufacturing to mining and clothing, even online shopping, there are few industries they are not involved in. In terms of share of the GDP, the estimated share of the IRGC is about 15%, with a growing trend, according to Iranian data.
The guard is by far the largest investor on the Tehran stock market. From car manufacturing to mining and clothing, even online shopping, there are few industries they are not involved in. In terms of share of the GDP, the estimated share of the IRGC is about 15%, with a growing trend, according to Iranian data.
The IRGC are trying to infiltrate every single aspect of the economy and are trying to engage in any kind of economic activity, whether legal and illegal, analysts told The Baghdad Post.
Attempting to curb IRGC’s control over Iran’s economy is a shell game. Khamenei has used this ploy to relieve the anger of protesters. The organization’s infiltration into many economic sectors in the country is based on direct orders from Khamenei himself as the latter receives a lion’s share of the Guards revenue, they noted.
Many Iranians question the military’s divestment from the Iranian economy, wondering whether it will actually be implemented, to what extent and when, they further stated.
Whatever one thinks about the IRGC, it has become an integral part of the Iranian economy. This means the IRGC is expected to remain a major player in the economy, they concluded.
Attempting to curb IRGC’s control over Iran’s economy is a shell game. Khamenei has used this ploy to relieve the anger of protesters. The organization’s infiltration into many economic sectors in the country is based on direct orders from Khamenei himself as the latter receives a lion’s share of the Guards revenue, they noted.
Many Iranians question the military’s divestment from the Iranian economy, wondering whether it will actually be implemented, to what extent and when, they further stated.
Whatever one thinks about the IRGC, it has become an integral part of the Iranian economy. This means the IRGC is expected to remain a major player in the economy, they concluded.
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