Although Iran’s Supreme Leader Ali Khamenei, in a recent speech on the 39th anniversary of the revolution, called for combating corruption, Iran is unlikely to adopt serious relevant measures. This is especially so because the regime is facing domestic and foreign pressures, and does not want to look weak. Additionally, the Iranian regime is not likely to audit the activities of its social institutions and charities, controlling an estimated US$95 billion in funds and constituting an effective tool for expanding its foreign influence. Moreover, the Iranian Revolutionary Guard Corps (IRGC) is keen on sending out clear messages to the Iranian government that they reject attempts to curb the economic influence of these institutions. The regime also is making precautions against possible new economic sanctions against Iran, including maintaining its front and fictitious companies established to evade the sanctions. Because these companies witness rampant corruption, Iran is likely to keep its policy in place, which means that reasons of popular outrage over the deteriorating economy will remain unaddressed.
Calls for combating corruption in Iran are not new but renewed, often surfacing and gaining special significance due to escalating crises hitting the regime both in the domestic and international arena. Headlining the most recent wave of protests that broke out on December 28, 2017 were demands of countering rampant corruption in state institutions and charitable trusts known as Bonyads that serve the regime’s goals both inside and outside Iran.
In other words, the regime appears to be heading towards adopting such calls as a mechanism through which it can mitigate pressures and send out a message that widespread corruption in state institutions was caused by mistakes in policies pursued by successive governments and not by the approaches that the regime itself is calling for.
This can explain why Khamenei urged for giving attention to such demands saying “corruption resembles a mythical seven-headed dragon” that officials have to slay.
Multiple Hurdles
In light of that, Khamenei’s call looks like an attempt to assimilate some of the demands put up by protesters who expressed anger over the massive influence of the state major institutions and religious foundations. This made Iran rank as one of the most corrupt countries scoring 131 points out of 176 on the 2016 Corruption Perceptions Index issued by Transparency International.
This appears to be inseparable from the crisis emanating from the bankruptcy of financial investment firms in the past period, caused primarily by corruption. Investors who lost their savings took part in the protests causing them to spread from small villages and towns to major cities including the capital Tehran.
However, this does not mean that there are no obstacles to taking serious steps in this context. This would make phenomenal corruption more likely to continue and consequently the crisis of protests to erupt once again at a later stage. The reason is that it will not be easy for the regime to put powerful measures in place to confront rampant corruption.
The obstacles preventing serious action against corruption are as follows:
1- Chronic Practices: The regime does not appear to be prepared for introducing significant changes to its domestic and foreign policies, at least currently. It is not seeking to send out messages to parties concerned with these policies that it can respond to pressures to further escalate them.
Hence the regime will not easily back down on protecting influence the Bonyads have been enjoying since the Shah was overthrown. The reason is that such influence serves the regime’s goals, at the foreign level in particular, where such organizations play roles serving the regime’s efforts to expand in areas lying far from Iran’s border, especially in poor countries facing economic and social crises or the consequences of conflict and civil wars that broke out in previous decades.
Some officials made note of the huge wealth owned by these organizations such as the Mustadafin Foundation which, according to its head Saeedi Kiya, accounts for about 1.5 per cent of Iran’s GDP, and made US$4.2 billion in profit in the period from March 20 to November 20, 2016. Recently, the foundation expanded its activities and in January 25, 2018, signed a memorandum of understanding with China’s railway firm CRIC to construct a high-speed railroad between Tehran and Iran’s northern cities. The agreement was signed during a visit to Beijing by a delegation headed by Kiya that also held negotiations with two other Chinese firms to build a terminal at the Khomeini International Airport and export dairy products to the Chinese capital.
Following the recent popular protests, Western reports noted that the Setade Ejraiye Farmane Emam, a foundation tasked with seizing property of Iran’s ruling family and other prominent figures, controls a wealth estimated at $95 billion in funds, and is under sole control of Khamenei.
2- Continued Influence. The military establishment, and the IRGC in particular, recently sent messages that they reject any attempts to curb their economic influence in the coming period, unlike the government of President Hassan Rouhani that is making relevant efforts in this direction.
The Pasdaran’s position is based on the belief that this influence secures massive resources and revenue that help accomplish its foreign missions, including in particular supporting Iran’s allied political regimes and terrorist organizations operating in crisis-hit countries. The reason is that budget funds allocated by the government to the Pasdaran are not enough to sustain these policies in the coming period.
That is why the Pasdaran was quick to criticize economic measures taken by the government to address the new reality imposed by the recent protests. In a February 9 statement, Yahya Rahim Safavi, a top military aide to Ali Khamenei, and a former commander of the IRGC, said that data announced by the government about increasing growth and efforts to create more jobs are wrong. Safavi was commenting Rouhani’s recent statement in which he revealed that the economic policy of his government succeeded in achieving positive results evidenced by a higher growth rate and generally better economic performance.
Ebadallah Abdollahi, Head of the Khatam al-Anbiya Construction Headquarters, an economic arm of the IRGC, responded to Rouhani’s call for curbing the economic influence of the IRGC and the military establishment, by calling upon the government to pay off an estimated 30 trillion toman (about $8.1 billion) in debt to the IRGC.
3- Advance Preparations. Iran no longer rules out the possibility of the issue of its nuclear program to return to square one, if the US Administration of President Donald Trump continues to carry out its current policy. Such possibility would expose Iran to stronger sanctions that would enable Iran’s hard-line conservatives to renew their call for Iran’s withdrawal from the nuclear deal.
For this reason, Iran may resort to the above said mechanisms that it used previously to circumvent international sanctions imposed before the deal was signed in mid-2015. The mechanisms include front companies founded by Iranian businessmen to help sell millions of oil barrels overseas on behalf of the government.
The case of Babak Morteza Zanjani, who was involved in such practices, caused quite a stir in December 2013 when he was arrested on accusation of embezzling some $2.8 billion. But the current oil minister Bijan Zanganeh, in a statement made on January 27, 2018, said that Zanjaji’s total debt increased to $3.7 billion after adding an interest.
Accordingly, Iran appears to be continuing to pursue the same old policies, which means actions made by the current government will not succeed in containing the several negative consequences of rampant corruption in state institutions, which were a major catalyst of the recent protests.
