Anchored Interests: The IRGC and Iran's Ports

Since most nuclear-related sanctions on Iran were lifted in January 2016, there has been renewed international interest in reengaging with the long-isolated Iranian market. Iranian ports, through which Iran’s major oil exports flow and into which international companies are seeking to import their products, have become a focus of this renewed commercial interest. 

Significant barriers to trade, however, remain in place. A primary concern in this regard is the Islamic Revolutionary Guard Corps, a security organisation that is constitutionally charged with protecting the revolutionary Iranian government and the Supreme Leader from internal and external threats. In addition to being Iran’s most powerful security institution, the IRGC controls and wields considerable influence over the Iranian economy through its management of several charitable foundations - known as Bonyads - in Iran, which have major asset holdings in all sectors of the Iranian economy. This presents a major concern to international companies seeking to enter the Iranian market, given that the IRGC and a number of its commercial interests remain subject to international sanctions.

The IRGC holds extensive commercial interests in Iranian ports and shipping. In some cases, these commercial interests are relatively easy to track. For example, both the European Union and the United States consider Tidewater Middle East Company, a prominent Iranian shipping and port operations company, to be under ultimate control of the IRGC, and have sanctioned it as a result. According to the Ports and Marine Organization of Iran, a government body with oversight over Iranian port facilities, Tidewater currently operates a terminal at the port of Amirabad. Through its subsidiaries, Tidewater may also have operations in eight other facilities, including Bandar Abbas, Iran’s largest cargo port.

In other cases, the IRGC’s control over a specific commercial interest is more opaque. For example, Sina Port and Marine Services Company, which is not currently subject to sanctions, was established by the Mostazafan Foundation, an Iranian charitable organisation widely perceived to be under the ultimate control of the IRGC. 

Other non-sanctioned Iranian shipping companies have also been subject to allegations that they are tied to the IRGC. Recently, for example, the National Council of Resistance of Iran, an Iranian opposition movement, alleged that Hafez Darya Arya Shipping Company was transporting containers of arms from Iran to Omani ports, which were then passed on via land smuggling routes to Houthi rebels fighting in Yemen. Although the allegations align closely with the IRGC’s capabilities and intent, the claims must be examined critically given the fact they originated from a group vocally opposed to the current regime. 

Separate to its commercial interests, the IRGC is ultimately responsible for defending the rule of the Supreme Leader and the longevity of the Islamic Republic of Iran. As such, the location of certain ports in areas of military, political and economic strategic importance increases the likelihood that the IRGC exercises some control over them. From a military and naval standpoint, the IRGC is likely to have operations in Bandar-e Jask, a port situated close to the Strait of Hormuz, a strategically important trade route through which approximately 30% of all maritime-traded petroleum passes. Iranian admirals have stated publicly that naval forces stationed at the port would be used to close the Strait of Hormuz in the event of a hostile action. For economic reasons, the IRGC is also likely to have operations at Kharg Island, through which the majority of Iran’s crude oil exports flow. Finally, for both political and military reasons, the ports on the island of Abu Musa are likely to be under IRGC control, given that the island is the subject of an ongoing territorial dispute between Iran and the UAE. 

The IRGC has clear strategic, economic and political motives for its involvement in Iran’s ports, as well as other key economic sectors. The fact that much of this involvement is concealed underlines the need for international companies to conduct thorough due diligence on counter-parties before executing any projects linked to Iran’s ports, or any other industry. Even if this does not reveal any clear IRGC involvement, any risk assessments should also involve a clear understanding of the relative economic, strategic and political importance of the industry, sector or asset in question.