Iran's Ideological Army Takes on Energy Contracts

Siavosh Ghazi, Yahoo News:

Iran's powerful ideological army, the Revolutionary Guards, is set to enter the oil and gas sectors in a move that would increase their stake in the Islamic republic's economy. "The Revolutionary Guards have obtained the contract to develop phases 15 and 16 of South Pars," a huge offshore gas field divided between Iran and Qatar, General Abdolreza Abed said in an interview with the Shargh newspaper Tuesday.

Abed, who heads up the Guards' economic operations, said the contract was worth 2.09 billion dollars.

The deal would be a major boost to the operations of the force, initially created after the 1979 Islamic revolution to protect the regime from foreign and domestic threats. READ MORE

It comes on the back of a string of advances into Iran's economy: several weeks ago the Pasdaran -- as the Guards are called in Farsi -- were awarded a 1.3-billion-dollar contract to construct a 900-kilometre (570-mile) pipeline between South Pars and southeastern Iran.

In both South Pars cases, the projects were awarded after the usual tendering process was abandoned.

For the South Pars development deal, the Revolutionary Guards -- under the name of their economic nerve centre of Khatam al-Anbia -- entered a partnership with the Norwegian firm Aker Kvaerner, although this firm subsequently pulled out.

The oil ministry then moved to open another tender process, but this was cut short.

Last week, press reports said the Revolutionary Guards have also been awarded a two-billion-dollar contract to develop Tehran's metro system.

For many observers, the wave of lucrative deals going to the Guards is connected to last year's shock presidential election win by hardliner Mahmoud Ahmadinejad -- a veteran of the force -- who promised to favour domestic entrepreneurs.

In his former job as Tehran's mayor, Ahmadinejad had already awarded municipal contracts to the Guards, who began to move into business during the reconstruction phase after the 1980-88 war with Iraq.

Completed contracts include the construction of a new 120-kilometre highway between Tehran and Saveh to the south, as well as dams.

The Pasdaran have also been steadily encroaching into national politics, and during disputed parliament elections in 2004 some 40 Revolutionary Guards veterans managed to win seats.

General Abed told the centrist Shargh newspaper that there was nothing wrong with the Revolutionary Guards -- now one of Iran's most powerful institutions -- branching out.

"Since when do the Pasdaran have to stick to building roads, dams, small tunnels or short pipelines?" he argued. "If we take on big projects we can put small entrepreneurs to work."

The general said the Revolutionary Guards' economic reach currently consists of 247 projects worth 21 trillion rials (2.28 billion dollars), while 1,220 projects worth between 2.7 and 3.2 billion dollars have already been finished.

But with foreign investment in the oil sector limited, the Guards appear ready to shift into top gear by filling the gap -- with General Abed also revealing his force's involvement in a new petrochemical port.

"Thirty percent of the Pasdaran's engineering capacity is dedicated to economic activities, and 70 percent to military," he said.