Revolutionary Guard leads Iran’s response to spread of coronavirus, marginalizing Rouhani in the process.
By STEVEN TERNERMilitary units of the IRGC Ground Force are seen as they launched war games in the Gulf, December 22, 2018(photo credit: HAMED MALEKPOUR/TASNIM NEWS AGENCY VIA REUTERS)
On April 14, in front of the Iranian Majles (parliament), Adel Azam, the chairman of Iran’s Court of Accounts, accused his government of corruption, mismanagement and the pilfering of state funds. He did so in his annual budget report, which he titled “Summary of Budget Fraud in 1397 (2018).” Budget reports are mandated, but they are not generally damning and accusatory, nor read before the Majles.The Budget Fraud Report of 1397 is incomplete. It carefully does not explicitly accuse Supreme Leader Ali Khamenei, the Islamic Revolutionary Guard Corps (IRGC), or the security establishment of impropriety. Rather, it does so implicitly by exposing the scope of corruption in the current government, by pointing out illegal salaries and subsidies to government debtors and contractors, and by identifying sectors of the economy that are known to be IRGC-controlled.IranWire wrote a series of articles detailing various aspects of the report to further shine a light on its mentions of currency manipulation, astronomical costs of small development projects, misappropriation of funds, and more. In these reports, it brings up the important question of why the report was intended to draw public ire; i.e., why would the government accuse itself of money laundering and corruption?In short, the answer is that factions in the government loyal to President Hassan Rouhani and his administration prepared the report to blame Khamenei and the IRGC for sabotaging Rouhani’s efforts to fix Iran’s economic troubles. In fact, the IRGC, with Khamenei’s blessing, has become quite brazen in its efforts to pilfer Iran’s treasury, as well as to undermine Rouhani’s efforts to curb such corruption. Rouhani versus the IRGCRouhani has faced significant opposition from hard-liners over the course of his tenure. The IRGC has been outspoken in its criticism of such policies as easing tensions with the West in the hopes of opening Iran’s economy to foreign investment and cooperation.Such opposition is generally presented as ideological opposition to the West, particularly the United States, for decades of interference in Iranian affairs. However, practically speaking, the IRGC opposes Rouhani’s economic policies because they are largely aimed at curbing its political influence by breaking up its cabals.Rouhani has tackled the IRGC’s ownership and management of hundreds of companies in construction, oil and gas, telecommunications, security, finance and other industries. These entities are frequently awarded government contracts without competing bids, which prevents competition and opportunity in the market for private companies. They also receive large government loans without having to pay them back or reporting how the money is spent.As noted, IRGC efforts to undercut Rouhani’s influence and expand its own are not new. However, it is no small matter that over the past two months the IRGC has, at the expense of the Rouhani administration, been granted a tremendous amount of formal control of the political system and economic infrastructure in order to spearhead the official governmental response to the health crisis caused by the coronavirus.Pandemic responseThe effect of the coronavirus on Iran’s short-term economic situation has been devastating. When the pandemic first hit Iran in mid-February, the Iranian government acquiesced to pressure from China, its largest trading partner and oil customer, to not temporarily suspend travel between the two countries.This move indicated the acute vulnerability of Iran’s so-called “resistance economy,” though that is a separate discussion. Additionally, the number of corona-related deaths, and the inability to distribute medical equipment, let alone essential goods such as food and medicine, to the provinces, further highlighted the country’s inadequate economic infrastructure and logistical capabilities.Mismanagement, cumbersome bureaucratic hurdles, and corruption also played a part in Iran’s dismal response to the health crisis.In an online panel hosted by the Asia Society on April 7, Ali Vaez, the Iran project director at the International Crisis Group, described how hard-line factions were using the devastating effects of the health crisis on Iran as ammunition to undercut the legitimacy of the Rouhani regime, in the hopes of positioning itself to take over the Majles and win the presidency in the 2021 elections.Similarly, Mehdi Khalaji and Saeid Golkar at the Washington Institute for Near East Policy detailed how the IRGC, with the blessing of the Khamenei, has taken the lead on the pandemic response. By doing so, the IRGC put itself in a position to increase its political and economic influence and control of Iranian industry in the near-term, with the hopes of solidifying it in the long-term. One question that must be asked is, what will a hard-line, IRGC-led regime mean for Iran’s economy?2021 electionsElections in the Islamic Republic are far from democratic. The supreme leader and his cronies on the Guardian Council exercise their formal authority to determine who is allowed to run for office in Iran. They usually choose candidates, and victors, based on whom they think both the population and the council members themselves can live with. By the time elections roll around, they have already predetermined who will win and the vote tally, which they use as a tool to show the population that its voice was heard, even if it was not accepted.Politically, the Trump administration’s decision to drop out of the JCPOA nuclear deal, and its implementation of a “maximum pressure” strategy to impose further crushing sanctions on Iran, gave Khamenei and the IRGC all the excuse they needed to design an outcome to the 2021 elections, in which their candidates will sweep the Majles and the presidency. In the meantime, as Rouhani is increasingly marginalized, the IRGC is actively expanding its authority. This has included reopening provincial offices that the government had ordered closed, in a centralization effort to curb IRGC interference in administration affairs. As Rouhani goes, so do his relatively moderate ideologies, his anti-corruption policies, and his benign governing style.The IRGC, in contrast, is widely corrupt, militaristic and authoritarian. It will not have to wait until elections in 2021 to implement its policies. In terms of anticipating economic policy, one must consider what will happen to the Iranian economy when a hard-line government replaces the Rouhani administration.Implications of an IRGC regimeInitially, the IRGC will strengthen its grip on Iranian industry. It has already seized infrastructure in its response to the current pandemic. However, if it transitions from an opposition faction working to hinder Rouhani’s economic policies, then it will have responsibilities and accountability associated with governing.The economic struggles of the middle and lower classes will become its own failures rather than a rallying cry for its support to take over. Will it, as the hard-line faction, have the capability to make the kinds of tough concessions it prevented Rouhani from making, as it will not have to fear being attacked from the Right? How will it manage calls to end corruption and break up monopolies, or to curb the bureaucracy that keeps small businesses out of the market?To salvage the Iranian economy, the IRGC will need to do more than simply blame moderates and the West. It will need to drastically undercut its own systemic corruption and industrial monopolization. It will also have to govern effectively. Such changes to its modus operandi will undoubtedly include significant ideological acrobatics, as it would be impossible to continue to operate as it has up until this point if it hopes to use economic improvements to build political legitimacy.The writer is a doctoral candidate at Tel Aviv University, where he studies American-Iranian relations. He is the producer of IranianEconomicNews.com, and a former breaking news editor at The Jerusalem Post.
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