The Iran Deal Will Unchain Top Ayatollah’s Terror Slush Fund

Hundreds of bad actors are set to be expunged from the US Treasury’s sanctions list as a result of the Iran nuclear deal signed last month in Vienna. Yet the most high-profile among them has gone strangely unnoticed: the country’s dictator since 1989, Ali Khamenei.

According to the deal, within six to 12 months, Treasury will de-list more than three dozen banks, oil companies and other investments belonging to the Execution of Imam Khomeini’s Order, a k a EIKO. Reportedly worth more than $95 billion, EIKO is controlled by the supreme leader.

EIKO was founded with the mandate of confiscating property from individuals linked to the shah’s system after the Islamic revolution of 1979.

Khamenei broadened the mandate in 1991 to confiscate property from dissidents, too. EIKO officials have included some of Iran’s worst human-rights abusers.

Treasury slapped sanctions on EIKO and its subsidiaries back in June 2013, noting that the purpose of EIKO was “to generate and control massive, off-the-books investments, shielded from the view of the Iranian people and international regulators.”

As one senior Obama administration official noted, Iran’s kleptocrats “profit from a shadowy network of off-the-books front companies . . . the Iranian government’s leadership works to hide billions of dollars in corporate profits earned at the expense of the Iranian people.”

A closer look at EIKO reveals that it maintains a stranglehold on the Iranian economy. The value of EIKO’s real-estate portfolio totals nearly $52 billion. EIKO’s investment arm is worth $40 billion. Its stakes in publicly traded companies total nearly $3.4 billion.

EIKO maintains a complex network of front companies and subsidiaries abroad in places like Germany, Croatia, South Africa, the UAE, Turkey and beyond.

These businesses were all flagged by the US government for illicit financial practices, including government corruption. As Treasury noted, EIKO made tens of billions of dollars alone through
the exploitation of favorable loan rates from Iranian banks.

And they’ll all soon be off our sanctions list. Not because they have suddenly become legitimate. In fact, there’s no indication that their conduct has changed.

The White House is simply trading them in for a purported diplomatic victory — even if it’s a temporary one, given that Iran must only wait 10 to 15 years to inherit a massive nuclear program, a short path to a bomb, intercontinental ballistic missiles and its economy immunized against future sanctions.

No matter how you slice it, this move undermines the mandate of the Treasury Department, which has spent the last decade building a powerful yet delicate sanctions architecture designed to punish Iran for its nuclear mendacity, ballistic-missile development, financial support for terrorist groups and backing of other rogue states like Bashar al-Assad’s Syria.

But above all, the goal was to shield the US-led global financial sector from Iran’s vast network of financial criminals and their illegal transactions.

The Obama Administration continues to insist that the nuclear deal won’t stop America from punishing Iran’s destabilizing activities across the Middle East. They say that the deal will keep sanctions on some of the worst actors within the Islamic Revolutionary Guard Corps (IRGC), which directs Iran’s external regional aggression, its nuclear and ballistic missile programs and its vast system of domestic repression. The Guards also control at least one-sixth of the Iranian economy, including strategic sectors — banking, energy, construction, industrial, engineering, mining, shipping, shipbuilding and others.

But Khamenei is the man who directs the activities of the Guards. Once EIKO is freed from the sanctions list, Khamenei will be free to invest billions around the world with impunity.

With the benefit of American sanctions relief, and with the aid of the Revolutionary Guards, Iran’s supreme leader will now be able to tighten his stranglehold on the Iranian people — a side effect of the nuclear deal that has not garnered enough attention. At the same time, he’ll be under fewer restrictions to finance terror and bloodshed around the region.

Mark Dubowitz is executive director of the Foundation for Defense of Democracies and its Center on Sanctions and Illicit Finance. Jonathan Schanzer, a former Treasury terrorism finance analyst, is vice president for research at FDD.

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