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Pasdaran power: the US Congress brands Iran's Revolutionary Guards Corps a terrorist organisation as it tightens its grip on the Islamic Republic's economy and builds political muscle.


AS THE BUSH administration sinks deeper into the Iraqi quagmire, it has said it plans to designate Iran's Islamic Revolutionary Guards Corps (IRGC), the Praetorian Guard of the clerical regime in Tehran, a terrorist organisation because of its alleged support for insurgents and Shi'ite militias in that tormented land.

Many observers see this highly unusual move as part of a wider strategy of tightening Iran's international isolation and setting the stage for US military action against the Islamic Republic, and are questioning the wisdom of taking such a provocative action.

If the administration goes ahead with its plan, it would be the first time the US has proscribed a component of a foreign state's armed forces as a terrorist group. By invoking Executive Order 13244, which President George W. Bush signed 12 days after 9/11, authorising attacks to obstruct terrorist funding, the administration wants to throttle the IRGC's vast business network that has become a key part of Iran's economic life.

On 25 September, the administration's plan got a big boost when the US House of Representatives passed a bill calling on the State Department to add the IRGC to its long blacklist of terrorist organisations because of its alleged destabilising operations in Iraq and other part of the Middle East, including Lebanon.

Few analysts believe that imposing international sanctions on the IRGC, known in Iran as the Padaran-e Enghelab-e Islami, will have any meaningful impact. Iran has been subjected to US and UN economic sanctions for years and these have failed to bring the Tehran regime to its knees. But the political impact could be considerable and potentially dangerous.

"The administration's attempt to coerce and put pressure on this organisation is likely to trigger its antagonism towards further dealings with the US," said Ray Takeyh, an expert on Iran and a senior fellow at the New York-based Council on Foreign Relations. Warning that the impact of the proposed sanctions would be extremely limited, he stressed that "coercing a pillar of the theocratic regime erodes the possibility of a diplomatic resolution".

Blacklisting the IRGC would threaten the current talks in Baghdad between US and Iranian officials, the first face-to-face talks between the two protagonists in nearly 30 years, and could well provoke an intensification of clandestine Iranian operations, run by the corps' elite Qods Force, in Iraq, the Gulf states and Lebanon.

Iran has threatened to retaliate by branding the US Central Intelligence Agency (CIA) a terrorist organisation and the supreme leader, Ayatollah All Khamenei, recently made surprise changes in the IRGC's high command, appointing new commanders who have been refining Iran's strategy to counter any US attack.

"The long-term effect of the decision to designate the IRGC a global terrorist organisation, however, may be even more significant. It is easier to put an entity on the terrorist list than remove it," says Dr. Trita Parsi, president of the National Iranian American Council in the US.

"Future US presidents will likely find their efforts to change Iranian behaviour and resolve US-Iranian disputes more difficult, not only because the designation may put legal limits on how the United States can deal with individuals associated with the IRGC, but also by further entrenching US-Iran relations in a paradigm of enmity."

The Americans have been crossing swords with the Pasdaran since its formation shortly after the 1979 Islamic Revolution. Many of the "students" who stormed the US Embassy in November 1979 were revolutionary zealots who became commanders of the IRGC, including the corps' new commander, Major General Mohammed Ali Jafari, appointed in September.

The US has accused the Pasdaran of involvement in a host of terrorist attacks over the years, including the slaughter of 241 Americans in the 1983 suicide bombings of a Marine barracks in Beirut, the 1996 bombing of the Khobar Towers military barracks complex in Saudi Arabia in which 19 Americans perished, as well as the bloodletting in Iraq. Two UN Security Council resolution have targeted the assets and movements of 28 Iranians, including IRGC officers, linked to Iran's nuclear programme.

The IRGC has become a powerful political force in Iran, its clout greatly enhanced since one of its own, Mahmoud Ahmadinejad, was elected president in 2005.

But what is less well known is that, with more than a little help from the hero of the 1980-99 war with Iraq, the Pasdaran has also built up a formidable economic empire that has made it financially independent and an important pillar of the country's power elite.

To illustrate the glittering prizes being heaped upon the IRGC, Brigadier General Abdolriza Abed, who heads the corps' economic operations, announced in June 2006 that its engineering arm, the Khatamal-Anbia, had been awarded a $2.09bn contract to develop the huge South Pars offshore gasfield that is shared by Iran and Qatar.

The corps' economic empire currently embraces a vast array of financial and economic enterprises, ranging from trading corporations to huge public works projects. "Thirty percent of the Pasdaran's engineering capacity is dedicated to economic activities, and 70% to military," Abed boasted.

