In the upcoming budget bill for Iran in the next year, the General Staff of the Armed Forces has been granted permission to sell crude oil and gas condensate, up to a monthly limit of 134 trillion tomans, with the aim of fortifying the defense base. This monthly allowance is equivalent to the sale of 104 million barrels of oil, constituting 21% of the country’s total oil exports.
As reported by Tejarat News, this authorization is outlined in paragraph b of note 4 within the bill. In the 2024-2025 budget bill, it is specified that if the government fails to allocate the designated budget to military institutions, the National Iranian Oil Company is obligated, under the Planning and Budget Organization’s announcement, to compensate for the shortfall by delivering crude oil or gas condensate to the relevant legal entities, to be reimbursed by the General Staff.
This is noteworthy because, by law, the National Iranian Oil Company holds monopoly over the sale and export of Iranian oil. Despite this, military institutions are now explicitly mentioned as recipients of such permissions, whereas in the past, individuals had received this authorization under the broad category of ‘persons approved by executive bodies,’ as outlined in Note 19 of the 2020 budget during Ebrahim Raisi’s government.
Raisi’s government recently presented the budget bill for the next year to the parliament, reintroducing non-oil entities into the oil sales cycle to evade sanctions. Past experiences suggest that this could lead to an expanded network of groups, companies, and individuals involved in oil sales, with security and military institutions gaining control without adequate oversight.
The power of military institutions, especially the IRGC, has grown to surpass that of a parallel government. With access to weapons, an intelligence apparatus, the authority to intervene in international affairs, the capacity for domestic and foreign operations, control of various media outlets, participation in significant economic projects, and influence in politics through positions in the parliament, government, and Expediency Discernment Council, the IRGC has become a potent force in both politics and repression.
Tejarat News reports that in previous years, approximately 4.5 billion euros of crude oil and gas condensate quotas were allocated annually to ministries for construction projects. However, the current shift indicates a prioritization of strengthening the military base over completing development projects.
In recent years, the IRGC has effectively operated as a parallel government with the authority to sell oil, a trend that appears likely to continue. This allows the institution to operate independently of the government’s budgetary support, generating revenue through oil sales purportedly for strengthening the military base. Similar actions during Mahmoud Ahmadinejad’s presidency resulted in significant embezzlements and legal repercussions for individuals accused of not depositing oil sale proceeds into the government account.
According to Tejarat News, the current budget’s Note 1 outlines a framework granting the General Staff of the Armed Forces permission to sell oil in two separate departments, amounting to three billion euros and one billion and 500 million euros. The former is designated for strengthening the defense base, strategic defense research, and fulfilling defense plan obligations, while the latter is allocated for eliminating deprivation plans and propulsion, based on the budget bill’s Table 21 framework.
In the next year’s budget bill, this note is narrowed down to one component—strengthening the defense base—with a figure exceeding 4.5 billion euros. Considering the government’s projected oil revenue of 614 trillion tomans for the next year, this allowance implies that 21% of the oil revenue will be allocated to the armed forces, allowing military institutions to export and sell an estimated 104 million barrels of oil in 2024-2025.
Notably, it’s not only military institutions that have their budgets tied to oil sales in the coming year. The government has also granted permission for Astan Quds Razavi and pension funds to export oil.
The landscape of oil and gas companies operating in Iran is predominantly composed of entities owned by regime officials, their relatives, and those affiliated with military and security institutions. This arrangement not only ensures direct funds from oil sales to these institutions, but also channels the brokerage fees and transportation costs associated with these sales to individuals connected to these institutions.
