An Iranian economist speaks with Tehran Bureau about the country’s postwar outlook and the Guards’ growing sway.
According to rumors circulating in Tehran in recent weeks, Mehdi Khamoushi, head of Iran’s Endowments and Charity Affairs Organization, is set to be named as chief of staff to Mojtaba Khamenei, Iran’s newly installed Supreme Leader. Already a member of the board of trustees of the Islamic Revolution Cultural Research Institute, responsible for preserving and publishing the works of the late Ayatollah Ali Khamenei, Khamoushi also has a close familial connection with one of Iran’s oldest surviving political organizations.
Taghi Khamoushi, Mehdi’s father, was for decades one of the leading figures of Motalefeh (the Islamic Coalition Party). Founded in 1963 with roots in the traditional bazaar merchant class, Motalefeh was closely aligned with the clerical establishment that helped bring the Islamic Republic to power in 1979. In the Iranian political context, Motalefeh is a foundational coalition of principlists (osoolgarayan)—ultraconservative supporters of whoever holds the office of Supreme Leader and the doctrine of Velaayat-e Faghih by which he exercises absolute authority.
The party’s religious, traditionalist, and bazaar-based members played a significant role in Iran’s economy from the outset of the 1979 Revolution and controlled a substantial share of the country’s non-oil exports during the Islamic Republic’s early decades. Under the reformist government of Mohammad Khatami, these figures were pushed to the political margins.
As the economic and political power of the Islamic Revolutionary Guard Corps (IRGC) grew during the Ahmadinejad era, Motalefeh was sidelined even further, and it ceased to be a major player in the economy. Mehdi Khamoushi’s rumoured appointment as chief of the Supreme Leader’s Office raised the question of whether he might restore Motalefeh to a position of political influence and economic strength.
This past week, Tehran Bureau’s economic unit, Resanegar, put this question to a veteran Iranian economist affiliated with the Institute for Economic Studies and Research of the University of Tehran. With extensive connections across Iran’s business circles (which overlap considerably with its political circles) and a deep understanding of the country’s markets and commerce, he offers an unusually well-informed perspective on the issue.
In analyzing possible shifts in Iran’s power dynamics over the coming months, he downplays the prospect of Motalefeh having the new Supreme Leader’s ear. Instead, he argues that the IRGC—whose economic grip had become less certain in the years before Donald Trump regained the US presidency—is now positioned to be Iran’s true locus of power. The war that began in late February, he argues, has expanded the Guards’ influence in Iran’s economy and politics alike.
Recently, unofficial reports have circulated suggesting that Mehdi Khamoushi may be appointed head of the Supreme Leader’s Office. While the news has not been confirmed, the decision would not be entirely unexpected. His appointment could be significant for Motalefeh, potentially providing it a bridge back from political marginalization. How much could Khamoushi’s arrival at the Leader’s Office affect Iran’s economy? Meysam Khamenei [Mojtaba Khamenei’s youngest brother] is married into the Lolachian family, another prominent Motalefeh-linked family. Even if power is not distributed among [Ali] Khamenei’s [four] sons, it seems unlikely that Mojtaba Khamenei’s brothers would be left without influence. Could some share of power also return to Motalefeh?
Current political and military conditions suggest that everything is effectively in the hands of the IRGC. The Guards appear to be making the key decisions. Yesterday, I watched footage of President Masoud Pezeshkian meeting with managers from the state broadcaster. It seems they are still holding meetings in secure locations. During the meeting, Pezeshkian said that “we do nothing without the Leader’s permission,” yet he had recently stated that he only met with Mojtaba Khamenei two months after [the Supreme Leader’s appointment]. This suggests that affairs have not necessarily been managed directly through the Leader’s authorization.
Whether power will be distributed among the Leader’s sons, or whether Khamoushi becoming chief of staff would alter economic policy, are questions that remain speculative. If we assume for the sake of argument that Seyyed Mehdi Khamoushi does become head of the office—though there is no confirmed information yet—the real question is how much influence he could have over the economy.
In my view, the Leader’s Office exerts its greatest influence by engineering elections in ways that bring to power individuals who will pursue its preferred economic policies. Until we know their electoral plans and what political strategy they intend to implement, we cannot know what economic program or structure they intend to pursue.
Based on Mehdi Khamoushi’s background, it is difficult to determine whether Motalefeh itself would return. If his thinking resembles that of his father, Seyyed Taqi Khamoushi, then his focus would be on the bazaar—not in the liberal economic sense, but in the traditional jurisprudential sense.
This is a conception of the market that is largely insulated from competition. Motalefeh was among the first groups to oppose the establishment of the Refah chain stores. If they truly supported free markets and limited state intervention, they would not have reacted that way. In reality, they have generally opposed modern market structures unless they themselves are incorporated into them.
