Government Proposes To Boost IRGC Budget More Than Twofold

The public, formal part of Iran’s Revolutionary Guard budget will increase 2.4 times next year and Iran’s armed forces will receive crude oil to sell abroad.

In the budget draft bill presented to parliament on Sunday President Ebrahim Raisi’s government proposed a 930 trillion rial budget for Islamic Revolution Guard Corps, IRGC. Last year that number was 380 trillion rials and the year before that was 240 trillion.

The trajectory of ever higher budgets for the IRGC and other entities that directly support and defend the Islamic Republic against domestic opponents is vivid in the new draft. The fiscal year will start on March 21, 2022.

The state broadcaster, the main propaganda arm of the regime and a host of clerical entities will also receive double-digit boosts to the current budgets, while an $8-billion subsidy for imports of food and medicine will be discontinued.

In addition, the government announced that 4.5 billion euros worth of crude oil will be put at the disposal of the armed forces to sell. This means the lion’s share will go to the IRGC, which has to find middlemen and illicit ways to export the oil, giving rise to corruption.

The same scenario happened during former president Mahmoud Ahmadinejad’s presidency in early 2010s, when for example the police was given oil to sell to provide for its needs. In the end it came to light that nearly $200 million of oil revenue in 2012 was never returned to the country.

A businessman, Babak Zanjani, who is now in jail with the death penalty hanging over his head, was a middleman selling oil during international sanctions also in the early 2010s, who failed to pay back at least $2.7 billion. His accomplices in the government were never identified. It would have not been easy for him to embezzle such a large amount of money without insider support.

IRGC has a major role in illicit oil trade. In September 2020, Iran’s oil minister Bijan Zanganeh asked help from IRGC’s business conglomerate, Khatam al-Anbia Headquarters to help circumvent US sanctions and sell crude on international markets.

The increase in IRGC’s formal budget is only the visible part of the all-powerful military’s sources of income. Government organizations all contribute a percentage of their budget to the Revolutionary Guard, in addition to its vast economic and business empire that generates income and pays salaries of many loyalists.

Analysts often try to estimate IRGC’s budget in US dollars, a difficult task given various exchange rates applicable in Iran and determining what part of its expenses and to what extent are in dollars. For example, the current formal budget would be around $3.5 billion calculated in free-market rate, but using a government exchange rate, it comes closer to $5 billion.

Perhaps a better gauge is to look at Iran’s annual inflation rate. This year inflation hovers around 45-50 percent, but IRGC’s proposed budget jumped 2.4 times. Moreover, the government is proposing to increase salaries of its administrative and industrial workers by 10 percent, which is way below the inflation rate.

Tens of thousands of teachers protested nationwide on Monday for higher pay to keep up with a nearly 50-percent annual inflation. The state has delayed the implementation of a law that would have boosted teacher’s pay, arguing that it has no money amid US sanctions.