The scene is a board meeting of Bank Sepah, Iran's second-largest financial institution, in Tehran. The directors are waiting for the sardar (literally "head-owner") to arrive. But the sardar is in a changing room, shedding his uniform for a civilian suit. The man in question is Gen. Mohammad Ali Jafari, the new commander-in-chief of the Islamic Revolutionary Guard Corps (IRGC), which owns and controls the bank.
Most Americans already know more about the IRGC than they'd like to. In September the Senate voted overwhelmingly in favor of a nonbinding resolution urging President Bush to label the IRGC a terrorist group. He did so a month later and has since implemented harsh new sanctions targeting the business interests of the IRGC. As Treasury Secretary Henry Paulson told the press recently, "It is increasingly likely that if you are doing business with Iran you are doing business with the IRGC."
Still, there is much about this organization that is misunderstood. The IRGC is a unique beast. It is an army answerable to no one but the "Supreme Leader" of the Islamic Revolution, Ayatollah Ali Khamenei. It is also a business conglomerate that controls over 500 companies active in a wide range of industries -- from nuclear power to banking, life insurance to holiday resorts and shopping centers. By most estimates, the IRGC is Iran's third-largest corporation -- after the National Iranian Oil Company and the Imam Reza Endowment in the "holy" city of Mashhad, northeast of Tehran.
The Islamic Republic established by the Ayatollah Khomeini after the ouster of the Shah in 1979, is often labeled a "mullahrchy" -- a theocracy dominated by the Shiite clergy. The truth, however, is that a majority of Shiite clerics never converted to Khomeinism and did not endorse the Islamic Republic. In the past few years, especially since the election of President Ahmadinejad in 2005, those mullahs who converted to Khomeinism have lost some of their power and privileges. Today, the IRGC is the dominant force within the ruling establishment in Tehran. It is not a monolith, and to label all of it a "terrorist" organization as the Bush administration has done, may make it difficult to strike deals with parts of it when, and if, the opportunity arises.
A thorough analysis of the IRGC must take into account a number of facts. First, the IRGC is not a revolutionary army in the sense that the ALN was in Algeria or the Vietcong in Vietnam. Those were born during revolutionary wars in which they became key players.
The IRGC was created after the Khomeinist revolution had succeeded. This fact is of crucial importance. Those who joined the IRGC came from all sorts of backgrounds. The majority were opportunists. By joining the IRGC, they could not only obtain revolutionary credentials, often on fictitious grounds, but would also secure well-paying jobs, at a time that economic collapse made jobs rare.
Joining the IRGC enabled many who had cooperated with the ancien regime to rewrite their CVs and obtain "revolutionary virginity." Membership of the IRGC ensured access to rare goods and services, from color TVs to more decent housing. As the years went by, IRGC membership provided a fast track to social, political and economic success. Today, half of President Ahmadinejad's cabinet ministers are members of the IRGC, as is the president himself. IRGC members hold nearly a third of seats in the Islamic Consultative Assembly (Majlis), the ersatz parliament created in 1979. Twenty of Iran's 30 provinces have governors from the IRGC. IRGC members have also started capturing key posts in the diplomatic service. Today, for the first time, the Islamic Republic's ambassadors in such important places as the United Nations in New York and embassies in a dozen Western capitals are members of the IRGC.
But it is as an economic power that the IRGC weighs so heavily on Iranian politics. In 2004, a Tehran University study estimated the annual turnover of IRGC businesses at $12 billion with total net profits of $1.9 billion. The privatization package prepared by President Ahmadinejad is likely to increase the IRGC's economic clout. Almost all of the public-sector companies marked for privatization -- at a total value of $18 billion -- are likely to end up in the hands of the IRGC and its individual commanders.
The crown jewel of the IRGC's business empire is the Islamic Republic's nuclear program, which has cost the nation over $10 billion so far. This is part of a broader scheme of arms purchases and manufacture, which in total accounts for almost 11% of the annual national budget.
The IRGC also controls the lucrative business of "exporting the revolution" estimated to be worth $1.2 billion a year. It finances branches of the Hezbollah movement in at least 20 countries, including some in Europe, and provides money, arms and training for radical groups with leftist backgrounds. In recent years, it has emerged as a major backer of the armed wing of the Palestinian Hamas and both Shiite and Sunni armed groups in Iraq, Afghanistan and Pakistan.
The vehicle through which the IRGC "exports" revolution is a special unit known as The Quds (Jerusalem) Force. This consists of 15,000 highly trained men and women specializing in "martyrdom operations," a code word for guerrilla war, armed insurgency and terrorism. The Islamic Republic has invested some $20 billion in Lebanon since 1983. In most cases, the Lebanese branch of the Hezbollah is nominally in control. However, a closer examination reveals that in most cases the Lebanese companies are fronts for Iranian concerns controlled by the IRGC.
The IRGC is divided into five commands, each of which has a direct line to the Ayatollah Khamenei. To minimize the risk of coup d'etat, IRGC's senior officers are not allowed to engage in "sustained communication" with one another on "sensitive subjects." Of the five commands in question, two could be regarded as "terrorist" according to the U.S. State Department's definition that, needless to say, is rejected by the Islamic Republic.
One command is in charge of the already mentioned Quds Corps, which is waging indirect war against U.S. and allied forces in Iraq and Afghanistan. Apart from Hezbollah and Hamas, it also runs a number of radical groups across the globe.
The second command ensures internal repression. It operates through several auxiliary forces, including the notorious Karbala, Ashura and Al Zahra (an all female unit) brigades, which are charged with crushing popular revolt. Many Iranians see these as instruments of terror.
As a parallel to the regular army, the IRGC has its ground forces, navy and air force. It also controls the so-called Basij Mustadafin (mobilization of the dispossessed), a fanatical, semi-voluntary force of 90,000 full-time fighters that could be built up to 11 million according to its commander Brig. Gen. Mohammad Hejazi. The IRGC's own strength stands at 125,000 men. Its officers' corps, including those in retirement, numbers around 55,000 and is as divided on domestic and foreign policies as the rest of society.
Some IRGC former commanders who did not share the Islamic Republic's goals have already defected to the U.S. Hundreds of others have gone into low-profile exile, mostly as businessmen in the United