Khatam Al-Anbiya, Central Headquarters: A Representation of the IRGC’s Political Ambitions and Economic Pursuits

by Nasim Roshanaei — 14June2022

Once a military institution, Khatam Al-Anbiya (KAA) has assumed an economic mission thanks to the support of Supreme Leader Ali Khamenei. Presently, KAA undertakes multi-billion-dollar projects in the most lucrative sectors of Iran’s economy and dictates terms and conditions even to the government. How has this situation come about?

Three decades after this military-turned-economic institution began its operations, it has become one of the key players in Iran’s political and economic spheres. KAA’s economic activities are vast: huge oil and petrochemical projects (the Persian Gulf Star oil refinery and the three phases of South Pars Gas Field), numerous dams (the Upper Gotvand on the Karun River and the Karkheh), railways (Gorgan-Aq Qala), as well as the construction of tunnels, roads, and subways.

After the Iran-Iraq War, the IRGC-affiliated KAA became the largest contractor for government projects with the help of Supreme Leader Ali Khamenei. Photo source: ISNA

Khatam-al Anbiya (KAA) Central Headquarters, an affiliate of the Islamic Revolutionary Guard Corps (IRGC), was established in 1989 at Supreme Leader Ali Khamenei’s command and Mohsen Rezaei’s decree. The primary aim of this organization was to assist in Iranian construction areas, including “oil and gas, dams, energy, roads, and water transfer projects”. Since its founding, the KAA has broadened its scope as an active player in the fields of oil, gas and petrochemicals, construction, mining and industry, agriculture, and research; it is currently under strict international sanctions. In addition to its economic projects, it also engages in cultural activities. KAA’s ninth commander-in-chief, Seyed Hosein Housh Sadat, came into the current position after the previous commander, Saeed Mohammad, resigned on 13 March, 2021.

Seyed Hosein Housh Sadat, KAA’s ninth commander-in-chief

A closer look at the history of the IRGC’s foundation and its consequent infiltration into the economic sector will shed more light on its claims to power — including its endeavors for presidency.

Although many consider the IRGC to be the most influential actor in Iran’s political and economic sphere at this historical juncture, its role should not be exaggerated. The IRGC has leveraged its subsidiaries — the KAA, The Cooperative Foundation of the Revolutionary Guards, and quasi-governmental institutions such as the Executive Headquarters of the Imam’s Directive, Astan Quds Razavi, Mostazafan Foundation, Imam Khomeini Relief Foundation, to name a few — to overtake both Iranian politics and the economy. In order to understand why and how the IRGC was founded, it is necessary to look at the history of quasi-governmental institutions that were established after the revolution.

Mehrdad Wahhabi, a professor of economics at Sorbonne Paris North University considers one of the primary reasons behind the establishment of quasi-governmental institutions and the IRGC to be Khomeini’s distrust of Mohammad Reza Shah’s army and ministries at the time.

Wahhabi pointed out that after the 1979 revolution, the army was in turmoil and the government, bureaucracy, and market were in crisis. He said:

At the time, Khomeini was not only suspicious of the shah’s army and ministries, but also of the Shiite clergy. So, he had to establish new institutions that would take over the realms of power and property.

Zamaneh researchers asked Mohsen Kadivar, a religious thinker and professor at Duke University, to comment on the idea of Khomeini’s suspicions of the Shiite clergy. He denied ever having heard such comments and added:
“Early after the establishment of the Islamic Republic, Khomeini believed that the clergy should not hold executive positions such as presidency and head of ministries. He feared that the Islamic Republic would come to be known as operating under mullah rule. The experience of the first prime minister and president, however, led him to the conclusion that the clergy were more reliable. He was no longer opposed to the clergy presiding over the role of the leader and the heads of the forces.”

