Revolutionary Guards Runs Iran’s Black Market Like a Mafia

Saeed Ghasseminejad, an associate fellow at the Foundation for Defense of Democracies, has a report on the Iran Revolutionary Guard Corps’ (IRGC) control of Iran’s black market.  “The IRGC has expanded Iran’s underground economy and its own control over it, building a mafia cartel in the process. Consequently, it is not surprising that in its 2011 plot to assassinate the Saudi ambassador in Washington, the Quds Force, the IRGC’s external operations wing, sought the help of Mexican drug cartels,” he writes.

That the IRGC has a major role in Iran’s economy is not news.  The IRGC controls up to a third of Iran’s legal economy through a network of investments and front companies, as has been revealed by a series of papers by the American Enterprise Institute’s Ali Alfoneh.  In addition to funding its operations (and enriching its members), the network of front companies allowed Iran to pursue its nuclear agenda by masking the end user in purchases of dual-use technologies.  Congressman Steve Russell, a veteran of the US Army, has been pressing the American administration on this point because of the danger that the upcoming sanctions relief would enrich the IRGC.  The restoration of international trading access is also likely to fund the IRGC’s operations.

What Ghasseminejad’s report makes clear is that the IRGC has expanded its economic network well beyond shadowy front companies to include actual criminal enterprise.

The IRGC is Iran’s chief smuggler. In the early 2000s, Mehdi Karroubi, the former speaker of parliament, complained about unauthorized ports under IRGC control that are used to smuggle goods. Ahmadinejad, who is Karroubi’s arch politically enemy, also called the IRGC “our smuggler brothers.”

The IRGC controls Iran’s sea, air, and land borders. It controls ports, airports, and roads, and does not shy away from using them to smuggle goods and line its pockets.

The value of smuggled imported goods in Iran is between $20-30 billion, according to various sources such as Iran’s Custom Administration and the Parliament. Iran, which is one of the world’s major oil producers, also suffers from the illegal export of fuel, caused by the lower price of fuel in Iran compared with its neighbors. Iranian officials believe that at least 20 million liters of fuel are smuggled out of the country per year.

Over the last few years, the dollar value of oil smuggling in Iran estimated to be around $7 billion per year. The IRGC is also the main producer of arms in Iran — and, at the same time, Iran’s main smuggler, channeling weapons to Iranian proxy groups like Hezbollah.

Drug trafficking is another major area of the underground economy that the IRGC controls. Iran’s long border with Pakistan and Afghanistan is one of the the world’s busiest drug smuggling corridors.

Iran’s interior minister recently declared that the value of narcotic  drug sales in Iran is $3 billion per year, not including commission from transporting the drugs from Afghanistan to other transit points, like the Balkans. The US Department of the Treasury has placed Quds Force Commander Esmail Baghbani on the US sanctions list for his role in drug trafficking. The IRGC also has close ties with the drug cartels in the South and Central America through Hezbollah.

In addition to enabling terror in the Americas through ties to these robust criminal organizations, the IRGC’s participation in the narcotics economy represents a vicious irony.  At least two thousand political dissidents have been executed by the Iranian government, many under cover of alleged violations of Iran’s draconian drug laws.  At the same time that it is murdering thousands of its own citizens with the apology that they were involved in the sale or smuggling of narcotics, the Iranian government is itself the major operator of its country’s drug trade.

Ghasseminejad’s proposed solution is that we treat Mexican cartels and others who do business with the IRGC as supporters of a terrorist organization.  Under the Iran deal, that may end meaning major corporations and international banks as well.