At about the same time, the IRGC was awarded a $1.2bn contract to construct a 900km pipeline linking the South Pars field to southeastern Iran to provide gas for domestic consumption. Developing South Pars is a key economic target aimed at exploiting Iran's massive reserves of gas. These are the second largest in the world after Russia's and will be the Islamic Republic's meal ticket as oil reserves shrink. The US has long sought to block badly needed foreign investment in Iran's vital but rundown energy industry.

Although France and others have often ignored these US efforts to keep open their options for exploiting Iran's energy riches, the IRGC's involvement in South Pars marks a crucial step by the corps into Iran's all-important energy sector--and expands its growing political power.


The IRGC's National Company of Building, working with the powerful Mostazafan Foundation, a bonyad, or charity, controlled by Pasdaran veterans, was awarded a $2.4bn no-bid by the Tehran Metro Company in 2006 to complete construction of the Iranian capital's subway system.

This is a project that had long been plagued by financial difficulties and which the populist Ahmadinejad, who governed the capital before he became president, had championed in a drive to tackle the chronic congestion that clogs the city of 7m, which contains more than half of Iran's industry. When Ahmadinejad was mayor he funnelled dozens of big contracts to the Pasdaran.

The IRGC also recently acquired Oriental Kish, Iran's largest private oil company, for $90m. Last July, the Energy Ministry decreed that Pasdaran contractors would operate all public infrastructure projects involving water, electricity and bridges in western Iran.

Abed and other sources say the IRGC is currently involved in some 250 other economic projects worth a total of $2.8bn, including a new port terminal for shipping petrochemicals, while 1,220 projects worth $2.7bn-$3.2bn have been completed.

The IRGC has been steadily amassing political power since Ayatollah Ruhollah Khomeini died in 1989, most notably since its current commander, Major General Yahya Rahim Safavi, took over in 1997. But its fortunes, economic as well as political, got an immense boost in June 2005 with the surprise election of the fiery populist Ahmadinejad, a former Pasdaran special forces commander, as Iran's president.

Militants in the Pasdaran and hardline conservatives in the clerical establishment, who have long relied on the IRGC to maintain their grip on power, played a key role in Ahmadinejad's election.

In Iran, ultimate power rests with the supreme leader, Ayatollah Khamenei, but Ahmadinejad carries a lot of weight among the conservatives who have dominated the corruption-plagued political and economic establishment since 1979. The IRGC, like all Iranian military forces, is directly responsible to Khamenei rather than the president. But Ahmadinejad, who earned his spurs conducting behind-the-lines operations against the Iraqis in 1980-88, has a profound influence on the Pasdaran and has gone out of his way to bolster their power.

Some observers of Iraq's opaque power structure believe that the IRGC leadership runs the president rather than the other way round. But half the members of his cabinet are former IRGC commanders or veterans of the notorious intelligence services. Eighty of the 290 members of parliament are Pasdaran alumni, the largest bloc of IRGC veterans elected to the Majlis since the 1979 revolution. Other IRGC figures hold key positions in the diplomatic corps after a widespread purge conducted by Ahmadinejad a few months ago.

Strategically, for the Americans the IRGC's importance lies in its supervision of Iran's controversial nuclear and long-range missile programmes, including the growing number of strategic Shehab-3 ballistic missiles currently capable of reaching targets in Israel, the Gulf region and Turkey that are now being deployed.

The IRGC's growing influence in politics, fuelled in large part by the profits of its economic ventures, has raised concerns in many quarters that a process of militarising the regime by diehard clerics and their political allies like Ahmadinejad is under way.

All this prompted one commentator, Kamal Nazer Yasin (the pseudonym of an Iranian journalist) to note on the Eurasianet website: "The scope of the Guards' influence in the political, economic and foreign policy arenas is such that it is fair to speculate as to whether the clerical leadership is not fast becoming a captive of its praetorian guard."

But Iranian analyst Kaveh Afrasiabi, author of several books on Iran, sees it differently. He argues that the IRGC's influence in the cabinet, parliament, government departments and local administrations emphasises "the depth of integration of the IRGC (past and present) in formal government structures".

He maintains that far from being a rogue organisation, a law unto itself, as it has been widely portrayed by the western media, "the much scrutinised role of the IRGC in the economy ... can be similarly interpreted as further support for the counter-argument that with the growing involvement of the Guards the formal and informal economy, their vested economic interests dictate more and more mainstream, as opposed to terroristic and subversive, behaviour."

But Matthew Levitt of the Washington Institute for Near East Policy, a pro-Israeli think-tank, believed the administration's aim is right on target.

