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Rouhani moves to leverage unrest to loosen IRGC grip on economy

Feb 10, 2013
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In the aftermath of the recent protests in Iran, public announcements about a concerted effort to get the Islamic Revolutionary Guard Corps (IRGC) and the Iranian army (Artesh) to divest from the economy seem to signal that President Hassan Rouhani remains firmly committed to his agenda.

Indeed, unlike the past — when civil unrest was quickly assumed by default to weaken moderates as the security state stepped in — elite responses to the protests have this time acknowledged grievances. Believed to have initially been instigated by hard-line foes who sought to undermine him, Rouhani is now using the protests to leverage his efforts to restrict the influence of unaccountable centers of power.

The endeavor is not new; rather, it has been on Rouhani’s agenda since he first took office. To achieve this objective, the administration has avoided confrontation aimed at wholly emptying the pockets of its rivals. Instead, the president’s approach has been one of co-optation via the gradual opening of the books of his opponents, with the aim of one day demanding full accountability. His engagement with the IRGC is a case in point.

Broadly speaking, the administration’s effort to co-opt the IRGC can be divided into several phases. Initially, public debate on the highly contentious topic of the IRGC’s economic activities was brought to the fore. Rouhani then laid out a discursive framework in which he effectively ring-fenced the IRGC’s economic domain by publicly negotiating respective turfs. Major projects outside the realm of the capabilities of the private sector were to be awarded to the IRGC, putting them in competition with revolutionary foundations and conglomerates controlled by religious endowments instead of the private sector. The impact of this was quickly visible: Only months after Rouhani took office in August 2013, Ali Saeedi, the supreme leader’s representative to the IRGC, said the IRGC “will continue to reduce the number of its projects, as it has already started to do.”

With the added incentive of seeking to "immunize" the IRGC from internal decay stemming from corruption, while also "protecting" the Iranian economy from external sanctions targeting the IRGC, the supreme leader has personally authorized the latest phase of Rouhani’s co-optation of the military: namely, its renewed focus on its core duties.

On Nov. 28, precisely a month before the initial protests in Mashhad, Rouhani declared on state television: “One of our goals … is for economic enterprises to be transferred to the people. And I think that besides the government, others who are in the public and nongovernmental sector, or the armed forces, must also [engage in] divestment. In this respect, and under this government, I have also spoken with the supreme leader and he fully agrees that all of these [economic enterprises] be transferred to the people.

As part of this redirection of the military’s focus, there has been a quiet crackdown on the IRGC's business activities. In September, the Financial Times reported that “at least a dozen [IRGC] members and affiliated businessmen have been detained in recent months, while others are being forced to pay back wealth accrued through suspect business deals.” In this vein, a “regime insider and a government official” told the Financial Times that “in the past year, the [IRGC] … had to restructure some holding companies and transfer ownership of others back to the state.” Importantly, this was reportedly being overseen by Maj. Gen. Mohammad Bagheri, the chief of staff of the armed forces, “to show that the process is carried out by a bipartisan institution.”

Enter Defense Minister Amir Hatami’s Jan. 21 interview with the official Iran daily, which has been making waves. Speaking about the divestment of the IRGC and the army, he said, “Responsibility for this task has been assigned to the General Staff of the Armed Forces by … the supreme leader, and the General Staff is pursuing this matter with all armed forces until these forces will exit irrelevant economic activities.” Hatami added that the activities of the military in the economic realm will continue per the needs of the government.

Hatami's comments confirmed Rouhani’s disclosure that Supreme Leader Ayatollah Ali Khamenei fully supports the refocusing of the duties of the IRGC and the army. They also confirmed prior reports about Bagheri being in charge of the restructuring of the business operations of the military — and thus likely being the key arbiter of what constitutes a “relevant” enterprise. Furthermore, Hatami’s comments contained three other important pieces of information.

First, he acknowledged that “the degree of our success depends on market conditions and the possibility of divestment.” Business observer Esfandyar Batmanghelidj has rightly pointed out that Iran’s “equities markets are insufficiently capitalized” to facilitate the sales of state enterprises at “sufficiently high prices,” and that this particularly applies to “investors outside the circle of bonyads and other quasi-state holding companies.” Thus, it appears evident that simply finding buyers for the military’s assets is going to be a major task. Kevan Harris, assistant professor of sociology at UCLA, told Al-Monitor, “Remember that since 2014, it has been hard for the IPO [Iranian Privatization Organization] to sell off a good chunk of public companies because they were not attractive to private buyers. So who is there on the demand side? I do not know, since we don't know the companies yet.” Harris has previously noted that "out of $70 billion worth of assets of [state-owned enterprises] divested since 2006, only 13.5% of the shares had gone to the private sector.”

Second, when asked whether the Defense Ministry will seek the assistance of the IPO, which is tasked with finding buyers, Hatami said, “There is no need for the capabilities of the IPO, and this work can be done in the capital market.” In this vein, Harris told Al-Monitor, “The IPO will most likely be the organization which handles any divestment of companies, unless there is a new system developed.” The involvement of the IPO in the divestment drive would be a key win for Rouhani for one simple reason: The administration will get a much more thorough look at the books of these often opaque organizations ahead of divestment.

