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How the Nuclear Deal Enriches Iran's Revolutionary Guard Corps

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How the Nuclear Deal Enriches Iran's Revolutionary Guard Corps How the Nuclear Deal Enriches Iran’s Revolutionary Guard Corps Emanuele Ottolenghi, Saeed Ghasseminejad, Annie Fixler & Amir Toumaj October 2016 FOUNDATION FOR DEFENSE OF DEMOCRACIES FOUNDATION How the Nuclear Deal Enriches Iran’s Revolutionary Guard Corps Emanuele Ottolenghi Saeed Ghasseminejad Annie Fixler Amir Toumaj October 2016 FDD PRESS A division of the FOUNDATION FOR DEFENSE OF DEMOCRACIES Washington, DC How the Nuclear Deal Enriches Iran’s Revolutionary Guard Corps Table of Contents INTRODUCTION .......................................................................................................................7 Understanding the JCPOA .....................................................................................................8 A HISTORY OF THE IRGC’S ROLE IN THE ECONOMY ..................................................8 THE IRGC’S PERVASIVE CONTROL OF THE IRANIAN ECONOMY ...........................11 Sector-by-Sector Analysis ......................................................................................................12 Oil and Gas ..........................................................................................................................13 Petrochemicals ....................................................................................................................13 Metals and Minerals ...........................................................................................................15 Automotive ..........................................................................................................................17 Shipping ...............................................................................................................................17 Aviation ...............................................................................................................................18 Construction .......................................................................................................................19 Banking and Finance .........................................................................................................20 Telecommunications ..........................................................................................................21 The IRGC Business Model .....................................................................................................22 THE IRGC AND IRAN’S ROGUE ACTIVITIES ...................................................................23 The IRGC and Iran’s Ballistic Missile Program ...................................................................23 The IRGC, Quds Force, and Terrorism in the Region ........................................................24 The IRGC’s Involvement in the Syrian Civil War................................................................25 Iran’s Cyber Army ...................................................................................................................26 RECOMMENDATIONS .............................................................................................................26 For the Current and Next U.S. Administration: ..................................................................27 For Congress: ...........................................................................................................................30 For the Private Sector: ............................................................................................................33 CONCLUSION .............................................................................................................................34 Page 5 How the Nuclear Deal Enriches Iran’s Revolutionary Guard Corps Introduction political power serves the economic enterprises it owns, and both its political and economic weight in turn During the first week of September, Iranian speedboats advance its military projects. twice harassed U.S. Navy ships in international waters near the Strait of Hormuz. Those boats belonged The IRGC’s wealth serves three important goals. First, it to the Islamic Revolutionary Guard Corps (IRGC). generates revenue to finance the IRGC’s military activities In the same week, news emerged that the IRGC had – including the nuclear and ballistic missile programs at arrested another dual Iranian-American national during home and sponsorship of terrorism abroad. Second, it a family visit to the country. The commander of the offers the Guard a network of companies, enterprises, IRGC’s Quds Force, meanwhile, was in Aleppo, in the banks, offices, holdings, and joint ventures that can company of Iraqi Shiite militias currently engaged in execute the regime’s procurement efforts for advanced the siege of Syria’s second-largest city. Indeed, only a weaponry and sensitive technology. Third, it generates few days earlier, the IRGC announced the formation personal affluence, which the Guard can translate into of a Shiite liberation army composed of Shiite militias political influence. Indeed, the Guard’s growing political that Iran has been nurturing across Mesopotamia and and economic influence enables it to bank on public the Levant. That did not stop France’s mobile phone companies’ willingness to lend their services – both at giant, Orange, from beginning talks with Iran’s largest home and abroad – to aid the Guard’s efforts to procure mobile phone operator, Mobile Telecommunication forbidden technologies and raw materials, and to finance Company of Iran (MCI), over acquiring a stake in the their purchases through middlemen in foreign markets. Iranian company. The IRGC controls MCI through a Although the summer 2015 Joint Comprehensive Plan 50-percent-plus-one stake in its parent company, the of Action (JCPOA) lifted significant sanctions on Iran, Telecommunication Company of Iran (TCI). the risks for foreign investors – risks of exposure to In short, whether its internal security, foreign adventures, money laundering, corruption, and terror finance or of or large corporate ventures, the IRGC plays an outsized inadvertently partnering with a still-sanctioned entity role in Iran’s internal power structure. Established in 1979 – have only increased. The Revolutionary Guard lies at to consolidate the Islamic revolution and fight its enemies, the heart of these risks. The IRGC launders money from its “legitimate” businesses to fund its illicit activities; it the IRGC has evolved over the years into a full-fledged finances terrorist groups across the world; and it enriches conventional army, conducting and directing terrorist itself at the expense of the Iranian people through activity abroad. The Guard has also become a political corruption and kleptocracy. It is for this reason, among power broker, an economic conglomerate, and an agency others, that Transparency International ranks Iran 130 in charge of nuclear and ballistic-missile proliferation. out of 168 counties on its corruption perception index, The interaction among military, economic, and political and the Basel Institute on Governance ranked Iran as worst in the world with regard to risks from money power is critical in understanding the centrality of the 1 IRGC to Iran’s current system. The Guard exploits its laundering and terrorism financing. influence and capabilities in one realm to increase its This report demonstrates the Revolutionary Guard’s presence in another. Its growing economic clout is both pervasive influence in the Iranian economy and an end in itself and a tool to advance its other agendas. provides an accounting of the IRGC’s nefarious Thus, IRGC revenues from economic activities yield activities. Without a sober understanding of how the the necessary resources and political leverage to place its IRGC will exploit economic dividends generated by members in positions of power. Conversely, the Guard’s the JCPOA, policymakers and the private sector cannot Page 7 How the Nuclear Deal Enriches Iran’s Revolutionary Guard Corps establish appropriate counter-measures to prevent the • Transition Day (October 18, 2023): Eight years after enrichment of the most dangerous elements of the Adoption Day, or when the IAEA reaches a so-called Iranian regime. broader conclusion that there is no undeclared nuclear activity in Iran and that all nuclear activities are Understanding the JCPOA peaceful in nature – whichever comes first. Additional U.S., EU, and UN sanctions will be terminated. In July 2015, P5+1 negotiators reached an agreement with Iran on its nuclear program and the lifting of international sanctions. The United Nations Security A History of the IRGC’s Role Council then adopted the agreement as Security in the Economy Council Resolution 2231, which supersedes all previous resolutions concerning Iran’s nuclear program. A full At the behest of Ayatollah Ruhollah Khomeini, the analysis of the terms and structure of the agreement, Islamic Revolutionary Guard Corps was established the Joint Comprehensive Plan of Action (JCPOA), is in 1979 as a militia tasked with consolidating his beyond the scope of this report, but an overview of the theocratic vision for Iran. The Iran-Iraq War (1980- deal provides important context.2 1988) transformed the IRGC into a parallel national army steeped in the ideology of the Islamic revolution.4 The JCPOA front-loaded the most significant sanctions Iranian state policy to export the revolution also took relief on Implementation Day (January 16, 2016) shape in this period,5 and the IRGC became the main after Iran met preliminary nuclear benchmarks. Then, instrument for the execution
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