October 7, 2014 | Policy Brief

Iran Sanctions Relief Backfires, Benefitting the IRGC

October 7, 2014 | Policy Brief

Iran Sanctions Relief Backfires, Benefitting the IRGC

Sanctions relief, according to the White House and supporters of the current negotiating strategy with Iran, empowers the pragmatic and allegedly moderate camp in Tehran, which in turn paves the path for a peaceful resolution to the Iranian nuclear crisis. President Hassan Rouhani, according to this line of reasoning, needed Western concessions to politically marginalize and economically weaken the hardline Islamic Revolutionary Guards Corps (IRGC). However, recent reports depict a very different picture: The IRGC, rather than the pragmatist and allegedly moderate Rouhani cabinet, seems to be the main beneficiary of Iran sanctions relief. 

Sanctions relief has indeed provided the Rouhani government with a much-needed economic boost. This includes $11 billion in estimated direct relief for the first six months of the period of the JPOA from January-June 2014, combined with billions more in indirect economic benefits as reflected in marked improvements in GDP, inflation, and the value of the Iranian currency. Iranian access to badly needed hard currency, $4.2 billion in repatriated oil revenues for the first six months of the JPOA plus an additional $2.8 billion for the four-month extension of the JPOA to November 24, is kick-starting the economy and reviving major infrastructure development projects. Rouhani did not intend to share this hard-won cash with the IRGC. Rather, he and his supporters organized waves of criticism against Khatam al-Anbia Construction Base, the contracting arm of the IRGC, in an attempt to reduce the role of the armed forces in Iran’s economy and replace them with the private sector.

Rouhani’s scheme was no secret to the IRGC. Major General Mohammad-Ali Aziz Jafari, IRGC chief commander, Brigadier General Ebad-Allah Abdollahi, Khatam al-Anbia chief, and other senior figures fired back at the government for not utilizing the developmental potential of the IRGC. In other words, they wanted their share of the sanctions relief.

For now, the Rouhani government appears to have lost this battle. Khatam al-Anbia is not only finishing major infrastructure development projects in Bushehr, and West Azerbaijan provinces, which it received on a no-bid basis from former president Mahmoud Ahmadinejad’s government, it is now being granted new projects. Rouhani supporter Akbar Torkan, the only civilian to serve as Minister of Defense and Armed Forces Logistics in the Islamic Republic, readily admitted: “We are not as strong as Khatam al-Anbia.” 

Torkan, who currently serves as a presidential adviser and director of Iran’s Free and Special Economic Zones director, made this remarkable statement as he complained of Khatam al-Anbia not living up to its contractual obligations in excess of $1 billion in development schemes in Qeshm Island. “At the time it [Khatam al-Anbia]… promised both to plan it, finance it and bring additional [external] financing… Now it’s their turn to bring in financing, but they say ‘we can’t’.”  

A few days later, Torkan at a joint press conference with Admiral Ali Fadavi, IRGC Navy commander, announced that the government intended to “utilize the capacities of the IRGC Navy” in the development of Hendurabi, Greater and Lesser Farur Islands in the Persian Gulf. 

In the end, it is clear that Supreme Leader Ali Khamenei cannot afford to alienate the IRGC. He has forced President Rouhani and other critics of the Guards to share in Iran’s windfall. This likely explains why the IRGC is now tolerating the nuclear negotiations. In the long term, however, a cash-flush IRGC could serve as the power center that would prevent Tehran from delivering upon its promises once a nuclear deal is reached.

Ali Alfoneh is a senior fellow at Foundation for Defense of Democracies. Find him on Twitter @Alfoneh 


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