Where goes the IRGC’s economic wing under Rouhani?

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Article Highlights

  • Should Rouhani try to starve Khatam al-Anbia of new projects, it will signal a renewed effort by Iranian political leaders to bring the IRGC under control.

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  • Will the IRGC subordinate itself without a fight to Rouhani's changes is another question entirely.

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  • President Hassan Rouhani has changed the tone of Tehran’s rhetoric

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While Western policymakers focus on the potential for renewed diplomacy with the Islamic Republic of Iran now that President Hassan Rouhani has changed the tone of Tehran’s rhetoric, the new administration is focused on a different agenda inside Iran. Under both President Mohammad Khatami’s second term (2001-2005) and Mahmoud Ahmadinejad’s presidency (2005-2013), the Islamic Revolutionary Guard Corps (IRGC) gained significant power, as the Supreme Leader blessed their entry into the political sphere in order to contain reformist sentiment. Ahmadinejad himself personified this trend, as he was the first post-revolutionary Iranian president to base his legitimacy on his service to the IRGC during the Iran-Iraq War rather than as a cleric. The power of the IRGC reached its peak during Ahmadinejad’s second term: more than half of Ahmadinejad’s cabinet were IRGC veterans, but his cabinet included only one cleric.

Rouhani’s cabinet is far different: he has reduced dramatically the number of IRGC veterans, balancing them instead with former employees of the Ministry of Intelligence. It is against this backdrop that Rouhani’s speech to the IRGC is interesting. The true base of the IRGC’s power and political influence rests in Khatam al-Anbia, the IRGC’s economic wing. As president, Ahmadinejad awarded upwards of $40 billion in no-bid contracts to Khatam al-Anbia-affiliated companies, a figure that represents a several-fold increase over the official IRGC budget. While Rouhani was willing to pay lip service to the IRGC’s economic role, Khatam al-Anbia chief Ebadollah Abdullahi appears frustrated at the lack of firm commitment Rouhani has made with regard to new projects which his government might award Khatam al-Anbia.

Should Rouhani try to starve Khatam al-Anbia of new projects, it will signal a renewed effort by Iranian political leaders to bring the IRGC under control. Whether the IRGC—with tens of billions of dollars in reserve—will subordinate itself without a fight is another question entirely.

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