Hello. It looks like you’re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

Thursday 15 August 2019

Iran and the West

Deep state rising

Chaos in the Gulf? The most powerful organisation in Iran isn’t complaining

By Amir Paivar

On a sunny Saturday in May 2004, Iran’s reformist President, Mohammad Khatami, opened Tehran’s new landmark Imam Khomeini Airport. Amid much fanfare and broadcast live on national television, Khatami welcomed passengers from the first plane to land, an Emirates flight from Dubai. The airport had first been planned under the Shah; now, almost 25 years later, the Islamic Republic was realising that dream. This was a moment Iran had been waiting for.

Mohammad Khatami shakes hands with the Iranian pilots who flew the first plane that landed at the Imam Khomeini airport

The airport’s second flight was due a few hours later – but it never arrived.

The Islamic Revolutionary Guard Corps (IRGC) had scrambled two fighter jets to intercept the second plane. On the ground, khaki Toyota Land Cruisers and white vans had suddenly appeared, blocking the new runway. They too belonged to the IRGC.

The aircraft intercepted in the skies over Tehran was neither hostile nor military – Iran Air 658 was a civilian Airbus carrying around 200 mostly Iranian passengers. The fighter jets forced it to divert south, escorting it some 400 kilometres to the central city of Isfahan.

The reason for this incident? A feud between the IRGC and the reformist government over a lucrative tender to run catering and ground-handling operations, as well as the construction of a second terminal at the new airport.

TAV – a Turkish-Austrian airport services company – had won the contract, and the IRGC was not happy about it. The IRGC had also asked the government to allocate 2,000 hectares of land (20 square km) from the new airport to a military airbase. The transport minister refused. The IRGC then accused TAV of having links to Israel and of being a security risk and shut the airport. The ploy worked – by the time the airport reopened a year later, TAV was long gone. Instead, a consortium of Iranian companies, including those with links to the Revolutionary Guards, took over the operations.

“They had said they would punch me in the face and take me down, and they did,” the former transport minister in the middle of the dispute later told a national newspaper.

The question in this instance, and in similar cases since, is to what extent does the IRGC act in self-interest, in the interest of the regime or that of the country? The boundaries have never been as blurred as during the events of the past year.

Asymmetric conflict

The Norwegian-owned Front Altair tanker said to have been attacked in the waters of the Gulf of Oman

President Trump pulled out of the Iran nuclear deal a year ago and re-imposed economic sanctions. The most crippling of these was a ban on the purchase of Iranian crude oil. The US administration first gave major Asian buyers waivers, but, as of May this year, it has been tightening the screws in a bid to bring Iran’s exports to zero. That’s when the current troubles in Persian Gulf, the world’s most important energy corridor, started:

  • In May, four oil tankers that were linked to Saudi Arabia, UAE and Norway were attacked. An inconclusive inquiry by those countries stopped short of accusing Iran but blamed the attacks on an unidentified “state actor”.
  • In June, while the Japanese Prime Minister was in Tehran to mediate between the US and Iran, two tankers – one carrying oil products for Japan – were attacked. The US accused the Revolutionary Guard.

These attacks apparently served one purpose: to sabotage mediation efforts by ratcheting up tensions between Iran and the West. IRGC involvement in these incidents has not been proved, but the Guards have taken other actions with similar outcomes:

  • In late June, they shot down a US drone, saying that it had trespassed into Iranian airspace.
  • In July, they seized a British oil tanker in the Strait of Hormuz, in retaliation for the detention of an Iranian one by British forces in Gibraltar last month.
  • And, in a less reported incident, the IRGC’s intelligence arm arrested a French-Iranian scholar in Tehran on undisclosed charges, as reports emerged of plans for a visit to the Iranian capital by France’s President Macron to mediate between Iran and the US.
Iranian Revolutionary Guards on patrol around the British-flagged tanker Stena Impero

On the face of it, Iran is responding to a US policy of “maximum pressure” in an asymmetric style. It cannot retaliate with economic sanctions of its own, but several senior officials have been quoted as saying that if Iran is not permitted to sell its oil, it won’t let other Persian Gulf countries sell theirs either. It’s probably not coincidence, in other words, that, when the tanker incidents started, Iran’s oil exports had fallen by four fifths in the space of a year.

As a military force, the Revolutionary Guards are naturally expected to respond when an enemy drone violates Iran’s airspace or if they believe the confiscation of an Iranian tanker by Britain’s Royal Marines is unjustified. But the IRGC is not just a military force. It’s a hybrid giant.

From the stands

Founded in 1979, the IRGC was originally tasked with guarding the Islamic revolution against the risk of coups d’etat. It played a central role in defending the country in the 1980-88 war against Saddam Hussein’s Iraq, and in post-war reconstruction efforts. But what started as a patriotic drive to rebuild roads and bridges soon morphed into profitable – and booming – business ventures. Like the People’s Liberation Army in China, the Revolutionary Guards extended their reach into virtually every corner of Iran’s economy.

Iran’s Revolutionary Guards prepare to burn an American flag on the al-Fao Peninsula

What the IRGC wants, the IRGC tends to get. Over the past two decades it has tackled a succession of national and foreign business rivals, taking over huge oil and gas contracts and substantial deals, including a joint venture to manufacture Mazda cars and the licensing of Iran’s second mobile GSM network. Occasionally it allows competitors into minority partnerships. More often it co-opts them through hostile takeovers, or simply muscles them out of business.

