Despite denials, Khamenei drives Iran’s economy

In his Nowruz speech, Supreme Leader Ali Khamenei denied involvement in economic decision-making, claiming it falls under the responsibility of the president. In reality, however, his influence over the economy is both profound and far-reaching.

Khamenei’s formal role in economic planning

While Khamenei does not directly manage economic ministries or oversee the national budget—duties formally assigned to the presidential administration and parliament—he exerts control through other channels. This influence, rooted in both constitutional authority and informal networks, is complex and multifaceted.

According to Article 110 of Iran’s Constitution, Khamenei has the authority to determine the general policies of the Islamic Republic. In collaboration with the Expediency Council, whose members he appoints, Khamenei issues "General Policies of the System," which shape the country’s economic direction.

The Planning and Budget Organization, an administrative body, must ensure that Iran’s development plans—such as macro policies in the oil sector—align with the overarching guidelines drawn in the General Policies of the System documents.

Political

He also holds sway over the expenditure of oil revenues. Any withdrawal from the National Development Fund of Iran (NDFI) requires his approval, for instance. At least 20 percent of all oil revenues are allocated to the NDFI, and successive administrations, including Masoud Pezeshkian’s, have sought his permission to borrow billions of dollars from the fund over the years to cover budget deficits.

Directing the economy through political engineering

Khamenei appoints the head of the judiciary and the members of the constitutional Guardian Council, which has the power to veto legislation, including economic policies and budget plans if they conflict with his prescribed policies. As Iran's election watchdog, the Council also engineers all elections and ensures that candidates whose platforms are not aligned with Khamenei’s political and economic vision are not elected as president or make it to the parliament.

Economic entities under Khamenei’s direct control

Khamenei wields significant economic power through a network of quasi-charitable foundations, known as bonyads, and religious endowments.

Among the largest bonyads are:

• Mostazafan Foundation
• Execution of Imam Khomeini's Order Headquarters
• Martyrs Foundation

Originally established to redistribute wealth and support social welfare following the 1979 Islamic Revolution, these institutions have evolved into major economic conglomerates operating in diverse sectors, including agriculture, construction, mining, energy, manufacturing, telecommunications, financial services, and real estate.

Their financial activities remain opaque, despite assets worth hundreds of billions of dollars.

These entities function as strategic instruments for maintaining Khamenei’s political and economic dominance. By appointing their leadership, he ensures loyalty and strengthens his control. They also help finance Iran’s regional allies and domestic political factions aligned with him through a complex system of privilege distribution—commonly referred to as rent in Iranian economic and political jargon.

The IRGC’s economic influence

The Revolutionary Guards (IRGC), which operate directly under Khamenei’s authority as commander-in-chief, also control vast segments of Iran’s economy. They are allocated a portion of the country’s oil exports, which they reportedly sell through front companies and intermediaries to evade US sanctions—generating funds for their military operations and regional activities.

The IRGC dominates industries such as construction, energy, and telecommunications. Additionally, it is granted a direct share of Iran’s oil revenues, allegedly selling oil through front companies and third-party intermediaries to bypass US sanctions and finance military and regional operations.

The extent of Khamenei’s economic control

Quantifying the economic footprint of bonyads, religious endowments, and the IRGC is difficult due to their opaque financial practices. Nonetheless, estimates suggest these entities collectively control at least half of Iran’s GDP.

Though they are technically subject to taxation and audits, they use complex methods to conceal financial data, making meaningful oversight nearly impossible.

Khamenei’s firm grip over these institutions reinforces his dominance over the Iranian economy, limiting transparency and blocking major reforms. This control expanded significantly after a 2005 privatization initiative that channeled state assets not to a genuine private sector, but to IRGC-linked entities, bonyads, and companies benefiting from monopolistic privileges.