Trends Magazine

he Islamic Revolutionary Guard Corps, the Praetorian Guard of the clerical regime in Tehran, has become a powerful political force in Iran, its clout greatly enhanced since one of its own, Mahmoud Ahmadinejad, was elected president in 2005.
But what is less well known is that, with more than a little help from the hero of the 1980-99 war with Iraq, the Pasdaran, as the force is known, has built up a formidable economic empire that has made it financially independent and part of the country’s power elite. Its empire covers a vast array of financial and economic enterprises, from trading corporations to huge public works projects.
In June, General Abdolriza Abed, who heads the corps’ economic operations, announced that its engineering arm, the Khatam-al-Anbia, had been awarded a $2.09 billion contract to develop the huge South Pars offshore gasfield that is shared by Iran and Qatar. At about the same time, the Pasdaran was awarded a $1.2 billion contract to construct a 900 kilometer pipeline linking the South Pars field to southeastern Iran to provide domestic gas.
Developing South Pars is a key economic target aimed at exploiting Iran’s vast reserves of gas. These are the second largest in the world after Russia’s and will be the Islamic Republic’s meal ticket as oil reserves shrink. Pasdaran involvement in South Pars marks a crucial step by the corps into Iran’s all-important energy sector and expands its growing political power.
On top of that, the corps recently acquired Oriental Kish, Iran’s largest private oil company, for $90 million. Gen. Abed and other sources say the Pasdaran are involved in about 250 other projects worth a total of $2.8 billion, including a new port terminal for shipping petrochemicals, while 1,220 projects worth between $2.7 billion and $3.2 billion have been completed.

Presidential support. The Pasdaran have been steadily amassing political power since Ayatollah Ruhollah Khomeini died in 1989, most notably since its current commander, Major General Yahya Rahim Safavi, took over in 1997. But its fortunes, economic as well as political, got an immense boost in June 2005 with the surprise election of the fiery populist Ahmadinejad, a former Pasdaran special forces commander, as Iran’s president. Militants in the Pasdaran and hardline conservatives in the clerical establishment, who have long relied on the corps to maintain their grip on power, played a key role in Ahmadinejad’s election.
In Iran, ultimate power rests with the supreme leader, Ayatollah Ali Khamenei, but Ahmadinejad carries a lot of weight among the conservatives who have dominated the political and economic establishment since 1979. The Pasdaran, like all Iranian military forces, is directly responsible to Khamenei. But Ahmadinejad, who earned his spurs conducting behind-the-lines operations against the Iraqis in 1980-88, has a profound influence on the Pasdaran and has gone out of his way to bolster their power.
Half the members of his cabinet are former Pasdaran commanders or veterans of the notorious intelligence services. Eighty of the 290 members of parliament are Pasdaran alumni, the largest bloc of corps veterans elected to the Majlis since the 1979 revolution. Other Pasdaran figures hold key positions in the diplomatic corps after a widespread purge conducted by Ahmadinejad a few months ago.
But, most important of all, the Pasdaran controls Iran’s controversial nuclear and long-range missile programs, including the growing number of strategic Shehab-3 ballistic missiles capable of reaching targets in Israel, the Gulf and Turkey that are now being deployed. All this prompted one commentator, Kamal Nazer Yasin (the pseudonym of an Iranian journalist) to note on the Eurasianet website: “The scope of the Guards’ influence in the political, economic and foreign policy arenas is such that it is fair to speculate as to whether the clerical leadership is not fast becoming a captive of its praetorian guard.”

Khomeini’s diehards. That was what Ayatollah Ruhollah Khomeini, the father of Iran’s Islamic revolution, had always feared. He established the Islamic Revolutionary Guard Corps as the clerical regime’s praetorian guard in a decree issued on May 5, 1979, only a few weeks after Shah Mohammad Reza Pahlavi had been toppled and driven into exile. Its main task was to act as a counterweight to the shah’s imperial army because its loyalty was in doubt even after hundreds of senior officers were executed, and to act as the revolution’s cutting edge.
The Pasdaran became national heroes in the 1980-88 war with Iraq, driving out Saddam Hussein’s forces that had invaded Iran’s southwestern Khuzestan province, the center of the country’s oil industry. The Pasdaran acted with suicidal zeal in human-wave offensives in which tens of thousands of Iranian fighters were killed. Khomeini made sure that the Pasdaran answered only to himself as supreme leader of the revolution.
His successor, Ayatollah Khamenei, has ensured that he too retains absolute control of the ideologically pure Revolutionary Guard. It is the most important military force in the land, with between 200,000 and 250,000 regulars. It also has 2 million reservists in the paramilitary Basij. This is a popular army formed in 1980 for the war against Iraq and now widely used as a rapid intervention force to counter any domestic upheaval that might threaten the clerical regime in Tehran.
Khomeini, ever mindful of the snake pit of constant factional fighting within the Islamic Republic, prohibited the Pasdaran from engaging in politics, a stricture intended to add weight to a constitutional ban on military involvement in politics. But that has gone by the board as the revolution’s hardliners have tightened their grip on power.
The Pasdaran’s growing influence in politics, fueled in large part by the profits of its economic ventures, has raised concerns in many quarters that a process of militarizing the regime by diehard clerics and their political allies like Ahmadinejad is underway. Given the regime’s confrontation with the United States over Iran’s nuclear program, and the Pasdaran’s control of the country’s strategic forces, it is likely that the corps will be among the first targets in any strike launched by the US.

