Iran Cuts Economic Power Of Revolutionary Guards

TEHRAN — From its nine-story headquarters in an upscale neighborhood of Tehran, a giant construction company directs its operations across Iran, building mosques, airports, oil and gas installations, hospitals, and skyscrapers.

But this is not just any company. Khatam- al Anbiya, whose name means “seal of the prophet,” is the most important economic arm of Iran’s elite Islamic Revolutionary Guards Corps, which also oversees Iran’s missile program. It employs nearly 1.5 million people, and is led by a military commander.

Yet a crackdown on the corps is being led by Iran’s president, Hassan Rouhani, who ran for office promising to unleash economic growth by completing a nuclear deal and freeing the country from international sanctions.

Now he has turned his sights on the Revolutionary Guards, whose monopoly on large sectors of the economy and penchant for corrupt dealing he sees as a major drag on growth.

In this, Mr. Rouhani seems to have the support of Ayatollah Ali Khamenei, Iran’s supreme leader.

“What I sought is that in the economy, we must have free competition,” Mr. Rouhani told a group of news media executives in New York in September. “No institution can use its authority to derive a benefit. We must be open and fair, and there can be no exclusivity in any one sector.”

For years, the construction giant and numerous other companies and conglomerates run by the Revolutionary Guards have operated with impunity, driving Iran’s sanctions- crippled economy, financing its military adventures in the region and enriching the hard- line commanders and clerics at their helms.

But now, with many sanctions lifted after the nuclear deal, and as the government tries to open the country to competition and foreign investment, the group’s economic dominance is increasingly seen as a liability.

The Revolutionary Guards’ international reputation for regional meddling, its potential designation as a terrorist group by the Trump administration and the sanctions that remain in place combine to make it a toxic business partner for the Western and Asian companies Tehran needs to reinvigorate its economy and rebuild its crumbling infrastructure.

As a result, it has had its budget cut and seen large government projects that were once its private preserve steered to outsiders. Several senior members of the Revolutionary Guards have been arrested on suspicion of corruption.

Recently, Khatam-al Anbiya was sidelined in two major oil and shipping projects, which went to bidders from France and South Korea.

Insiders say the arrests confirm the Revolutionary Guards is now committed to curbing corruption and smuggling by its forces, which control Iran’s borders.

Tensions over the Revolutionary Guards’ economic activities first surfaced during Mr. Rouhani’s re- election campaign in May, when he implied that the group was the primary beneficiary of several rounds of privatization.

“We handed our economy to a gov-

Sending soldiers to Syria and building skyscrapers.

ernment that has guns, media, many other things, and no one dares to compete with them,” he said. “This is not privatization.”

After Mr. Rouhani’s victory in May, he had two meetings with Revolutionary Guards commanders. As a result, they seem to be conforming.

Even the conservative news media has been quietened. Two media figures affiliated with the Guards, Reza Golpour and Mohammad Hossein Rostami, were arrested and accused of cooperating with Israeli intelligence, the state newspaper Kayhan reported.

But the Revolutionary Guards will not be forced entirely from the Iranian economy, said Bahman Esghi, the secretary general of the Tehran Chamber of Commerce. Since the private sector has only 20 percent of the economy, the country needs its heft.

“The reality is that the Guards Corps is the locomotive of our economy,” he said. “Our private sector simply is way too small to replace it.”