November 15, 2016 | Policy Brief

Orange Telecom Mulls Partnership with IRGC-Controlled Firm

The French telecom company Orange is in negotiations to buy shares of the Mobile Telecommunication Company of Iran (MTCI or MCI), a firm jointly held by the Islamic Revolutionary Guard Corps (IRGC) and foundations controlled by Supreme Leader Ali Khamenei. Such a deal would pave the way for other multinational firms to enter the Iranian telecom industry – an industry controlled in large part by the supreme leader and IRGC. It is crucial that Washington persuade its European allies that the benefit of this and similar deals is not worth the irreparable damage it causes the international sanctions regime.

Iran’s telecommunication industry is dominated by companies close to the Islamic Republic’s military and political centers of power. Orange, however, has chosen to partner with a firm at the very belly of the Iranian beast. MCI is not under U.S. sanctions, but its major ultimate shareholder, the IRGC, is designated by Washington for its sponsorship of terrorism worldwide.

The Islamic Republic’s two main providers of information and communication technology services are the Telecommunication Company of Iran (TCI) and Irancell. TCI and its subsidiaries, including MCI, are owned by Tosee Etemad Mobin Company, which is jointly held by the IRGC and the Execution of Imam Khomeini’s Order (EIKO), a shadowy $100-billion network of foundations controlled by Khamenei. EIKO was subject to sanctions pursuant to Executive Order 13599 of February 2012, and delisted under the nuclear deal.

For its part, Irancell is jointly held by South Africa’s MTN and a joint venture between the Iran Electronic Industries and the Mostazafan Foundation, itself controlled by the supreme leader. TCI reportedly controls the landline market, with 30 million subscribers. In the cell phone market, TCI controls 57 percent while Irancell controls 40 percent.

The IRGC’s acquisition of TCI and MCI (the only non-IRGC bidder was dismissed for “security” reasons) was not just a financial decision. As the main provider of telecommunication and information services, TCI and MCI enable the IRGC to gather information on ordinary citizens. Fittingly, TCI’s slogan is “You are never alone.”

Nor is the Guard using TCI and MCI solely to spy. Telecommunications and information technologies also play an essential role in ballistic missile programs. It is no coincidence that Irancell is owned by Iran Electronics Industries, which is controlled by the Ministry of Defense and is under U.S. sanctions for proliferation.

An Orange purchase of MCI shares would directly enrich the IRGC, and opens the gate for other international firms to partner with the Guard. It would enable the IRGC to double down on human rights violations, hunt dissidents, and monitor Iranian citizens. Finally, it would enhance the technological capacity of Iran’s illicit ballistic missile program, which is controlled by the Guard and whose entities are sanctioned under Executive Order 13382 of 2005.

To stop the transaction, Treasury must add TCI and MCI to its Specially Designated Nationals list. Congress could also issue a statement warning Orange and other international companies against partnering with IRGC-controlled firms. The incoming administration must declare that it is going to more assertively limit the IRGC’s economic activities by lowering the bar for entities to be designated, and working with Congress to develop and enforce new sanctions. Proponents of the nuclear deal maintained that it would shore up international security. Instead, Orange’s potential Iranian foray risks providing sanctions relief that enriches a terrorist organization and provides it with cutting-edge technology.

Saeed Ghasseminejad is an associate fellow at the Foundation for Defense of Democracies and its Center on Sanctions and Illicit Finance. Follow him on Twitter @SGhasseminejad