In fact, by establishing quasi-governmental institutions, Ruhollah Khomeini was institutionalizing the Shiite clergy’s newfound power. On February 28, 1979, he issued a decree called The Confiscation of the Property of the Pahlavi Dynasty and Their Affiliates. Part of this decree reads:
“With the present decree, the Islamic Revolutionary Council is charged with seizing from the Pahlavi dynasty and all of its branches, agents, and members, all of the properties (including real estate and movable properties) that they have embezzled from the treasury of our Muslim nation during their illegitimate rule so that it can be allocated to the poor as well as the less fortunate among the workers. Their cash reserves are to be transferred to a bank account in the name of the Revolutionary Council or in my own name, and the real estate, including lands and tenements, will be duly registered and allocated to providing housing and job opportunities for the poor. I order all Islamic Revolution Committees throughout the country to deposit what they have gained from such spoils into a registered bank account.”

Later that year, on December 25, The Protection and Development of Iran’s Industries Act was passed in two articles. Under this act, the government gained ownership of the large industries and mines whose owners had amassed vast fortunes through illegal ties to the previous regime, illegal use of facilities, and squandering of public rights (some of whom had already fled the country). Initially, 51 people were targeted by Article B of this act; soon after, this group became known as “The 53” when two names were added to the list.

On the topic of the establishment of the quasi-governmental institutions, Wahhabi continued:

In his first fatwa, Khomeini confiscated the properties of 53 industry and bank owners and placed them under the direct supervision of an institution called the Mostazafan Foundation. He did not pass the properties to the government or the Shiite clergy, and they were not considered part of Waqf (mortmain properties). He called these properties “booty.” In my opinion, the turmoil in the relationship between power and ownership resulted in their merger and the establishment of Mostazafan Foundation.

The IRGC and Mostazafan Foundation were not the only parallel quasi-governmental institutions that Khomeini established after the revolution: jihad sazandegi, Islamic Bank, and Qarz al-Hasna were other such institutions. The IRGC was initially established as a military organization but gradually became a quasi-governmental, economic institution. According to Wahhabi, the “lack of boundaries between property rights and sovereignty” from the beginning led to the creation of such quasi-governmental institutions in Iran.

In Protestant Ethics and the Spirit of Capitalism, German sociologist Max Weber coined the term “booty capitalism” as a form of political capitalism in which a ruler consolidates his political power by looting and confiscating the property of members of the former government. “Booty capitalism” could be an appropriate title for the way in which the theocratic regime merged sovereignty with ownership — that is, by looting and confiscating properties and handing them over to the newly established quasi-governmental institutions of the Islamic Republic.

The IRGC was established in the aftermath of the 1979 revolution due to the lack of a strong military force. The first responsibility of this military institution was to confront the “counter-revolution” and to suppress all opposition to the Islamic Republic. In 1979, the IRGC proved its ability to Khomeini in its campaign against Kurdistan and repression of the Kurds, as well as its massacre of the leaders of the Turkmen Sahra. After that, the IRGC solidified its position as the country’s foremost military force in the eight-year Iran-Iraq War.

After the Iran-Iraq War ended, Iran was facing the issue posed by a large number of soldiers returning from the war, some of whom were disabled or unemployed. The government felt an obligation towards this group as well as the war-torn masses. On this topic, Wahhabi commented:

“During the eight-year war, a war economy formed in which the government, and not the market, played a major role. After the war, from 1989 onwards, the country faced the problem of mass unemployment of those who were mobilized for the war, many of whom were youth. In long wars, the need for a welfare state arises; in Iran, various insurances and independent institutions for Islamic welfare resulted. Such a state can be called the “State of the Martyrs” or the “State of the Welfare of the Martyrs.”

The same conditions and logic gave rise to KAA after the war, as it was a supra-governmental institution whose services were partly non-profit. The IRGC and KAA entered Iran’s economic scene after the war and gradually overtook the lucrative sectors, such as oil and petrochemicals. In addition to rent-seeking and systematic corruption in Iranian political and economic sectors, several factors contributed to the IRGC and KAA’s wealth-seeking process: Article 147 of the constitution, which allowed the IRGC to insert itself into the economic scene in the first place; the interpretation of Article 44; and the beginning of a pseudo-privatization process through which governmental institutions were taken over by quasi-governmental institutions; international sanctions; and finally, a multi-factor construction system, which this article will address below.

