When Iran’s Islamic Revolutionary Guard Corps (IRGC) was formed shortly after the 1979 Islamic Revolution,1 few might have guessed a day would come when Ruhollah Khomeini’s revolutionary children – organized to counterweigh a likely royalist coup d’état and to crack down on political opponents – would become the most influential players on the Tehran Stock Exchange (TSE).2 However, the IRGC achieved its success not by cultivating the support of Iran’s people, but through force, corruption, and disinformation campaigns.
In the past 10 years, the IRGC has had between 15 percent and 25 percent of Iran’s stock market under its control, either independently or along with other military institutions.3 In the non-publicly traded segments of the economy, it has a presence in nearly every profitable and strategic field, from energy and construction to food and clothing.4 Additionally, the IRGC has a strong presence in the black market, including illegal trade in goods and fuel as well as drug smuggling.5
The Guard’s role in the Iranian economy has been accompanied by a massive campaign of disinformation. The IRGC not only lies about the dimensions of its presence and influence, taking great pains to hide behind an enormous network of front companies, but also works to eliminate competitors from the field with disinformation, slander, and trumped-up litigation. The presence of the Guard – a military-intelligence organization with prisons at its disposal and great influence in the judicial system – in Iran’s economic life is one factor contributing to the regime’s corruption and inefficiency.
The IRGC’s role in economic affairs was limited in the first decade of its operations. Initially, the Guard was founded to neutralize dangers posed by the Royal Army and other foes of the 1979 Islamic Revolution.6 As the 1979 factions began to splinter in the fight over the revolution’s direction and Khomeini’s opponents were booted out of the revolutionary camp, cracking down on these new “anti-revolutionaries” became part of the Guard’s duties. In this way, the IRGC, in its original form, was a hybrid of military-intelligence organization and paramilitary strike force for street clashes. Since then, the group has never given up its intelligence-security or street fighting activities. The Revolutionary Guard’s Intelligence Organization is still the most important intelligence unit in the country, and the Basij militia’s primary function still entails cracking down on dissidents when necessary.
When the Iran-Iraq War broke out in 1980, the clerics’ mistrust for the army and President Abolhassan Banisadr led the Guard to enter the battlefield.7 The IRGC’s involvement in the war would prove significant for the economic role it would later assume. During the war years and those that came after, the Guard sought to defame the army, blaming it for all losses and stealing credit for all victories.8 At the same time, part of the war’s massive budget went to the IRGC in the form of engineering tools and equipment.9 By putting to work this powerful base of hardware and engineering experience gleaned from the war, the Guard was able to enter Iran’s economy after the war ended.
Khomeini’s death marked the beginning of a new era in Iran, as Ali Khamenei assumed the position of supreme leader and Akbar Hashemi Rafsanjani became president. Rafsanjani asked state agencies not to solely rely on state budget but raise revenue through their own business initiatives.10 Sources close to the Guard claim Rafsanjani himself asked it to get involved in the construction business.11 This claim is likely true.
Rafsanjani was the government’s second-in-command during the war years and the one in charge of the War Office. At the outset of Khamenei’s time as supreme leader, the IRGC was closer to Rafsanjani than to Khamenei. Rafsanjani sought to keep his allies in the Guard wealthy and loyal by involving them in his construction plans. At the beginning of the Rafsanjani administration, the IRGC played a very limited role in the country’s economy; by the end of his term, it had emerged as a real economic player. During this time, as the Guard was accumulating capital, it spent some of its funds launching groups like Ansar Hezb-Allah, a violent group formed by veterans of Iran-Iraq war and young members of Basij, to resist the patrician lifestyles and avarice of the leaders, clerical and lay, with whom the IRGC competed.
