Iran Armed Forces to Sell `Irrelevant' Businesses, Official Says

(Bloomberg) -- Iran’s powerful Revolutionary Guards and other branches of the military have been instructed to sell off business holdings and commercial assets “irrelevant” to their main function, according to the defense minister.

Brigadier-General Amir Hatami said Supreme Leader Ayatollah Ali Khamenei had told all of Iran’s armed forces to either divest economic holdings on the country’s capital market or sell them to the private sector.

“They will pursue this matter until these forces withdraw from irrelevant economic activities, ” Hatami was quoted as saying in an interview late Saturday to Iran newspaper.

Defense forces, especially the Guards, have extensive economic holdings in Iran’s construction, energy, banking, insurance and telecommunications industries. The Guards, which have been subject to U.S. sanctions for decades, control one of Iran’s largest construction companies, the Khatam al Anbia Construction Headquarters, which employs tens of thousands of people and has been contracted to build some of the country’s biggest oil and gas projects for the government.

President Hassan Rouhani, who under Iran’s system of multiple power centers doesn’t control most of the security services, has been attempting to scale back the economic footprint of the Guards since he took office in 2013. While his efforts have so far achieved little, the purported backing of the country’s ultimate authority, Khamenei, could add momentum, said Foad Izadi, assistant professor at the Faculty of World Studies at Tehran University.

‘Matter of Time’

“We can take Hatami’s word for it that the leader has asked the Joint Chiefs of Staff to oversee this transformation,” he said. “So it’s just going to be a matter of time for this to happen.”

This latest call to scale back the armed forces’ economic reach comes within weeks of
protests that gripped dozens of towns of cities erupted over the state’s handling of the economy. The demonstrations, which later expanded to target both Iran’s political and clerical establishment, killed at least 25 people and led to the arrest of almost 4,000.

In their immediate aftermath, Rouhani emphasized the need for the government to confront “institutions that don’t pay tax,” a phrase he often uses to refer to Iran’s religious foundations, which receive millions of dollars in state funding and also own large amounts of land and real estate.

Hatami signaled that Khatam al Anbia, the construction giant, might escape attention. The Guards have a constitutional duty to help the government develop projects, he said, without referring to the company by name.

“These tasks are of another nature,” Hatami said. “Depending on the requirements of the government, this work can continue.”

In omitting Khatam al Anbia, authorities are underscoring that the overhaul isn’t a response to U.S. sanctions on the Guards, according to Izadi.

Hatami “is saying we are not doing this because of U.S. pressure, and that’s why the main component of the IRGC that is engaged in economic activities is excluded,” he said.

Data suggest Iran’s economy is gradually recovering since the 2015 nuclear deal lifted a series of crippling sanctions. The improvement, however, has been slowed by an increasingly hostile U.S. and the reluctance of many European companies to invest while the Trump administration is adding sanctions.

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