The accusations leveled by Foreign Minister Mohammad Javad Zarif, On November 12, 2018, at the Islamic Revolutionary Guard Corps (IRGC) of profiting from money laundering and obstructing Iran’s signing of the relevant treaties, provoked a new conflict between the government and the IRGC. These accusations highlight the latter’s involvement in large scale money laundering activities, which it employs to support terrorist organizations and armed militias, a matter the Western countries may exploit to impose further sanctions. Such accusations also bring the past corruption cases to the fore, particularly that of the Iranian businessman Babak Zanjani case.
The supreme leader is expected to step in to resolve the ongoing conflict between the two sides, whether by pressing for the dismissal of the foreign Minister, or retaining him, given two considerations: the impact of the sanctions on internal balances and the extent to which the West will exploit these statements to impose further sanctions on Tehran.
The US sanctions on Iran have not only had economic repercussions, as evident in the fall of Iranian oil exports, exacerbated domestic economic problems, particularly high levels of inflation and unemployment and the crash of the national currency, but they have also played a role in triggering political crises whose effects appear to linger over the remaining time of President Hassan Rouhani’s second term, which will expire in mid-2021.
This was evident in the controversy sparked by the remarks of Foreign Minister Mohammad Javad Zarif on November 12, 2018, in which he accused some entities in Iran of benefiting from money laundering activities and hence they hinder Iran’s signing of international treaties to combat such operations by convincing influential institutions in the regime, such as the Guardian Council and the Expediency Council, to reject or provide essential feedback on the bills put forward by the government and endorsed by the Consultative Assembly (Parliament) in this regard.
Various Factors
As part of his accusations against some of the internal forces of profiting from high-yield money-laundering operations, Zarif said that the money spent on media campaigns against government anti-money laundering bills equals the annual budget allocated to the Ministry of Foreign Affairs, which amounts to $262 million, per the government price, a unified rate of 42,000 rials for a dollar, while the real price exceeds three times that figure.
Certainly, these accusations have prompted many institutions and political forces to exert greater pressure on the government, and the parliament may see motions to question or table a vote of no confidence in Zarif, which could deliver a devastating political blow to the government at this critical juncture of internal and external crises.
The tendency to escalate against Zarif and the government in general can be attributed to several factors, key among them are the following:
1- Widespread activity: These accusations shed more light on the rampant money laundering operations carried out by the entities associated with the regime, which led Iran to be ranked among the top countries in the world according to international indexes, such as the Basel Anti-Money Laundering Index, whose 2017 report put Iran at the top of the list of 10 most dangerous countries in this field, a ranking that Iran has held for more than a year.
2- Possible sanctions: According to the fundamentalist conservatives, the focus on Iran’s involvement in such operations may provide an opportunity for the powers that oppose Iran’s roles in the region, to ramp up international pressure. This comes as some influential institutions in the regime, especially the IRGC, is already facing accusations of large-scale money-laundering operations to secure multiple sources of funding for terrorist activities, particularly supporting terrorist organizations in various countries of the region, such as Syria, Lebanon, Yemen and Iraq.
Accordingly, some fundamentalist conservative MPs pointed out that these statements lend credence to the accusations levelled at the IRGC, especially the Quds Force, of providing continued support to such organizations, which increases the likelihood of being hit by new sanctions that may not only be limited to the US. Some European countries may take actions too, in the coming period, to curb the Iranian ongoing attempts to target and liquidate some Iranian opposition figures abroad, especially those belonging to the Mujahedin-e Khalq Organization (MEK) and the National Council of Resistance of Iran (NCRI).
Moreover, some influential officials in the regime, such as Sadeq Larijani, the head of the Judiciary, have not only indicated that Zarif has not yet submitted any evidence or documents to substantiate his accusations, but warned that if he owns it, he may face legal problems because he did not submit it to the competent authorities before issuing his recent statements.
1- The Zanjani case: The spiraling controversy over anti-money laundering will bring the issue to the fore, which received remarkable attention in Iran in recent years, regarding some of the mechanisms upon which the government had adopted to confront the international sanctions before reaching the nuclear deal on July 14, 2015.
As part of these mechanisms, the government entrusted some businessmen with the sale and purchase of oil and transferring the revenues to it, leading to rife corruption; the case of businessman Zanjani was the most salient in this context. Zanjani managed oil sales for the government of former President Ahmadinejad, but after Rouhani has assumed power in August 2013, the businessman faced charges of embezzling some $ 2.7 billion from the proceeds of the operations and was sentenced to death for corruption by disrupting the economic system of the state.
The government of Rouhani and the moderates took advantage of this issue as evidence of rampant corruption in the country during Ahmadinejad’s presidency (2005–2013), as part of their defense of the economic policy, which the latter attacked more than once in the recent period. According to oil minister Bijan Zanganeh on January 27, 2018, the government said the total debt owed by Zanjani, with interest added, amounts to more than $3.5 billion.
Mysterious Paths
Although the pressure on Zarif is set to continue during the coming period, escalation to the point of questioning him or tabling a vote of no confidence in him by the Consultative Assembly will, in the first place, hinge on the assessment of the Supreme Leader Ali Khamenei to the possible repercussions of such move on the internal political balances and the position of Iran in the face of the continuing international pressure from the US as well as some European countries which have begun to focus on the risk of betting on Iran’s commitment to the agreement without regard to its destructive roles on the region and support for terrorism.
So far, Khamenei has been reluctant to intervene in the raging controversy between the government and the moderates, whose MPs issued a statement supporting Zarif, the fundamentalist conservatives and the IRGC. However, Khamenei may step in to determine the course of this controversy during the next period if he sees that its continuation could negatively affect Iran’s response to the international pressure. This will crystallize in the coming period when the government try to step up cooperation with European countries to activate financial mechanisms that help sustain economic dealings between the two parties and hinder the US efforts to bring Iranian oil exports to zero after the six-month period expires, which it has granted to eight Iranian oil-importing countries.
