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Iran's $12-billion enforcers

From road-building to laser eye surgery, the Revolutionary Guard dominates the economy.

August 26, 2007|Kim Murphy | Times Staff Writer

LONDON — Iran's Revolutionary Guard has quietly become one of the most significant political and economic powers in the Islamic Republic, with ties to more than 100 companies, which by some estimates control more than $12 billion in business and construction, economists and Iranian political analysts say.

The Guard was created in 1979 as a military and intelligence force to protect the ideals of Iran's Islamic Revolution. But the 125,000-strong force has used the massive military engineering capability it developed rebuilding the country after the 1980-88 war with Iraq to take over the strategic highlands of the Iranian economy.

The legendary people's army now has its hand in a broad and diverse variety of activities, such as dentistry and travel, and has become the dominant player in public construction projects across the country, say businessmen and economists in Tehran and analysts abroad.

Under the leadership of President Mahmoud Ahmadinejad, a former Revolutionary Guard commander, the force also has extended its reach in the Cabinet: 14 of 21 members are former Guard commanders. Former officers also hold 80 of the 290 seats in the parliament and a host of local mayorships and local council seats. Iran's chief nuclear negotiator, Ali Larijani, is a former Guardsman.

The Revolutionary Guard's growing economic clout helps explain why the Bush administration is reportedly contemplating designating it a terrorist organization: More important than the label itself, the move would allow the U.S. to block its assets and disrupt operations by firms that associate with it, which with the Guard's large financial footprint would affect supplies, credit and investment to a broad swath of the Iranian economy.

With billions of dollars in revenues at the Guard's disposal, analysts say, the organization that has been the ideological heart of the Islamic Revolution has developed an expanded capability to finance and mount covert military operations well outside the public eye.

"Now, all the money that's coming in serves to make them the most powerful force in Iran. They have a massive hand in the economic sector," said Robin Hughes, deputy editor of the London-based Jane's Defense Weekly. "And what's important about that is there is no oversight body that exists that has the capability to supervise the IRGC's economic activities," he said, using initials of its formal name, the Islamic Revolutionary Guard Corps.

Across Iran, public works projects involving pipelines, roads, bridges and, increasingly, oil and gas are dominated by the Guard's engineering arm, the equivalent of the U.S. Army Corps of Engineers, or by companies with which the Guard has a close relationship.

"The amount of money we're talking about is $12 billion to $15 billion in contracts. Unbelievable," said a Tehran-based economist who spoke on condition of anonymity for security reasons. "Basically, the private sector has no more space for doing civil projects in the country, or very few of them. All the projects are being done by special companies which belong to the Revolutionary Guards."

Iranian officials have disclosed an estimated $6 billion in contracts the Revolutionary Guard has received over the years -- a figure equivalent to one-tenth of Iran's annual exports of $66.7 billion, mainly oil. The nation's annual gross domestic product is about $204 billion, unadjusted for cost of living.

Even in cases where the Guard does not assert direct ownership of companies, there often are important below-the-radar links, said Mahan Abedin, an Iranian native who is research director for the Center for the Study of Terrorism in London.

"The people who do the really tough jobs on these big construction projects, because they design a lot of them, are part of the Revolutionary Guards. But that ownership is never stated," Abedin said. "There is a very complex commercial structure in place. They will always hide that link.

"Back in the '80s, it was a very pure force, ideologically. Very Islamic. But now the whole thing is about making money."

The Revolutionary Guard plays a unique role in Iranian society. It was envisioned as a people's army that would provide a counterweight to the regular military and protect the late Ayatollah Ruhollah Khomeini's Islamic Revolution against the threat of foreign-sponsored coups, and today it remains a bastion of Islamic ideology.

Its troops are organized in parallel to the Iranian military, complete with an officers' academy and independent naval, air and ground components. It also runs a large and widely feared domestic and foreign intelligence service, and reports directly to the supreme leader of Iran's Shiite regime.

The Guard has mobilized its equipment stockpiles, wartime medical know-how, weapons-building capability and cheap military labor to become the contractor of choice on many government projects.

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