Third, Hatami directly referenced “protecting the value of the money of the pensioners” in an apparent nod to the political difficulties involved in privatizations. Looking ahead, one instructive experience is that of SHASTA, the investment arm of the Social Security Organization that provides pensions to almost 40% of the Iranian population. Harris noted that “pensioners would hardly accept a sell-off of SHASTA’s investment portfolio to the private sector without major guarantees of future entitlements by the state.” But, as Batmanghelidj pointed out, “the Rouhani administration has committed to reducing entitlements.” The impact of this dynamic should not be underestimated when considering the potential role of the army and IRGC retirees in the grander scheme of things.

While many questions remain about the military’s divestment from the Iranian economy — including whether it will actually be implemented, to what extent and when — one thing is clear: The Rouhani administration has quickly managed to return the question of the role and duties of the IRGC to the center of the public debate, within its grander discursive framework of tackling unaccountable powers. The game remains the same: to co-opt via greater oversight and accountability rather than to confront. As Harris told Al-Monitor, “They want to even the taxation field, and the first step is to make the economy ‘legible’ to the state, so to speak.”


https://www.al-monitor.com/pulse/or...c-economic-involvement-divestment-hatami.html
 
Feb 10, 2013
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My personal view on the recent events in Iran.

The recent demonstrations were spread across the country and were different from middle-class Tehrani or student protests. The lower class took part, even in holy cities Qom and Mashhad. In some places religious symbols were attacked and people were calling for the entire regime to be removed. This can be seen as calm before storm.

The regime now knows that their communist-islamist system is failing badly and is one of the factors that makes the Iranian nation angry, however they are in a really difficult situation. If they give up their failed communist-islamist economy (IRGC, Bonyads, State companies etc..) by privatisation and taxasion, it means they give up their political and social power.

Some Islamists are now saying people are angry because Rouhani is cutting the subsidies. While Rouhani was shoved down the throat of Iranian nation serving as the puppet of the islamic regime for the task of cleaning the mess which were the regimes own failures (economy, nuclear deal) and while Rouhani is saving khamenei and the whole regime by taking all the blame, still the same islamists are accusing him of the mess they themselves created.

What the islamists want is communist measures to keep the people, or at least their own supporters silent. These measures are handouts, subsidies, clerics and mosques who give meat to the people etc. However these fake measures will create a harsh blowback because it will only save them temporary in tempering the people, but meanwhile the silent destruction of the economy continues from inside, like cancer which is not detected and suddenly comes above and kills the patient within a short period. So worser chaos will follow when the money basket for communist and islamist measures and propaganda becomes empty.

People here can search after my posts before the Iranian "elections"/selections. Before (s)elections in Iran I was writing why this failed regime and their puppet candidates don't concentrate on these huge problems, meanwhile islamist mods and their supporters here banned me and censored my posts (for spam). Now the whole system is FORCED to take SOME measures (which I mentioned those comments) to PREVENT the collapse of the REGIME.

They have 3 options now:

1. Continue with the corrupt communist-islamist system by letting irgc and bonyads go on with their activities>>> leads to collapse of whole system.

2. Enforcing the communist-islamist economy by returning old habits such as subsidies and stopping reforms by selecting some Raeesi like figure in the next presidental Selections. This will prolong the life of the regime a little bit, but the backlash and chaos will be harsh and will lead to the collapse of the system.

3. Reforms of communist-islamist system by cutting economical power of the state and those related to the state (irgc, bonyads, state companies). This will weaken the socio-cultural power of Islamic republic and will lead to further reform/change demands which will go beyond the question of economy. The question of political and social changes will arise.

Which option will the regime chose? please discuss.
 
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somebozo

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Iranian regime sits on its people not by popular approval but by fascist imposition..and it derives legitimacy by funding and arming various overseas conflicts..
 

Serpentine

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Iranian regime sits on its people not by popular approval but by fascist imposition..and it derives legitimacy by funding and arming various overseas conflicts..
Actually Iranian system, with all its faults, is established by full popular vote, with overwhelming support of people. Unlike Saudi regime, which you support with full heart, who gets its whole legitimacy (if we can call that) from sperms of a tribal extremist from a century ago, who also named country after his clan.
This is the most ridiculous irony that we witness here.
 

somebozo

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Actually Iranian system, with all its faults, is established by full popular vote, with overwhelming support of people. Unlike Saudi regime, which you support with full heart, who gets its whole legitimacy (if we can call that) from sperms of a tribal extremist from a century ago, who also named country after his clan.
This is the most ridiculous irony that we witness here.
When ayotallah has all grand power concentrated in his hands, popular vote does not mean anything..the gulf countries have their monarch and iran has their grand ayatollahs...same coin..different face!
 

Serpentine

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When ayotallah has all grand power concentrated in his hands, popular vote does not mean anything..the gulf countries have their monarch and iran has their grand ayatollahs...same coin..different face!
I was talking about the popular vote based on which the Islamic Republic itself was established. There was also a referendum on current Iranian constitution. President, MPs, local councils, assembly of experts etc all get elected directly by people. No Iran is nothing like European democracies, but it's much better, more vibrant than politically backward countries like Saudi Arabia, Bahrain, UAE etc. Not just the system of governance, but an actual number of intellectuals, political scientists, thinkers, writers, journalists etc, and not just for the Islamic Republic, but actually in past century. Iran is nothing like quasi-nations on the southern shores of Persian Gulf.
 

Aramagedon

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Iran has democracy (even Islamic republic is chosen via democracy) while American/British/Zionist made PGCC regimes are fulll dictatorship.
 

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