By Saeed Ghasseminejad
December 3, 2020
The U.S. Department of the Treasury last week sanctioned the Mustazafan Foundation, one of three critical holdings in the business empire of Iran’s supreme leader, Ayatollah Ali Khamenei. The Trump administration, which has vowed to continue its maximum pressure campaign against Iran until the last days of its term, can build on this designation by sanctioning the following entities.
Razavi Economic Organization
The Razavi Economic Organization is the business arm of Astan Quds Razavi, another one of the three critical holdings in Khamenei’s business empire. (Treasury designated the third holding, known as the Execution of Imam Khomeini’s Order, or EIKO, in 2018.) In 2019, Khamenei appointed his longtime aid Ahmad Marvi as Astan Quds Razavi’s custodian.
One of the wealthiest entities in Iran, Astan Quds Razavi has strict control over the economies of three eastern provinces of the country. In 2016, the value of its real estate portfolio was an estimated $20 billion, according to BBC Persian. Astan Quds Razavi owns more than 3,000 square miles of land, including 43 percent of Mashhad, the country’s second-largest city.
By designating the Economic Razavi Organization, Washington will increase the pressure on Khamenei’s pocketbook.
Saipa and Iran Khodro
Saipa and Iran Khodro are Iran’s two major car manufacturers, producing more than 90 percent of all vehicles. Both provide material support to the country’s defense industry, including the Islamic Revolutionary Guard Corps (IRGC) and the Ministry of Defense and Armed Forces Logistics (MODAFL).
Washington should designate both companies for the material support they provide to entities involved in terrorism and proliferation of weapons of mass destruction. Both companies rely on foreign technology and parts to continue and expand their production. Designating Saipa and Iran Khodro would thus increase the pressure on this significant sector of Iran’s economy to an unprecedented level.
The Tehran Stock Exchange and Its Sister Companies
The Tehran Stock Exchange (TSE) is an important element of Iran’s economy and an instrument of the regime’s “privatization” policy, under which Tehran has turned over state-controlled companies to IRGC and military control. Over the last few years, Iran has begun to move away from bank-based financing to market-based financing, making the TSE the hub for raising capital. Over the last two years, with few available hedges against inflation, the TSE has absorbed vast amounts of wandering liquidity.
The TSE hosts several companies under U.S. terrorism sanctions. It also supports firms controlled by the IRGC and MODAFL, both under U.S. sanctions. The Trump administration can thus designate the TSE for providing material support to terrorist organizations and designated entities.
The United States can also sanction the Securities and Exchange Organization (SEO), the TSE’s parent company. The SEO oversees Iran’s Energy Exchange and Commodities Exchange. The Energy Exchange, which sells oil at competitive prices in the current sanctions environment, helps Iran bypass oil sanctions by keeping the identities of the buyers secret. The Commodities Exchange plays a similar role for other sanctioned industries, such as the petrochemical and metal sectors.
Iran’s Petrochemical Industry
Since November 2018, as part of its reimposition of sanctions on Iran lifted under the 2015 nuclear deal, Washington banned the purchase of petrochemical products from Iran. Since then, Washington has imposed sanctions on Iranian petrochemical companies and foreign entities involved in importing petrochemical products from Iran. The petrochemical sanctions affected Iran’s exports but have not been as successful as U.S. oil sanctions: It is very difficult to track shipments of petrochemical products, while tracking oil tankers is a doable task.
Washington should take three critical steps to increase the pressure on this industry. First, the Trump administration should explicitly designate all companies involved in this industry. Second, the United States should ban the exportation to Iran of technology, services, and goods used in the petrochemical industry. Third, America should ban any investment in Iran’s petrochemical industry.
Foundation for Defense of Democracies