With the beginning of Mohammad Khatami’s presidency in 1997, the IRGC’s political and security role intensified as it confronted the Reform movement. It was at this time that the Guard achieved one of its longstanding dreams: seizing control of the security establishment. During the 1980s and early 1990s, the Guard had grudgingly submitted to the Ministry of Intelligence. During the Mousavi and Rafsanjani eras, intelligence ministers Mohammad Mohammadi Reyshahri and Ali Falahian had transformed the ministry into Iran’s supreme intelligence and security body. But with Khatami’s rise to power and the weakening of the intelligence ministry resulting from its admission that it played a leading role in the 1988-1998 extrajudicial killings of dissidents known as the chain murders, the Guard Intelligence Organization was able to take control of intelligence and security affairs and act as the long arm of the supreme leader’s office.
During the eight years of the Khatami presidency, the Guard grew so powerful in security matters that even after a change in administration, with the ascensions of veteran security figures Gholamhossein Mohseni Ejei to minister of intelligence and Mostafa Pourmohammadi to minister of the interior, the Ministry of Intelligence was still unable to regain its former position. It was in the Khatami era that the IRGC launched many news services, newspapers, and websites, raising the quality and impact of its campaign of disinformation. The purpose of such efforts was to undermine not only the Guard’s external enemies, but also civil society institutions and political and cultural activists with trumped-up litigation and judicial-security responses.
This increase in the IRGC’s political and security power contributed greatly to its quest for economic dominance. The high point of this period was the Guard’s successful mobilization, in 2004, to prevent the opening of the newly constructed Imam Khomeini Airport. Angered that Tehran had awarded airport management to the Turkish company Tav, the Guard demanded that it be transferred to one of its own affiliate companies. The IRGC unleashed a massive wave of disinformation against Tav, claiming it belonged to “Zionist institutions.”12 It bears mentioning that the IRGC thinks of control over airports as its right, using them as bases for bringing in and sending out goods and people for its own economic, intelligence, and terrorist activities. In the same years, Mehdi Karroubi, then-speaker of the Iranian Parliament, protested the Guard’s control of illegal shipping piers and their smuggling activities. President Mahmoud Ahmadinejhad would later christen IRGC leaders “the smuggler brothers.”13
With Ahmadinejhad’s election in 2005 and Khamenei’s decree to privatize major strategic industries such as banking, shipping, and telecommunications, a new period of IRGC economic expansion commenced.14 It was at this time that institutions affiliated with the IRGC and the supreme leader’s office swallowed up privatized companies. Three major holdings affiliated with the Guard intervened in Iran’s economy: the IRGC Cooperative Foundation, the Basij Cooperative Foundation, and Khatam al-Anbiya Construction.15 On paper, the IRGC Cooperative Foundation and the Basij Cooperative Foundation, both of which are tax-exempt, were formed to provide a range of social services to IRGC and Basij members, such as housing, loans, health, and education. In practice, both foundations have become the largest economic cartels in the country. Khatam al-Anbiya Construction, which is in charge of IRGC construction projects, has become Iran’s largest contractor.16
The IRGC’s acquisition, in 2009, of the Telecommunications Company of Iran (TCI), Iran’s largest telecom company, provides an example of its substantial clout. When the Ahmadinejad administration announced plans to sell the TCI,17three consortiums came forward to compete for the bid. Two were affiliated with the IRGC: E’temad Mobin, which included subsidiaries of the IRGC Cooperative Foundation, and a consortium affiliated with the Basij Cooperative Foundation. The third, Pishgaman-e Kavir of Yazd, was independent. Under pressure from the Guard, Pishgaman-e Kavir was forced out of the bid. As a pretext, the IRGC argued that telecommunications are a security matter, thereby necessitating IRGC control.
The lasting presence of the IRGC in Iran’s economy has had ruinous effects on Iranians, driving many companies into bankruptcy18 and leading to the imposition of U.S. and international sanctions on the country. For the last four decades, Iran’s economy has suffered from corruption, high inflation rate, high unemployment rate, high poverty rate, and low economic growth. As a result, an economy which was ahead of South Korea under the Shah, is now failing at all levels. Iran needs structural and fundamental reform of its economy and the exit of the Guard from Iran’s economy and politics is a prerequisite for any successful economic and political. However, over the past two decades, it has become more and more clear that only a revolution can drive the Guard out of Iran’s politics and economy because the IRGC is not just guarding the regime, the Guard is the regime.