Iran's Guards tighten economic grip
By Omid Memarian
BERKELEY, California - A move by Iran's Revolutionary Guard Corps (IRGC) to
withdraw US$1 billion from the country's Foreign Reserve Fund to complete
Phases 15 and 16 of the gigantic South Pars gas project could provoke a serious
crisis in view of looming sanctions over Iran's nuclear program, according to
analysts.
The IRGC cash grab reveals the military organization's power over Iran's
economy and control over the country's sensitive oil, gas and nuclear
industries.
Last month, Rostam Ghassemi, the commander of Khatam-ol-Anbia Construction
Complex, the contractor for the two South Pars fields, told Mehr News Agency
that to remedy the "financial
difficulties" facing these phases, the IRGC planned to withdraw a billion
dollars from Iran's Foreign Reserve Fund.
"Progress problems for Phases 15 and 16 were caused by the National Iranian Oil
Company's tardy provision of financial resources needed by the project," he
said. "The Economic Council [headed by President Mahmud Ahmadinejad] has
approved the withdrawal and the administrative process for it is currently
underway at the central bank."
The IRGC's Khatam-ol-Anbia Construction Base, considered the most important
financial unit of the Guards and currently the largest contractor of government
projects in Iran, was established in 1990 with the agreement of Iran's Supreme
Leader, Ayatollah Ali Khamene. Over the past four years, the entity has been
the contractor for 1,500 of the country's most important government projects.
A branch of the Iranian military, the IRGC has built up a sprawling business
empire since the 1979 revolution, with annual revenues estimated at some $12
billion and investments in sectors ranging from oil, gas and petrochemicals to
cars, bridges and roads. It also controls the paramilitary Basij militia.
"The ruling political class, the IRGC, needs to control and monitor Iran's
financial resources in order to continue its political hold," Mashallah
Shamsolvaezin, a prominent Iranian journalist, told Inter Press Service (IPS)
in a telephone interview from Tehran.
"Ahmadinejad sees absolutely no need to obtain permission from anyone, but such
interference in the economy will work against him."
In 2006, the Khatam-ol-Anbia Construction Base took on the National Gas
Company's 90-kilometer Asalouyeh-Iranshahr pipeline project in Iran's Sistan
and Balochistan provinces, a contract worth $1.3 billion.
Another large project the Oil Ministry awarded to IRGC is the South Pars Gas
Field Development Project's Phases 15 and 16. At $2.97 billion, the contracts
were awarded to Khatam-ol-Anbia Base two years ago, bypassing the tender
process. However, the IRGC firm was unable to finish the project in time.
Jamshid Asadi, an economics professor at the American University in Paris, said
the latest IRGC action culminates its aggressive efforts to monopolize key
state projects over the past six years.
"Unfortunately, this is not the beginning. IRGC's strong presence in Iran's
economy, its efforts to replace the private sector, and its lack of supervision
by the parliament or other oversight units is in fact completing the political
coup d'etat which began with Ahmadinejad's election [in 2005]," he said.
In early 2005, towards the end of president Mohammad Khatami's second term,
through a military takeover at the airport, the IRGC revoked the Imam Khomeini
International Airport's tender, which had been partially awarded to a
consortium of Turkish and Austrian companies.
In another case, when Turkcell won the international tender for a cellphone
network operation license, parliament and the cabinet were put under pressure
to revoke the tender.
"A $1 billion withdrawal which could not be granted without Mahmud
Ahmadinejad's influence and direct order has been seen as the IRGC's technical
incompetence to fulfill its obligations and reliance on the government's
support," a former member of parliament told IPS on the condition of anonymity.
The Khatam-ol-Anbia Construction Base has been linked to Iran's nuclear
activities and is under sanctions by the European Union and the United States.
"The economic dominance of the IRGC over gigantic gas and oil projects has made
Iran's economy extremely vulnerable towards any new round of sanctions on the
country's financial institutions and oil industry," the source said. New
sanctions from the United States and the United Nations Security Council are
considered highly possible linked to Iran's nuclear power plans.
Assadi told IPS, "This process is illegal. The Economics Council was one of the
economic units that were stripped of their powers during Mr Ahmadinejad's term,
and even under its previous power it had no autonomy over whether funds were
withdrawn against the Foreign Reserve Fund.
"It falls within the parliament's authorities to approve the government's
proposed budget and if the Economics Council approves such a thing, it has
overstepped its authorities and duties," he added.
Sadegh Zibakalam, a political analyst in Tehran, told IPS, "In response to
objections that Ahmadinejad has repeatedly withdrawn funds from the Forex
Reserve Fund, he has said that he has not taken even one dollar without the
parliament's approval."
"The IRGC's withdrawal from the Forex Reserve Fund contradicts Ahmadinejad's
statements," he said. "Iran's Foreign Reserve Fund's Board of Trustees were
removed from office by Ahmadinejad himself and it seems that he is solely
responsible for the fund.
"Considering that IRGC's companies and their related companies are mentioned in
the sanctions [against Iran adopted by the UN Security Council], there is a
danger that the IRGC's presence in Iran's large national oil projects might
cause other oil and gas companies from Malaysia to China and Western countries
to be pressured not to cooperate with Iran; this could face the Iranian oil and
gas industries with serious threats," said Zibakalam.
During the period of relative press freedom in Iran between 1998 and 2005,
independent Iranian media repeatedly accused IRGC companies of sidestepping
customs rules and regulations, and importing goods and equipment through
unofficial entry points. During the Khatami era, reformist newspapers exposed
the existence of 60 illegal ports in southern Iran.
Other reports by Iranian officials suggested that nearly one-third of the
country's imports were made through illegal markets, the underground economy,
and illegal ports.
According to a report the IRGC provided to the Iranian parliament's budget
committee, Khatam-ol-Anbia Base owns 812 registered companies inside and
outside Iran.
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