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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

"The IRGC is so deeply entrenched in Iran's economy and commercial enterprises, it is increasingly likely that if you are doing business with Iran, you are somehow doing business with the IRGC," Henry Paulson, U.S. Treasury secretary, said in a speech last month.

No oversight

Crucially important to U.S. officials weighing the possibility of sanctions is that the Guard presides over a multibillion- dollar income stream outside the scrutiny of Iran's parliament or the national budgeting process, according to many of those familiar with the Guard's operations.

Such a cash flow, Iranian opposition leaders and some analysts have argued, could be marshaled to finance clandestine military operations, such as support to Iraq's Shiite militias, weapons for Lebanon's Hezbollah fighters or clandestine nuclear development programs.

The controversial uranium enrichment facility at Natanz, which came to light in 2002, was developed under close supervision by the Revolutionary Guard without disclosure under the parliament's public budgeting process. Since then, U.S. officials have attempted to impose a series of sanctions to halt financing of Iran's nuclear and missile development programs.

"They don't answer to anybody. Because they have the power. They have the guns," said Mohsen Sazegara, a co-founder of the Guard who helped draft its original charter, but who has gone into exile in the U.S. "And when there is no free media to criticize them, naturally they start to become corrupt, to start to do whatever they want. This is now the situation."

Revolutionary Guard leaders have said they are using their expertise and equipment for the good of the nation, and are not only providing employment, but generating work for companies that subcontract with the organization. Many Iranians have argued that it is better to have Guard engineering firms in charge of strategic sectors of the economy than relying on foreign firms.

"The IRGC considers itself responsible for the defense of the Islamic Revolution, its achievements, and the ideology and values of Imam Khomeini," the chief commander, Yahya Rahim Safavi, wrote in a letter to the parliament in 2003. "Our main mission is to stop those who wish to destroy and overthrow the Islamic Revolution."

Last year, the Guard's main engineering firm, Khatam al Anbia, was awarded a contract to construct a $1.3-billion, 560-mile gas pipeline to the Pakistan border. It is also the lead contractor for development of a portion of Iran's massive South Pars gas field, a project worth $2.3 billion, beating out more experienced foreign oil and gas contractors. And Guard interests are also thought to be in control of the transport of oil from Kazakhstan through Iran.

The Guard also won two contracts potentially worth $2 billion for expansion of Tehran's subway system and is linked to a company that assembles up to 50,000 Mazda cars a year in Iran.

Chances are, Iranians who go in for laser eye surgery are being treated by the employees of the Revolutionary Guard, which operates a major hospital in Tehran and several dental and eye clinics.

In 2004, the much-heralded new Imam Khomeini International Airport just south of Tehran, run by a Turkish-Austrian consortium, had been open only a few hours when it was ordered closed by the Guard, citing "security" concerns.

Several analysts said the closure was widely believed to be an attempt by the Guard to protect its oversight of air shipments to and from the Iranian capital. It is now under Guard control, out of the prying eyes of outsiders.

Iranian analysts say that some elements of the Guard have leveraged its control of Iran's borders into an informal relationship with gangs that smuggle in alcohol, cigarettes and satellite dishes from Iraq.

No competition

Many of Iran's businessmen say it is impossible to compete against companies that not only have the inside track in government contracting but the armed force of the law behind them.

A businessman who would allow only his first name, Ali, to be published said his company lost out in bids for overhauling an oil terminal in the port of Mah Shahr and expansion of the port in Chabahar after a Guard-affiliated company bid was one-third less and won the contract.

"How can we compete?" he said. "Why can they offer such an inexpensive price for a civil project like this? A, they have access to cheap assets and equipment owned by the IRGC. B, for unskilled workers they can use the drafted soldier, though we have to pay. C, they are confident that once they win the tender, they can ignore the overruns."

Reports that the Bush administration may designate the Guard a terrorist organization have drawn widespread condemnation across Iran.

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