Akbar Hashemi Rafsanjani with senior IRGC commanders (Mohsen Rezaei, Rahim Safavi and Gholam Ali Rashid)

The IRGC entered into the economy during Rafsanjani’s presidency

According to Article 147 of the Constitution of the Islamic Republic, “In times of peace, the government, in complete respect for the standards of Islamic justice, must utilize military personnel and technical equipment for relief operations, educational and productive endeavors, and jihad sazandegi (reconstruction campaigns), to the degree that the military’s combat-readiness is not impaired.”

When the Iran-Iraq War ended, and the troops returned from the war to face unemployment in Iran, Akbar Hashemi Rafsanjani was president. Hojjat-ul-Islam Ali Saeedi, the IRGC representative of the Supreme Leader, told Mehr News Agency on February 4, 2011: “After the war, there was an acute need for the reconstruction of country’s infrastructure. So, the head of the government (Ayatollah Hashemi Rafsanjani) asked the Supreme Leader to allow a portion of the IRGC’s surplus in human and technical resources to assist the government. The Supreme Leader granted this request and the IRGC entered the economic arena, or more specifically, the construction sector.”

At that time, in accordance with Article 147 of the constitution, the troops were given permission to enter the economic sphere to generate income, and maintain and repair their military vehicles in order to increase the country’s capacity for reconstruction. Article 147 does not allow the IRGC to establish its own economic institutions, but it does enable it to directly assist the government. Therefore, this article does not infer that the IRGC should own economic enterprises. However, that is exactly what happened.

As the structural economic adjustment policies were on the agenda in 1989, the IRGC entered the economic sphere by establishing the KAA. Over the past three decades, whenever the process of the privatization of state institutions has ramped up, there has been a simultaneous expansion of the economic activities of the IRGC, its affiliated companies, and its extra-governmental foundations.

By the end of the Iran-Iraq War, Iran’s official reserves were depleted and the government had to turn to the International Monetary Fund (IMF) and the World Bank for loans to implement its political will. The IMF designed conditional loans, subject to implementation of structural adjustment programs, and so structural economic adjustment policies were initiated in that period. Reducing subsidies, raising taxes, downsizing government, and privatizing companies were all part of these economic adjustment policies.

Akbar Hashemi Rafsanjani and Mohsen Rezaei

Structural adjustment programs initiated during that period had devastating effects not only on Iran’s economy, but also on the lives of the lower classes as well as natural resources. In his book Iran’s Economy in the Period of Structural Adjustment, Farshad Momeni, an economist and opponent of the economic adjustment programs, explicitly criticizes the programs implemented in the first development plan. According to Momeni, following the IMF’s recommendations without regard for social and cultural realities exacerbated Iran’s economic problems. He attributes many of today’s problems to these post-war economic policies.

Mehrdad Wahhabi classifies 1988–2005 as the first period of the IRGC’s activities. During this time, the IRGC engaged in entrepreneurship, employed those who had returned from the war, and provided services to the families of fallen soldiers. In this way, the IRGC secured itself a foothold in rebuilding the war-torn economy. It is in this period that the IRGC also began road and dam projects, reconstruction of war-torn areas, and the construction of railways and subways.

KAA’s activities were not limited to Iran. Commander Mohammad Reza Yazdi, the IRGC’s deputy for legal and parliamentary affairs, told Khabar Online in 2011: “The KAA would undertake contracts within its capabilities in other countries.” The military official, however, did not specify these countries.

KAA has always enjoyed the Supreme Leader’s approval and thus has managed to win large project contracts. It has done so by obtaining special privileges in most governments, including those of Mahmoud Ahmadinejad and Hassan Rouhani.

By the end of 2004, KAA had 55,000 employees, including 40,000 military personnel and 15,000 paramilitary forces (the Basijis), and an official revenue of $12 billion. After 2005, the KAA re-aligned its mission and KAA’s power and wealth increased.

+Read the full investigation here

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