The Political Economy of the IRGC’s involvement in the Iranian Oil and Gas Industry: A Critical Analysis MSc Political Science (Political Economy) Thesis Research Project: The Political Economy of Energy University of Amsterdam, Graduate School of Social Sciences 5th June 2020 Author: Hamed Saidi Supervisor: Dr. M. P. (Mehdi) Amineh (1806679) Second reader: Dr. S. (Said) Rezaeiejan [This page is intentionally left blank] 2 Table of Contents Table of Contents ................................................................................................................................ 3 Abstract ............................................................................................................................................... 6 Acknowledgments ............................................................................................................................... 7 Maps ................................................................................................................................................ 8 List of Figures and Tables ................................................................................................................. 10 List of Abbreviations ........................................................................................................................ 11 I: RESEARCH DESIGN .................................................................................................................................... 13 1.1. Introduction ......................................................................................................................... 13 1.2. Literature Review ............................................................................................................... 16 1.3. Theoretical framework ....................................................................................................... 19 1.3.1. State corporatism and the role of military forces .......................................................... 20 1.3.2. The neo-mercantilist developmentalist state ................................................................. 21 1.3.3. Hypotheses .................................................................................................................... 23 1.3.4. Argumentation: economic and political mechanisms ................................................... 24 1.3.4.1. Economic liberalization and the IRGC’s involvement in the economy ........................ 24 1.3.4.2. Factionalization as a catalyst political factor ................................................................ 27 1.4. Research method ................................................................................................................. 29 1.5. Organization of the thesis ................................................................................................... 32 II. TRANSFORMATION OF THE ISLAMIC REPUBLIC FROM STATE CORPORATISM INTO THE NEO-MERCANTILIST DEVELOPMENTALIST STATE ........................................................................... 33 2.1. Introduction ......................................................................................................................... 33 2.2. State Corporatism and the role of the IRGC during 1979-1989 ..................................... 34 2.2.1. State corporatism in post-revolutionary Iran ................................................................. 34 2.2.2. The origin and position of the IRGC in the consolidation of the Islamic Republic ...... 36 2.2.3. The crisis of state corporatism and the necessity of economic adjustment ................... 37 2.3. The emergence of neo-mercantilist developmentalist state and the IRGC’s involvement in the economy ..................................................................................................................... 38 2.3.1. The nature of the Iranian neo-mercantilist developmentalist state ............................... 39 2.3.2. Privatization of state-owned enterprises ....................................................................... 45 2.3.3. Privatization and the involvement of parastatal and military institutions ..................... 49 2.4. Conclusion ........................................................................................................................... 51 3 III. POSITION AND DEVELOPMENT OF THE OIL AND GAS INDUSTRY WITHIN THE POLITICAL ECONOMY OF IR ...................................................................................................................... 53 3.1. Introduction ......................................................................................................................... 53 3.2. The structure of the energy industry within the Iranian economy ................................. 54 3.2.1. Oil and gas reserves ...................................................................................................... 54 3.2.2. Share of oil and gas revenues in Iran’s political economy ............................................ 55 3.2.3. Ownership and governance of the petroleum sector under state corporatism ............... 59 3.3. Energy industry under neo-mercantilist developmentalist state of Iran ....................... 60 3.3.1. Necessarily of transformation in the energy sector ....................................................... 60 3.3.2. Introducing Buyback Contracts (BBC) and foreign investment ................................... 61 3.3.3. NIOC’s subsidiaries and their ties with political factions and elites ............................. 63 3.3.4. Contractors and influence of political factions and elites in the energy sector ............. 65 3.4. Conclusion ........................................................................................................................... 68 IV. THE IRGC’S INVOLVEMENT IN THE IRANIAN OIL AND GAS INDUSTRY ............................... 71 4.1. Introduction ......................................................................................................................... 71 4.2. The development of the IRGC’s involvement in the Iranian economy .......................... 71 4.2.1. Background of the IRGC’s entry into Iran’s post-war economy ................................... 72 4.3. The IRGC’s involvement in the oil and gas industry ....................................................... 74 4.3.1. Khatam al-Anbia’s activities in oil, gas, petrochemical areas ....................................... 75 4.3.2. The IRGC’s involvement in the energy sector during the presidential terms ............... 83 4.4. Conclusion ........................................................................................................................... 86 V. Conclusion ...................................................................................................................................................... 88 Bibliography .................................................................................................................................... 92 Books ....................................................................................................................................... 92 Peer-reviewed journal articles ....................................................................................................... 95 Online recourses ............................................................................................................................ 98 Primary recourses .......................................................................................................................... 99 Media, newspaper, weekly journals ............................................................................................ 113 Appendixes .................................................................................................................................... 114 I. Largest prived reserve holders of crude oil and natural gas ........................................ 114 4 [This page is intentionally left blank] 5 Abstract The prominence involvement of the Islamic Revolutionary Guard Corps (IRGC) in the Iranian economy, especially in the oil and gas industry, has drawn particular attention in the political as well as academic sphere. This thesis examines the economic and political factors involved in the presence of the IRGC in the energy sector relating to the historical development of the Iranian political economy in the post-revolutionary period. Specifically, the purpose is to map how the transformation of the political structure of the Islamic Republic, the execution of the neoliberal economic policies in the energy sector, and the rivalry among political factions together generate a condition under which the IRGC as a military institution has become a powerful domestic player in, among others, the oil and gas industry. Underneath this triangulation complex is the shift of the Islamic Republic from state corporatism into the neo-mercantilist developmentalist state by which the state pursued a top-down strategy of economic liberalization and, simultaneously, maintain its control over the economy. The state involved the IRGC as one of the most well-organized and reliable instruments to have strict control over the reshaping of the national economy at which the IRGC operates as the long-arm of the state in this process. At the political level, political factions within the Islamic Republic played as a mediator factor in the augmenting/diminution of this involvement in each presidential term.