Defying pressure, Khatam al-Anbia chief defends IRGC’s economic role

By Ahmad Majidyar | Fellow and Director of IranObserved Project - The Middle East Institute | Feb 9, 2018
Defying pressure, Khatam al-Anbia chief defends IRGC’s economic role

The commander of Khatam al-Anbia Construction Headquarters, a conglomerate of the Islamic Revolution Guards Corps (IRGC), has dismissed latest criticism of the organization’s increasing role in the Iranian economy. Addressing concerns that IRGC companies are undermining the private sector, General Abdollah Abdollahi claimed that his organization is currently working with 5,000 companies to jointly implement construction and other projects. He added that nearly a quarter million people work on Khatam al-Anbia’s projects across the country. He further claimed that the government owes Khatam al-Anbia about $10 million. He was speaking at a press conference on Thursday to brief reporters on the organization’s relief assistance to earthquake victims in Kermanshah Province.

Abdollahi’s remarks came after the Iranian defense minister said Supreme Leader Ali Khamenei ordered the IRGC to divest financial and commercial assets not relevant to its mission. But paradoxically, Abdollahi said the IRGC does not engage in economic activities, whereas elaborating about the IRGC’s economic projects at the same time. “We successfully ended the war [with Iraq] with the support of the people and we emerged victorious against all super powers. Today, work needs to be done for construction and development projects,” he added. And the IRGC general further revealed that it Khatam al-Anbia will increase its role in projects relating to the energy industry, water management, and other key sectors.

Comment: Abdollahi’s remarks came after Iran’s defense minister on January 20 said that Khamenei has ordered the IRGC to curtail its growing business empire. Soon after Hatami’s comments, a senior IRGC commander downplayed them, arguing that all IRGC economic activities are within the legal framework and “relevant” to their mission. “Sepah [IRGC] has never embarked on economic activity and most of its [economic] activities have been through construction work in accordance with the constitution. According to the law, the armed forces in peacetime need to help the government. Based on this, since the end of the [1980s Iran-Iraq] war, Sepah has executed construction work that other companies were unable to deliver,” said Brigadier General Esmail Kowsari, the deputy commander of IRGC’s Sarallah Unit, which is responsible for security in Tehran. “The construction activity of Sepah [IRGC] is based on Ayatollah Khamenei’s permission,” he stressed.

Days later, another senior IRGC official said he has no information about a recent decree reportedly issued by Khamenei. “I was unable to find such a declaration and have not seen it,” Brigadier General Mohammad-Saleh Jokar, the deputy head of IRGC in parliamentary and legal affairs told Etemad Online. “I do not know where this report – which you say the defense minister has announced – has come from,” he added. “The issue is that this report says that Sepah [IRGC] and Artesh [regular army] have economic activities, which is questionable!” Jokar, who was previously commander of the Student Basij and held several other key positions, argued that “all of Sepah’s activities are construction work that is carried out through the Khatam al-Anbia Construction Base.” He further claimed that the IRGC’s projects are not profit-generating initiatives.

The debate over IRGC’s economic role is not new. In recent years, President Hassan Rouhani has repeatedly stressed the need that the IRGC should not dominate the Iranian economy. But in practice, the IRGC has only expanded its economic activities inside Iran as well as in neighboring countries.

Founded by the Islamic Republic’s founder Grand Ayatollah Ruhollah Khomeini after the 1979 revolution to safeguard the regime from internal and external threats, the IRGC has not only evolved into Iran’s most powerful military force but also dominates the country’s key economic sectors, such as energy, construction, telecommunication, media, mining, electronics, automobile, banking, and more. Last year, IRGC’s Chief Commander Major General Mohammad Ali Jafari announced that his forces are now also involved in Iran’s agricultural industry. While IRGC leaders argue that their economic activities are aimed at helping the country’s policy of “resistance economy” and helping the poor, the elite force in reality spends most of its revenues on military expenditures at home and abroad. 

Khatam al-Anbia, and other IRGC-affiliated companies, benefited greatly from the privatization program of former President Mahmoud Ahmadinejad. In 2006, the company secured deals worth at least $7 billion in the oil, gas, transportation and other sectors. In October 2007, the US Department of Treasury designated Khatam al-Anbia and several other IRGC companies under EO 13382 as part of a plan to counter Iran’s bid for nuclear capabilities and support for terrorism. And in February, 2010, the Treasury took further action against Khatam al-Anbia by designating the company’s commander, General Rostam Ghassemi, and its subsidiary companies. As the Treasury noted, the IRGC uses profits from Khatam al-Anbia for its illicit activities, including nuclear proliferation and support for terrorism in the region.

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