The golden era for the Guards’ businesses was during the hardline rule of President Mahmoud Ahmadinejad between 2005 and 2013, when sanctions were first directed at Iran’s nuclear programme. European and Asian firms left the Iranian market and big projects, especially in oil and gas, were given to the Guards with no official tender process.

Former Iranian President Mahmoud Ahmadinejad visits the Natanz uranium enrichment facilities

However, the 2015 nuclear deal between Iran and the P5+1, and the subsequent lifting of sanctions, provided little benefit for the Revolutionary Guards. The IRGC was not awarded many of the spoils of sanctions relief. On the contrary, many of their businesses remained on the sanctions lists of both the United States and the European Union, preventing multinationals from working with them.

When Iran’s market opened to European investors, the IRGC was watching from the stands. When France’s Total, along with the China National Petroleum Corporation, won a $5-billion project to develop South Pars gas field in the shallow waters of the Gulf, IRGC generals could not stay silent. They branded the deal an act of treachery, “selling out the country”.

“We remember how when sanctions hit, they (Western companies) dodged the bullet and fled,” General Abdollah Abdollahi, head of IRGC’s construction conglomerate, told a press conference at the time. “We have to rely on our own domestic capabilities instead.”

But a confident President Rouhani, who had been emboldened by delivering the nuclear accord, was having none of it. On the contrary, he would often take a swipe at the IRGC publicly, accusing it of “financial corruption” and calling it “the armed government” – a reference to Iran’s powerful, parallel deep state.

Blessing in disguise

For Iranian hardliners and the IRGC, Trump was a blessing in disguise. He unilaterally withdrew from the nuclear deal, even though it had been endorsed by the UN Security Council and complied with, until recently, by Iran. The hardliners were proved right for having said the Americans could not be trusted. Trump re-imposed sanctions, and they were proved right again for having said Iran should stand on its own.

Donald Trump holds up a memorandum that reinstates sanctions on Iran

Sanctions on Iran’s energy, banking, shipping, insurance, precious metals, automotive and petrochemical sectors are back. These are unilateral American measures but they force non-US as well as US companies to choose between working in Iran and the US market. For most the choice is a no-brainer. Almost all European and most Asian firms have since pulled out of Iran, again.

For good measure, the Trump administration has designated the IRGC a terrorist organisation, mainly for its sponsorship of Hezbollah and Hamas. Tensions between Iran and the West, especially within the Gulf, are higher than at any other point in the past three decades. The Revolutionary Guards are back behind the wheel and few can oppose them inside Iran.

Palestinian Hamas militants in the Bani Suheila district of Gaza City

Naturally, there is talk of increasing the military budget, and once again IRGC’s construction arm is presenting itself as an alternative to the Western contractors who have left projects in Iran half-finished. Banking on a possible resolution to the nuclear deal stand-off, Rouhani’s government still resists using IRGC firms. But this will be a matter of time if the conflict with the West continues, and especially if the nuclear deal collapses entirely.

Sanctions and rampant domestic corruption have put a heavy strain on the Iranian economy. Inflation is officially around 40 per cent and the IMF believes the economy will shrink by 6 per cent this year. The currency is worth barely a third of its value against the US dollar before Trump pulled the plug on the nuclear deal.

Iran’s Revolutionary Guards test missiles during military manoeuvres outside the holy city of Qom

The pressure has not yet made Iran succumb to America’s terms for resuming negotiations, which include scaling back Iran’s missile ranges and retreating from Iraq and Syria. So what happens next? There are three possible scenarios:

If negotiations were ever to resume, the Revolutionary Guards would probably want to be involved. In particular, they would demand to be taken off all sanctions lists, paving the way for their businesses to partner with multinationals in the giant modernisation projects that Iran urgently needs.

If tensions were to escalate into a military confrontation, the IRGC would have to hope it came and ended quickly. The Guards are no match for a US military in a full-fledged war and the longer the sanctions bite into Iranian economy, the less money there is for war.

If the uneasy status quo continues, the country as a whole suffers but the IRGC benefits from returning to the fore, both in politics and in the economy, as long as Iran continues to export at least some oil. In this scenario, Iran would need to preserve the nuclear deal in some form to prevent the return of UN sanctions, and to preserve some limited trade with Europe. Otherwise, complete collapse of the deal and an ensuing, prolonged, full embargo could threaten the survival of the regime.

Anyone who sells wheat wants everyone to have bread for breakfast. In the same way, a limited military conflict or, even better, the fear of one is not a bad strategy for a military force. So why de-escalate?

 

Further reading

Iran-watching was a cottage industry in Washington long before the current US administration went public with its fever dream of regime change in Tehran. As a result, there is no shortage of good think-tank primers on the Revolutionary Guards’ origins and interests. The most authoritative is probably this one from the Council on Foreign Relations, although this from the Counter-Extremism Project is even more frequently updated.

This Rand report on the IRGC for the US Department of Defence was written in 2009 but is comprehensive up to that point.

For a thorough overview of how modern Iran functions try Iran’s Political Economy since the Revolution by Suzanne Maloney (CUP, 2015); and for a journalist’s view of real life in Tehran read Ramita Navai’s City of Lies (2014).

More recent is this unusual diplomatic memoir by Jack Straw, the former UK foreign secretary, who became so involved in Iran’s tortured relationship with Britain that he wrote a book about it.