Sanctioning Iran's Military-Industrial Complex

As the United States and its allies have tightened sanctions on Iran, they have sought in particular to isolate the Islamic Revolutionary Guard Corps, the regime’s most aggressive institution. The IRGC, known in Persian as the Pasdaran, fields its own army, navy, and air force, and dominate a large and increasing share of Iran’s national economy.

The IRGC first rose to prominence thanks in large part to the Islamic revolutionary government’s suspicions of the Artesh, Iran’s conventional military forces that had been closely associated with the United States and served as a key pillar of the Shah’s regime. Although it has fallen out of favor, the Artesh has not gone away.

Artesh and Sanctions

The US and over 30 other countries have imposed sanctions on Iran in hopes that exerting pressure on the Iranian regime will persuade it to halt its illicit nuclear activities, or at least delay those activities and make them more difficult.

Sanctions prohibit individuals and companies from providing material or financial support to the people and companies they target. As a result, sanctions legislation constrains its designated targets’ access to international markets and raises their operating costs, as the remaining firms can charge a risk premium to continue working with them.

While both the IRGC and the Artesh report to Iran’s Ministry of Defense Armed Forces Logistics, international sanctions on Iran have generally focused on members of the IRGC and the companies they operate. This suggests that on every matter of strategic importance — from Iran’s illicit nuclear activities to its ballistic missile program, its terrorist activities abroad and the ongoing human rights abuses associated with its efforts to repress internal dissent at home — the IRGC is the power broker.

Supreme Leader Ayatollah Khomeini founded the IRGC after the Iranian Revolution to supplement the Artesh and safeguard the principles of the revolution. In addition to protecting the regime, the IRGC also seeks to export the principles of the revolution around the world. The IRGC has five branches — army, navy, air force, the volunteer paramilitary Basij militia, and the Qods Force, which heads their international activities — and they enjoy outsized influence in relation to their actual size. In addition to these branches, the IRGC have untold numbers of companies, organizations, and bureaus, which extend into a variety of Iranian commercial sectors, including energy, its most profitable enterprise.

The United States and its allies have targeted the IRGC on the basis of its great and growing influence in Iran under President Mahmoud Ahmadinejad, a former Guardsman himself. Khatam al-Anbiya’, the IRGC’s engineering and construction arm, has become increasingly active in Iran’s energy business, signing several no-bid contracts to develop Iran’s oil and gas fields in the past few years.

The IRGC has also stepped into Iran’s media and communications businesses. In September 2009, an IRGC-linked consortium purchased a majority share of state-operated Iranian Telecommunications Company for $7.8 billion.

At the beginning of Ahmadinejad’s second term in office, 10 of 21 members of his cabinet are Pasdaran commanders. Former IRGC commanders also occupy 80 of 290 seats in Iran’s Majlis [parliament], including that of its speaker. Most recently, the Majlis approved the nomination of an IRGC commander as Iran’s oil minister: Brigadier General Rostam Qasemi, an individual designated as a target of sanctions by the US and the EU for his connections to the IRGC as the head of Khatam al-Anbiya.^[1]

Unlike the IRGC, whose Qods Force is tasked with exporting Iran’s revolutionary ideals, and arming and training foreign proxy forces like Hizbullah, the Artesh is responsible solely for the security of the Iranian state. The Artesh is comprised of Iran’s regular navy, ground forces, and air force, and manned by a combination of conscripts and volunteers.^[2] Its role in Iran’s illicit weapons and terrorist activities is unclear, but it does not appear to act overseas in the same way that the IRGC does.

The IRGC and the regime still view the Artesh as an institution loyal to the Shah, which they must therefore hold in check.^[3] Additionally, the United States used to provide training and equipment to the Artesh, compounding the IRGC’s suspicions of the regular army.^[4] The Iranian Constitution underlines the division between the two forces, stating that the Artesh is responsible for defending Iran’s borders and maintaining internal order, while the IRGC is responsible for protecting the regime.^[5]

In Washington’s view, the IRGC’s connection to Iran’s nuclear program has made it the key concern among the armed entities in Iran. In October 2007, the US designated the IRGC under Executive Order 13382, which gives the US president the right to block American entities from maintaining financial connections with Iranians involved in the production or proliferation of weapons of mass destruction (WMD).^[6] The UN and the European Union have also sanctioned the IRGC for its involvement in Iran’s WMD activities. The EU designated the IRGC in June 2010, noting that the group had “operational control for Iran’s ballistic missile program [and] has undertaken procurement attempts to support Iran’s ballistic missiles and nuclear program.”^[7] In 2010, the US State Department sanctioned the IRGC for its role in human rights violations in the aftermath of the June 2009 election.

In addition to sanctioning the entities themselves, the US, EU, and UN have gone after senior IRGC leaders for their ties to the group and its illicit activities. In June 2010, the United States designated the organization’s commander Mohammad ‘Ali Jafari for his connection to the IRGC.^[8] The US subsequently sanctioned him again for human rights violations committed by the Basij under his leadership in the aftermath of the June 2009 elections.^[9]

When the US designated the IRGC in October 2007, it also named nine other entities owned or controlled by the group, including the Qods Force, for its terrorist activities.^[10] The EU followed suit, sanctioning the Qods Force in July 2010.^[11]

The Artesh has been spared most of the international attention that the IRGC receive because US and other government officials see it as distinct from the regime’s minions. Though the Artesh reports directly to Iran’s Ministry of Defense Armed Forces Logistics — an organization that the US, EU, and UN have all already sanctioned for its connections to the regime’s nuclear activities — its historical connection to the United States appears to have remained.

By shying away from targeting the Artesh, American leaders appear to be making the careful and critical distinction between the Islamist regime and the Iranian people by opting to pursue the regime’s elite forces and leaders responsible for documented proliferation activities and human rights violations.

Yet given the regime’s continued use of front companies within its armed forces, the Artesh’s involvement in illicit acts cannot be ruled out. It is, after all, part of a regime that shows no compunction about violating international law.