"The IRGC is precisely the element within Iran that should be targeted," he wrote recently.

"It is deeply involved in the country's nuclear, missile and other weapons proliferation activities ... The IRGC controls vast financial assets and economic resources. While most of the actual funds and assets are in Iran and beyond seizure, the IRGC's business and industrial activities--especially those connected to the oil and gas industries--are heavily dependent on the international financial system."

Ayatollah Ruhollah Khomeini, the father of Iran's Islamic revolution, had always feared the Pasdaran would become politicised. He established the IRGC as the clerical regime's Praetorian Guard in a decree issued on 5 May, 1979, only a few weeks after Shah Mohammad Reza Pahlavi been toppled and driven into exile.

Its main task was to act as a counterweight to the shah's imperial army because its loyalty was ideologically suspect even after hundreds of senior officers were executed by Khomeini's fanatics, and to act as the revolution's cutting edge.

The Pasdaran became national heroes in the 1980-88 war with Iraq, driving out Saddam Hussein's forces that invaded Iran's southwestern Khuzestan province, the centre of the country's oil industry, with suicidal zeal in human-wave offensives that killed tens of thousands of Iranian fighters. Khomeini made sure that the Guards answered only to himself as supreme leader of the revolution.

His successor, Ayatollah Khamenei, has ensured that he too retains absolute control of the ideologically pure IRGC. It is the most important military force in the land, with some 150,000-200,000 regulars. It also has 2m reserves in the paramilitary Basij. This is a popular army of Islamic zealots formed in 1980 for the war against Iraq and now widely used as a rapid intervention force to counter any domestic upheaval that might threaten the clerical regime in Tehran.

Khomeini, ever mindful of the snakepit of constant factional fighting within the Islamic republic, prohibited the Pasdaran from engaging in politics, a stricture intended to add weight to a constitutional ban on military involvement in politics. But among Iran's adversaries there is a widespread perception that all that has gone by the board as the revolution's hardliners tightened their grip on power.

After the 1980-88 war, the Pasdaran was given responsibility for much of the reconstruction programme. To fulfil this task it created the Construction Jihad and it was through this that it moved into the economic sector. In 1983, Iran's Supreme Defence Council ended the monopoly of the regular armed forces over domestic arms production and repair industries established, largely with US help, under the shah, and authorised the Pasdaran to set up its own military industries.


Within a few years the Guards were running a rapidly expanding defence industry that now produces everything from ballistic missiles to automatic rifles as Iran, internationally isolated and subject to US-led arms embargoes, struggles to produce as much of its military requirements as it can.

The corps has long sought to limit the penetration of foreign contractors into Iran's economy, often arguing that they constitute a security risk or have business dealings with Israel. This was particularly true while the reformists of former President Mohammed Khatami, who favoured opening up the economy to badly needed outside investment, were in power from 1997 to 2005.

The impact of the Pasdaran's growing economic power is heightened by the control that the regime's financial oligarchy, dominated by the influential League of Islamic Associations, exerts over state and non-state institutions. These include a cluster of powerful semi-government, supposedly philanthropic, foundations known as bonyads like the Mostazafan Foundation that control assets worth billions of dollars and have allegedly been used to finance covert IRGC operations.

This allowed the Pasdaran to build up a chain of enterprises across the republic that provides funding independent of the state and mimics the high-profile political roles of the corps' military counterparts in neighbouring Pakistan and Turkey.

Ahmadinejad has ensured that big contracts go to the Pasdaran. As often as not, government contracts that go to the IRGC are never put out to tender first as is the normal process, spawning growing criticism and allegations of cronyism. Neither of the two South Pars gas contracts, for instance, were open to bidders. Despite Khatami's best efforts to curb the IRGC's economic steamroller, the reformists failed signally to undercut Pasdaran control of several ports through which it allegedly smuggles goods worth some $9.5bn a year. According to dissident Iranian sources, the Pasdaran regularly take over oil platforms in the Gulf and fill up tankers bound for China, supposedly off-the-books payment to Beijing for its help on Iran's nuclear programme.

For the more pragmatic circles in Iran, there is a feeling that the IRGC may have overplayed its hand. Already Khamenei has moved to curb Ahmadinejad's provocative policies because many in the power elite, and among the bazaaris, the wealthy merchants who wield considerable influence, deem them to be reckless and dangerous. It remains to be seen who comes out on top.
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Title Annotation:CURRENT AFFAIRS
Author:Blanche, Ed
Publication:The Middle East
Geographic Code:7IRAN
Date:Nov 1, 2007
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