July 13, 2022 | Policy Brief

Washington Should Keep the IRGC’s Khatam al-Anbiya on Its Sanctions List

July 13, 2022 | Policy Brief

Washington Should Keep the IRGC’s Khatam al-Anbiya on Its Sanctions List

As part of negotiations to revive a version of the 2015 nuclear deal, Iran is reportedly demanding the suspension of U.S. sanctions imposed on Khatam al-Anbiya Construction Headquarters, the Islamic Revolutionary Guard Corps’ (IRGC’s) hub for infrastructure and construction projects. If the reports are accurate, Iran is effectively asking President Joe Biden to unshackle the IRGC’s key economic arm from sanctions, thereby undermining the administration’s decision to keep the Guard on the State Department’s Foreign Terrorist Organization (FTO) list.

The Revolutionary Guard operates in Iran’s economy through three key entities sanctioned by the United States: Khatam al-Anbiya Construction Headquarters, the IRGC Cooperative Foundation, and the Basij Cooperative Foundation. The two cooperative foundations are financial holdings investing in various firms across Iran’s economy, including publicly traded firms. Khatam is the largest construction firm in Iran, dominating infrastructure projects throughout the country.

According to the U.S. Department of the Treasury, Khatam is “the engineering arm of the IRGC that serves to help the IRGC generate income and fund its operations. Khatam al-Anbiya is controlled by the IRGC and is involved in the construction of streets, highways, tunnels, water conveyance projects, agricultural restoration projects, and pipelines.” As part of the IRGC, Khatam has a specific disbursement line in the country’s annual budget and helps finance Iran’s nuclear program, ballistic missile development, and terrorist activities.

Furthermore, using its influence, Khatam receives the lion’s share of the country’s infrastructure projects. Khatam is not just a key generator of revenue for the IRGC; it also provides the IRGC with opportunities to reward loyalists by appointing them to lucrative positions and to expand its web of influence in Iranian society.

The Obama administration did not remove Khatam from the U.S. sanctions list as part of the nuclear deal in 2015. Even while Washington remained in the agreement, Khatam could not engage directly with Western multinational firms. But the IRGC now wants the supreme leader, Ayatollah Ali Khamenei, to ensure that sanctions relief for Khatam — meaning sanctions relief for the IRGC — is a condition of any revised nuclear deal going forward.

The United States should not lift sanctions on Khatam as part of any new agreement with Tehran. Since the Biden administration recently reaffirmed the president’s view that the IRGC is a terrorist organization and should remain on the U.S. FTO list, sanctions relief guaranteed to pump billions of dollars into the IRGC’s coffers would be a hard sell to Congress and U.S. allies in the Middle East.

Saeed Ghasseminejad is a senior advisor on Iran and financial economics at the Foundation for Defense of Democracies (FDD), where Richard Goldberg is a senior advisor. They both contribute to FDD’s Iran Program and Center on Economic and Financial Power (CEFP). For more analysis from the authors, the Iran Program, and CEFP, please subscribe HERE. Follow the authors on Twitter @SGhasseminejad and @rich_goldberg. Follow FDD on Twitter @FDD and @FDD_Iran and @FDD_CEFP. FDD is a Washington, DC-based, non-partisan research institute focused on national security and foreign policy.

Issues:

Iran Iran Global Threat Network Iran Sanctions Sanctions and Illicit Finance