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Iran Defense Ministry Claims It Has Divested From Civilian Businesses

IRAN -- Iranian Defense Minister Amir Hatami stands next to a new generation of Iranian short-range missile 'Fateh-mobin' during an unveiling ceremony in Tehran, August 13, 2018

Iran’s Defense Ministry has shut down more than 130 of its companies that were active in the economic sector and sold its shares in other corporations.

In an interview with the government’s official newspaper, Iran Daily, Iranian Army Brigadier General Amir Hatami said on August 25, “The ministry has given up its shares in Wagon Pars and Iran Air Tours.”

Wagon Pars is an Iranian train manufacturing company established during the reign of Mohammad Reza Shah in 1974, in the city of Arak. The company’s products include locomotives, trains, metros, freight and fuel wagons, and aircraft equipment.

Iran Air Tours is an airline based in Tehran. The airline mainly operates under the English name Iran Airtour as written in Persian. Iran Air Tours was established as a subsidiary of Iran Air and operates scheduled domestic services and international services in the Middle East and Eastern Europe, as well as charter services.

Previously, in a January 20 interview with the daily Iran, Hatami had said, “Based on a decree issued by Supreme Leader Ayatollah Ali Khamenei, the general staff of the armed forces of the country has been assigned to pave the way for giving up those economic entities controlled by the armed forces that are not related to their mission.”

However, Hatami noted that the armed forces, including the Islamic Revolutionary Guards Corps (IRGC) affiliated Khatam ol-Anbia industrial conglomerate, will continue their involvement in the construction sector.

He did not elaborate which businesses might be transferred to the private sector but vaguely alluded to entities related to the “investment sector.”

The plan will be implemented in the investment sector without any involvement of the government-run Privatization Organization, which could open the door to more controversies, he said.

In the past decade, the IRGC has expanded its economic empire in different sectors, including financial services, with little transparency.

President Hassan Rouhani and his administration have repeatedly criticized the presence of the Iranian military, specifically the IRGC, in the economic sector.

During his presidential campaign last year, Rouhani complained of the IRGC’s “meddling” with the Iranian economy and described the military elite to a “government armed with a gun” that the private sector dares not to compete with.

In his Saturday interview with daily Iran, Hatami noted, “At a joint session with the roads and urban development minister, I suggested transferring to the private sector a number of projects, including the projects for constructing the Isfahan-Shiraz freeway, the Tehran-Mashhad electric railroad, and the Ramsar bypass.”

The Iranian armed forces have established numerous economic and financial corporations in different sectors in recent years. Currently, the IRGC plays a pivotal role in almost all economic aspects of life in Iran through powerful and influential entities such as IRGC Cooperatives Fund, Bank Ansar, and Khatam ol-Anbia Headquarters.

The chairman of the society of investor companies for constructing freeways disclosed on July 30, that along with the IRGC, contractors affiliated with the police force, army, Defense Ministry, and Astan-e Qods-e Razavi have become involved in road projects.

Astan-e Qods-e Razavi‎ is officially an autonomous charitable foundation in the city of Mashhad. It is the administrative organization that manages the shrine of the Shi’ite eighth Imam, Ali ibn Mousa al-Reza.

The main source of income for the institution is endowments, with assets estimated to be worth billions of dollars, but it is difficult to quantify its annual income as there are no reliable reports or tax declarations available.

The financial empire is run by Rouhani’s main challenger in last year’s presidential election, mid-ranking hard-liner cleric Ebrahim Raeisi.

While the defense minister is talking about ceding ministry shares in several companies, the IRGC-affiliated forces, including a company owned by the Basij militia, Mehr-e Eqtesad-e Iranian Investment company, have purchased shares in a plethora of companies, including Iralco, Foolad Mobarakeh, Tabriz Tractor, Sadra, Technotaz, and the Jaber ibn Hayyan pharmaceutical complex.

The Defense Ministry has been also active in the economic sector. On top of industrial military complexes, it owns numerous companies, including the Energy Development and Construction company, Shams, and Iran Electronics Industries.

The Iranian regular army has tried not fall behind. It has also established economic and financial entities, including Bank Hekmat, Qa’im Construction Headquarters, Spadana Industrial Corporation, and the Saba Insurance Foundation.

Recently, hard-line former President Mahmud Ahmadinejad joined voices with his successor to blast Iranian military activities in the country’s financial and economic sector.

In an open letter to the supreme leader on March 13, Ahmadinejad noted that the revenues of Bonyad Mostaz’afan, 15 Khordad Foundation, the Executive Headquarters of Imam’s Decree, IRGC Cooperatives Foundation, Artesh Cooperatives, Baseej Cooperatives, the Defense Ministry Cooperatives Foundation, and the economic subdivision of the Imam’s Relief Committee amount to more than 7 trillion rials (roughly $170 million), although they are not accountable to the public or the government and never publish balance sheets or activity reports.