Don’t let the Revolutionary Guards join Iran’s gold rush

Iran’s Islamic Revolutionary Guard Corps (IRGC) is the regime’s top exporter of terrorism and chief enforcer of repression at home. Regrettably, it is the IRGC that will benefit most from the Joint Comprehensive Plan of Action (JCPOA) nuclear agreement that world powers signed with Tehran in July.

{mosads}The deal’s success ultimately rests on its ability to engineer moderate change among Tehran’s decision-makers before key provisions expire in a decade. The economic and political benefits set to accrue to the IRGC leave little reason for optimism to believe that will occur.

The JCPOA dismantles most of the international nuclear sanctions against the Islamic republic, creating a giant stimulus package for Iran’s economy. Although the U.S. retains the legal edifice of sanctions against the IRGC, it is insufficient to exclude it from the post-deal windfall.

First, on Implementation Day, just months from now, the JCPOA will lift or suspends sanctions against entire sectors of the Iranian economy. The IRGC is active in each, and its companies will get the lion’s share of new business opportunities in them. Second, the lifting of sectoral bans will provide the IRGC easier access to dual-use technology in the aerospace, defense and nuclear sectors. Third, the JCPOA will delist companies that assisted the IRGC’s nuclear and missile procurement efforts, as well as its support for Hamas, Hezbollah and the Assad regime in Syria. A change of behavior was not a condition for their delisting. Fourth, most IRGC companies were never identified as such by EU or U.S. authorities. The U.S. Treasury has listed only 19 IRGC individuals, 23 companies, four military entities and two academic institutions. The European Union has listed just 25 companies.

Treasury’s list was last updated back in November 2012. Since then, it has made no new IRGC designations — even against individual managers — despite personnel changes that have occurred over the years. Rostam Qasemi, for example, was sanctioned in 2010 while he was commander of the IRGC construction giant Khatam Al-Anbiya. In 2011, however, he became minister of petroleum. In March 2013, Brigadier General Ebadollah Abdollahi was appointed to replace him as commander of Khatam Al-Anbiya. Since taking on this position, he has not been listed.

Moreover, as documented in my recent congressional testimony, the IRGC controls or owns hundreds of companies that should have been targeted for sanctions. The global business community looks to the U.S. Treasury in assessing risk, and firms seeking to re-enter Iran will assume that what is not explicitly forbidden is allowed.

One of these companies is Iran Aluminum Company (or IRALCO), Iran’s largest aluminum producer. The EU sanctioned the company in 2012 over links to Tehran’s nuclear procurement, including a contract to supply aluminum to the U.S.-, U.N.-, and EU-sanctioned Iran Centrifuge Technology Company. The EU will delist IRALCO on Implementation Day along with all other entities under nuclear-related sanctions. Washington, inexplicably, has never designated it, even though it is partially owned by Mehr Eghtesad Iranian Investment Company, a U.S.-sanctioned IRGC investment firm.

To redress such shortcomings, the administration should dramatically increase U.S. designations against the IRGC because of its unequivocal role in terrorism and an array of illicit activities. If Congress and the Treasury were to designate hundreds of IRGC firms before Implementation Day, it would send a strong message to the international business community as it contemplates Iranian contracts.

For its part, the IRGC has engaged in a pattern of obfuscation to hide its control of many corporations. Even with merely a minority share, the Guard often controls such companies through placing officials and sympathizers on their board of directors. Congress should therefore require Treasury to lower the threshold for designations, and expand criteria for what it considers a controlling stake to include a majority of Guard-linked board members or 20-percent ownership.

Congress should also instruct the State Department to designate the IRGC as a “Foreign Terrorist Organization.” Such a designation would demonstrate that the Guard cannot be decoupled from the U.S.-designated Quds Force, the Guards’ extraterritorial arm that has shed the blood of hundreds of American troops in Iraq and continues to prop up the Assad regime in Syria. They are one and the same.

Finally, Congress can leverage future trade agreements with Europe to limit the IRGC’s operations on the continent. Washington should require the Transatlantic Trade and Investment Partnership — a proposed free-trade zone with the European Union — to stipulate that any European company contracting with Iran must certify that none of its business partners are associated with the IRGC, and that the EU compile an annual report on European companies investing in the country. At a minimum, Congress should encourage international corporations to demand an exclusion clause to halt commercial activities with all suspected or designated IRGC entities.

A more aggressive approach to countering the IRGC is crucial to compensate for the nuclear agreement’s shortcomings. Signing the nuclear deal is by no means the end of countering the Guard’s ambitions — in many ways, it is just the beginning.

This piece has been slightly revised.

Ottolenghi is a senior fellow at the Foundation for Defense of Democracies and its Center on Sanctions and Illicit Finance.