Andrew Korybko |
The Ayatollah ordered the powerful Islamic Revolutionary Guard Corps and the country’s conventional military forces to divest their holdings in the economy. Sputnik quoted the Iranian Minister of Defense who in turn told a national newspaper that these armed entities need to sell their stakes in businesses that aren’t directly related to their work, which would have probably been unthinkable had it not been for the recent economic protests in the country.
Those demonstrations started off innocently enough and were designed to put pressure on the authorities to roll back some of the most neo-liberal elements of President Rouhani’s proposed budget and create more economic opportunities for average Iranians in the country, but they were soon thereafter briefly exploited by foreign-backed regime change forces until the security services and large-scale pro-government rallies succeeded in restoring order to the affected cities.
If everything pretty much stays the same, then it might lead to more widespread discontent with time just like the false hopes surrounding the nuclear deal contributed to the latest round of unrest.
Nevertheless, the authorities heard the people’s legitimate grievances despite the violent distractions that occurred, and it appears as though one of the state’s reactions to those protests has been the Ayatollah’s decree that security representatives need to disengage from the public economic sector.
The IRGC has always played a crucial role in the country’s economy because it’s constitutionally entitled to if the government requests its assistance on various projects, but whether fairly or not, they’re being set up as the most convenient scapegoat for Rouhani’s failure to jumpstart the economy after the 2015 nuclear deal, and that’s most likely why the Ayatollah had to make this move against his institutional allies.
The Defense Minister’s pronouncement on behalf of the Supreme Leader reportedly suggests that the IRGC and other active members of the security services “sell their holdings on the country’s capital markets or…the private sector”, and this could be expected to placate the populist masses who conveniently blame them for their problems.
This one as well, and it remains to be seen whether it’s a sincere effort to separate state and military interests from the economy or just a superficial crowd-pleasing gesture for the time being.
The implied idea is that more people will acquire jobs in the “construction, energy, banking, insurance, and telecommunications industries” that the IRGC is known to have invested in if these companies are placed into other hands and put at the mercy of the marketplace, which could even result in “trickle-down economics”, or so it’s thought. Just like the high hopes over the nuclear deal, however, events may not play out as expected in this case either.
It’s unlikely that the IRGC and other security actors will fully divest ownership of their companies, both because of the aforementioned constitutional safeguard that could be exploited as a loophole against this, and also because of their own self-interested reasons in retaining the economic stakes that they had come to depend on.
A foreseeable workaround could be that active servicemen simply sell their shares to their retired counterparts or even their own family members, especially since the Ayatollah’s decree doesn’t seem to demand any Western-style transparency standards. If that’s the case, then excluding a few highly publicized examples, the bulk of these transactions might just lead to ownership deeds going from the left hand to the right one and not to new investors like it’s supposedly intended.
Sputnik quoted the Iranian Minister of Defense who in turn told a national newspaper that these armed entities need to sell their stakes in businesses that aren’t directly related to their work.
Like with all major policy announcements, the “devil’s in the details” with this one as well, and it remains to be seen whether it’s a sincere effort to separate state and military interests from the economy or just a superficial crowd-pleasing gesture for the time being.
If genuine change towards large-scale privatization does indeed occur, then it’ll signal a shift from the semi-socialist foundations of the post-revolutionary economy, but if everything pretty much stays the same, then it might lead to more widespread discontent with time just like the false hopes surrounding the nuclear deal contributed to the latest round of unrest.
DISCLAIMER: The author writes for this publication in a private capacity which is unrepresentative of anyone or any organization except for his own personal views. Nothing written by the author should ever be conflated with the editorial views or official positions of any other media outlet or institution.
Andrew Korybko is a political analyst, journalist and a regular contributor to several online journals, as well as a member of the expert council for the Institute of Strategic Studies and Predictions at the People’s Friendship University of Russia. He specializes in Russian affairs and geopolitics, specifically the US strategy in Eurasia.