How rich are Iran’s ayatollahs really? After the harsh exchange of accusations between Trump and Rouhani, US Secretary of State Mike Pompeo intervened to claim that the Supreme Leader, Ali Khamenei, had a secret hedge fund worth $95 billion. In truth, Washington is pretending not to be aware that the existence of this capital is a well-known fact. This is simply the total value of the assets managed by Setad, one of the Bonyads (in Iranian, “Foundations”), or tax-exempt consortiums, which have administered much of the Iranian economy after the 1979 Revolution.
But how does the “ayatollah economy” actually work—especially as in recent months, in addition to the fall of the rial against the dollar, it has been confronted with more and more popular protests, including by merchants at the Great Bazaar in Tehran, which had traditionally supported the religious rulers. Khomeini’s Setad, by its full name “Setad Ejraiye Farmane Emam,” or “The Execution of Imam Khomeini’s Order,” was formed in 1989 by Imam Khomeini with the task of managing the property seized during the chaotic years after the revolution, with the aim to help the poor and the veterans of the eight-year war with Iraq (which left one million dead and disabled).
During the time of the Shah, 100 families with connections to the Pahlevi court controlled 80 percent of the economy; afterwards, all of this passed into the hands of the new ruling elite. The Setad was supposed to be in operation for only a couple of years, but over time it has become a real estate giant that has bought stakes in dozens of companies in almost all sectors: finance, petroleum, telecommunications, and everything ranging from manufacturing birth control pills to farming ostriches.
Between its real estate portfolio (worth $52 billion) and corporate shares ($43 billion), during certain periods of low oil prices, the Setad was worth more than the country’s oil exports. The Bonyads, foundations whose profits are tax-exempt, are the heart of the Iranian economy. They are responsible for around 50 percent of the GDP, and they have taken up the market space available to private entrepreneurs, often favoring those who had connections to the faction currently in power—something which would periodically change with the prevailing political winds.
Likewise, the Pasdaran, Iran’s Revolutionary Guard, which are still engaged in fighting in Iraq and Syria and supporting Hezbollah in Lebanon, have their own significant share of economic power to hold onto and develop, just like the ayatollahs. It is with them that major business is done in Iran, as ministers and those in political power limit themselves to awarding procurements and contracts. During the eight years of Mahmoud Ahmadinejad’s presidency, the Revolutionary Guard obtained the right to the exploitation of a number of gas fields in South Pars, the largest reserve in the world, and they have overseen industrial and commercial activities worth an estimated $120 billion through their own foundations, as the economist Said Leylaz has pointed out. Among the companies they control is also the state telecom operator (worth $8 billion), and they have won a number of public works projects such as the Tehran metro through the Khatam Al Anbia construction company.
The economy of the ayatollahs and the Pasdaran, taking the form of these foundations, is the backbone of Iranian power, both a patronage network and a welfare state, in which the Bonyads and the foundations of the cooperatives of the Basiji (paramilitary forces) have as their goal to provide charity and welfare. But at the same time they do not renounce their profits and involve, more or less directly, millions of Iranians. They are thus essential to the manufacture of consent.
The fundamental question remains the following: is it possible to reform such a post-revolutionary economy—and, more, an Islamic one? It is a difficult task, especially now. Due to the US sanctions, Europe will have to decide whether to remain a player in Iran or bow to US pressure and offer the country and its oil on a silver platter to China and India, Tehran’s two largest customers (Italy being third)—not to mention ensuring the dominance of the military wing of the Pasdaran. There are around 80,000 mosques, temples and religious institutions in Iran which are administering lands and businesses, just like the monasteries in the European Middle Ages, when the Church was competing with the secular powers in every domain.
At Mashad, the Reza Foundation, built around the famous shrine of the Eighth Imam, manages 7 percent of Iran’s GDP and controls the economy of Khorassan. The “Foundation of the Oppressed” (now the Mostazafan Foundation of Islamic Revolution), for which the current head of Setad used to work, has an estimated turnover of over $12 billion per year. The “Foundation of Martyrs and Veterans” (Bonyad Shahid va Omur-e Janbazan) controls over 100 companies.
On the Tehran Stock Exchange, 60 percent of all capitalization is made up of companies that revolve around the “ayatollah economy.” Reforming this system is a challenge at which President Rouhani—a pragmatist who finds himself in the crosshairs of the fundamentalists—has so far been unsuccessful.
Striking at the heart of this system, using a mix of economic and destabilizing actions, is the goal of the US, Israel and Saudi Arabia, each using the weapons it has on hand: sanctions, finance, the production of oil for export, military operations. It is not only an economic issue, but rather one of security throughout the Middle East and Europe: it won’t be just Tehran to face the consequences—as per Trump’s threat—but us as well. As usual.