Iran Irony: IRGC And State Firms Are Benefiting From JCPOA

Those who raised the Iran deal flag, mainly in the United States and Europe, claimed the Joint Comprehensive Plan of Action (JCPOA) would boost trade and encourage foreign investment, enhancing Iran’s private sector and eventually downgrading the regime’s tight grip on the economy.

This was back in 2015 when the P5+1 agreed to lift sanctions in return for having Iran’s nuclear program curbed. Now in early 2017, however, signs indicate the main winners in Iran are none other than state-owned companies. This means Iranian Supreme Leader Ali Khamenei and the terrorist-supporting Revolutionary Guards are enjoying JCPOA benefits.

At least 90 of the nearly 110 agreements, totaling nearly $80 billion, involve such state-controlled companies. This includes the National Iranian Oil Company, parallel to others run by regime pension funds and massive conglomerates of semi-public nature.

Many deals, spanning the energy, infrastructure, pharmaceuticals and other sectors, remain in the preliminary stage. Iran’s foreign partners mainly include France, Germany, Italy, Russia and South Korea.

Iran’s “Setad Ejraiye Farman-e Hazrat-e Emam,” also known as the Headquarters for Executing the Order of the Imam and best known as Khamenei’s personal empire, has been the main benefactor of the highly flawed nuclear pact. This entity has stakes in and control over nearly all of Iran’s economy and benefits significantly through the JCPOA.

A 2013 Reuters probe shed light on Setad’s $95 billion empire, established through illegally seizing thousands of properties owned by business people, Iranians living abroad and religious minorities.

“A major network of front companies controlled by Iran’s leadership” is how the U.S. Treasury Department described Setad as it sanctioned the massive entity. Through the JCPOA, however, this conglomerate has enjoyed doing business with foreign companies.

One of the three such deals signed with foreign companies involves a $10 billion oil refinery construction plan. While Khamenei may not personally own these companies, his shadow—described as supervision—is essentially routing all invested finances.

In the past 18 months Khamenei-controlled companies, including the IRGC conglomerate, have sealed deals with foreign companies valued at over $11 billion.

It is a known fact that Tehran maintains a heavy hand over the economy, providing circumstances allowing state-controlled firms to acquire most business deals made possible after sanctions were lifted. The private sector makes up a mere 20% of Iran’s economy, according to official estimates.

To this end, private companies have received a dismal 17 deals, including a hotel management contract sealed most probably because of the French partner’s chief executive being the brother of Eshaq Jahangiri, Iran’s vice president.

The first slate of investments inked for Iran is most likely to strengthen state power, meaning Khamenei, counter to any hopes raised prematurely by JCPOA supporters. The supreme leader enjoys vast control, especially in the IRGC, through which he pursues his Syria, Iraq, Yemen, Bahrain and Lebanon policies.

Conglomerates, or foundations, whose chiefs are appointed directly by Khamenei, were the recipients of five of the 90 deals. Several of these entities enjoy widespread business transactions and not being obligated to pay full taxes. This includes Astan Qods Razavi, a vast religious institution controlling at least 36 subsidiary companies and entities.

One such firm is the Razavi Oil & Gas Development Company that sealed a preliminary agreement with Italy’s Saipem, also an oil and gas company.

The IRGC, known for its domestic crackdown and dispatching tens of thousands of Shiite militia members and arms throughout the region, is also considered a major destination point of JCPOA benefits.

The IRGC controls or has large stakes in four of the 90 deals sealed with the Iranian regime. And of course, Khamenei enjoys full hegemony over the IRGC. Despite remaining U.S. sanctions banning any “significant” business transactions with the IRGC, many of its front companies are free of any blacklisting.

Three of the four mentioned deals are signed with companies with strong ties to the IRGC and yet are not sanctioned. And to add insult to injury, the fourth company is on sanctions and yet enjoys involvement in a foreign deal through indirect routes.

Loopholes remain in the sanction regime imposed against Iran, all resulting from an appeasement/engagement approach adopted by former president Barack Obama. This is a gap in need of closing at a policy level.

“Despite a decline in sanctions… the Iranian economy is suffering from recession. The Iranian economy is under the control of the regime’s supreme leader Ali Khamenei and the IRGC. They are the only one who will benefit from trade with Iran and not the Iranian people,” said Iranian opposition leader Maryam Rajavi in a conference. Rajavi is president of the National Council of Resistance of Iran, an umbrella group of Iranian dissident entities, including the People’s Mojahedin Organization of Iran (PMOI/MEK).

Debate over the JCPOA’s future remains a major issue. If kept intact despite all its flaws, the U.S. should fully implement all articles and have each and every loophole sealed. This initiative can be coupled with further sanctions punishing Iran’s lethal meddling across the Middle East, pursuing a dangerous ballistic missile program and atrocious human rights violations.

Originally published in Forbes