Why the Revolutionary Guards Do Not Run Iran’s Economy
Image Credit: Office of Iran's President

Why the Revolutionary Guards Do Not Run Iran’s Economy


Particularly in the wake of the contested 2009 presidential elections in the Islamic Republic, a popular consensus has taken shape among Western government officials, policymakers, and scholars on the immense role the Islamic Revolutionary Guards Corps (IRGC) plays in the Iranian economy.

Stanford University’s Abbas Milani, for instance, stated in 2010 that the IRGC, an elite branch of the Islamic Republic’s armed forces, is akin to a “military junta” and controls “minimally about 60 percent of the economy.”

Similarly, back in 2007, George W. Bush’s Treasury Secretary, Henry Paulson, stated: “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 doing business with the IRGC.” Former U.S. Secretary of State Hillary Clinton concurred in a 2010 speech in Doha, when she expressed the Obama administration’s concern that the IRGC was “supplanting the government of Iran” and seizing control of large swaths of the country’s economic establishment.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

Today, this position significantly informs sanctions policy, as individuals, businesses, and organizations suspected of having ties to current or former IRGC members are quickly blacklisted by Washington and Brussels from international finance and trade networks.  Late last year, the state-owned National Iranian Oil Company, a huge organization which dates back to 1948, was added to the sanctions list ostensibly because the new oil minister, Rostam Qasemi, had previously been in charge of the IRGC’s engineering and development contracting arm, Khatam Al-Anbia.

The expansion of sanctions over the past two years seems to have followed the numerous organizational charts that frequently appear in Washington, DC think-tank reports, where hundreds of business and individuals are linked via dotted-line tentacles to the IRGC.  Add to this a series of accusations by Iranian politicians and the Iranian press reporting over IRGC-linked firms acquiring state-owned assets through murky means, and the case seems closed. 

Yet, as I document in the most recent issue of the International Journal of Middle East Studies, anecdotes, accusations, and poorly sourced think-tank reports are not adequate for examining the vast shifts that have taken place in Iran’s economy under President Mahmoud Ahmadinejad.  Instead of a military monolith dominating the economy, the Islamic Republic more resembles what I call a “subcontractor state,” whereby the government’s public assets have been decentralized and transferred to a wide variety of firms, pension funds, holding companies, and state-linked economic actors. 

The president of Iran claims this outcome is due to the successful implementation of his privatization policies.  His opponents, including former high-ranking members of the IRGC itself, call it something else: “pseudo-privatization.”

Sign up for our weekly newsletter
The Diplomat Brief