Economic reach. After the 1980-88 war, the Pasdaran was given responsibility for much of the reconstruction program. To fulfill this task it created the Construction Jihad and it was through this that it moved into the economic sector. In 1983, Iran’s Supreme Defense Council ended the monopoly of the regular armed forces over domestic arms production and repair industries established, largely with US help, under the shah, and authorized the Pasdaran to set up its own military industries. Within a few years the Pasdaran was running a rapidly expanding defense industry that now produces everything from ballistic missiles to automatic rifles as Iran, subject to US-led arms embargoes, struggles to produce as much of its military requirements as it can.
The corps has long sought to limit the penetration of foreign contractors into Iran’s economy, often arguing that they constitute a security risk or have business dealings with Israel. This was particularly true while the reformists of former President Mohammed Khatami, who favored opening up the economy to badly needed outside investment, were in power from 1997-2005.
Gen. Abed defends the Pasdaran’s plans for widening its economic reach. “Since when do the Pasdaran have to stick to building roads, dams, small tunnels or short pipelines?” he argued. “If we take on big projects we can put small entrepreneurs to work.”
The impact of the Pasdaran’s growing economic power is heightened by the control that the regime’s financial oligarchy, dominated by the influential League of Islamic Associations, exerts over state and non-state institutions. These include a cluster of powerful semi-government, supposedly philanthropic, foundations known as bonyads that control assets worth billions of dollars and have allegedly been used to finance covert Pasdaran operations. This has allowed the Pasdaran to build up a chain of enterprises across the republic that provides funding independent of the state and mimics the high-profile political roles of the corps’ military counterparts in neighboring Pakistan and Turkey.

Challenging Khatami. Ahmadinejad has ensured that big contracts go to the Pasdaran. In 2006, the Iranian media reported that the corps had been awarded a $2 billion contract to develop Tehran’s metro system. This is a project that had long been plagued by financial difficulties and which the populist Ahmadinejad, who governed the capital before he became president, had championed in a drive to tackle the chronic congestion in the city of 7 million, which contains more than half of Iran’s industry. When Ahmadinejad was mayor he funneled dozens of big contracts to the Pasdaran.
Government contracts that go to the Pasdaran are often not put out to tender, as is the normal process, spawning growing criticism and allegations of cronyism. Neither of the two South Pars gas contracts, for instance, were open to bidders. Throughout the reformist Khatami’s eight-year term, the guards did everything they could to block foreign investment desperately sought by Khatami to modernize Iran’s dilapidated and aging economic infrastructure.
The Pasdaran’s most dramatic challenge occurred on May 8, 2004, when it shut Tehran’s newly inaugurated showpiece Imam Khomeini international airport. The Pasdaran clearly had the backing, tacit or otherwise, of leading rightwingers in the political elite for this unprecedented action. No one tried to stop them. Khatami, with no real support base within the establishment, was powerless to do anything. Pasdaran units blocked the runways of the airport with tanks and, according to Tehran newspapers, warned off an incoming Iran Air flight with anti-aircraft fire. Two air force jets escorted the airliner to Isfahan airport in central Iran.
The corps claimed that a $200 million contract Khatami’s administration had signed with the Austrian-Turkish consortium Tepe-Afken-Vie (TAV) to operate the airport’s terminals endangered national security because the group had business dealings with Israel. In fact, the Pasdaran acted because the reformist government had rejected a Pasdaran bid for the lucrative operating contract when it was put up to international tender.

Sanctions threat. Despite Khatami’s best efforts to curb the Pasdaran economic steamroller, the reformists have failed signally to undercut Pasdaran control of several ports through which it allegedly smuggles goods worth about $9.5 billion a year. According to dissident Iranian sources, the Pasdaran regularly take over oil platforms in the Gulf and fill up tankers bound for China, off-the-books payment to Beijing for its help on Iran’s nuclear program.
Within the more pragmatic circles in Iran, there is a feeling the Pasdaran may have overplayed their hand. Already Khamenei has moved to curb Ahmadinejad’s provocative policies because many in the power elite and among the Bazaris, the wealthy merchants who wield considerable influence, deem them to be reckless and dangerous. It remains to be seen who comes out on top.
As Iran faces United Nations sanctions over its nuclear program and a growing financial squeeze led by the US, there have been suggestions that the Pasdaran should be especially targeted. “The IRGC [Islamic Revolutionary Guard Corps] is precisely the element within Iran that should be targeted,” says Matthew Levitt of the Washington Institute for Near East Policy. “It is deeply involved in the country’s nuclear, missile and other weapons proliferation activities …
“The IRGC controls vast financial assets and economic resources. While most of the actual funds and assets are in Iran and beyond seizure, the Pasdaran’s business and industrial activities – especially those connected to the oil and gas industries – are heavily dependent on the international financial system.”