Ali Naqi Khamoushi [Mehdi Khamoushi’s uncle] chaired Iran’s Chamber of Commerce for nearly thirty years. If you look at the people around him—for example, one of his close associates, who was known as the “father of Iran’s plaster industry” and owned the Semnan plaster business—you find individuals who never worked to modernize the Chamber of Commerce or attempted to integrate Iran into the global trading system.
They made no meaningful effort to bring Iran into the World Trade Organization. In many cases, they showed little interest in or understanding of such institutions. Their primary concern was practical self-interest: if they were importers, they wanted a lower exchange rate to increase profits; if they were exporters—even of raw materials—they sought higher returns. They were not interested in serious competitors or partners.
Given this, does it seem that whether Motalefeh returns or figures like Babak Zanjani remain influential, Iran will continue to follow the same closed, rent-seeking economic model?
Iran’s economy is fundamentally rent-based. It has never operated on meritocracy. Those connected to power receive a share of economic opportunities.
Everyone seeks access to political power because that is how economic benefits are obtained. This differs from developed countries such as Britain or the United States, where individuals generally become economically successful first and then enter politics in an effort to influence policymaking.
Babak Zanjani himself emerged from this system of rent-seeking. Could figures like him become even more influential?
If the Wall Street Journal report is correct and Babak helped transfer roughly $850 million into Iran through cryptocurrencies, then yes, people like him could gain greater influence.
Their expertise lies in sanctions evasion. As long as sanctions remain in place, such individuals continue to serve a practical function for the system.
Returning to Motalefeh: is it fair to say that the party has been marginalized in recent years, and that Mehdi Khamoushi and a new leadership arrangement could bring it back to prominence?
Motalefeh began losing influence when Mahmoud Ahmadinejad came to power, although the process actually started during Mohammad Khatami’s presidency through efforts to take control of the Chamber of Commerce away from them.
Their supporters fought hard to retain influence. At one point, the election of the Tehran Chamber of Commerce chairman was invalidated and he was removed so that Motalefeh could maintain control. They succeeded temporarily, but eventually lost their position as Chamber elections progressed.
During Ahmadinejad’s administration, they were pushed almost entirely to the margins. Even in the petrochemical sector, cases were opened against some of them and they faced considerable pressure.
Even if Khamoushi became chief of staff, that would not necessarily mean Motalefeh’s return. The traditional bazaar economy no longer exists in the form it once did. There is no old-style economic order to restore, nor can they simply oppose modern distribution networks as they once did.
These individuals are deeply embedded within Iran’s economic system and would likely return with a new image. They have tried to adapt to changing circumstances. Their children are now entering positions of influence, and some of them are even frustrated with Iran’s current economic policies. One of them, whom I know personally, openly supports reconciliation with the United States.
The internet and social media have changed too much. This is no longer the era of Motalefeh.
But doesn’t this network still control a significant portion of Iran’s exports?
Iranian exports have changed dramatically. Traditional exports such as carpets, pistachios, and agricultural products no longer play a meaningful role in the country’s trade balance.
At one time, these products accounted for more than 60 percent of Iran’s non-oil exports. Today they represent less than one percent. Carpets, pistachios, legumes—none of them have the importance they once did.
Today, roughly 70 percent of Iran’s non-oil exports consist of petrochemical products and steel.
Doesn’t that still make them influential in the petrochemical sector?
Not particularly. They have interests in companies such as Amir Kabir Petrochemical and Sadaf, but these do not represent a major share of exports.
The Persian Gulf Petrochemical Industries Holding Company alone accounts for roughly half of Iran’s petrochemical exports. Therefore, it would be inaccurate to say that Motalefeh controls the pulse of petrochemical exports.
Assuming the current political system remains in place, what do you think will be the most important economic change in the coming years?
If the system survives, the most significant change will be continuity in the direction established by the recent conflicts. Iran’s economy will increasingly become an economy dominated by military institutions.
The IRGC and Khatam al-Anbiya Headquarters will expand their influence. Any meaningful change in economic policy would require a change in the IRGC’s outlook.
The Guards will likely gain even greater freedom of action. More state contracts will be awarded to them.
There was an interesting article in Foreign Affairs written by one of the American negotiators involved in the Obama-era nuclear talks. He argued that the nuclear agreement had been structured in a way that effectively discouraged the IRGC from economic involvement. According to him, the Iranian government itself had shown an interest in reducing the IRGC’s role because sanctions targeting the Guards also harmed the broader economy.
But what Trump did effectively reversed that trend and made the IRGC central to the economy once again.
The IRGC will likely gain even more authority. Consider the idea of asserting control over the Strait of Hormuz and collecting transit fees. Who would actually collect those fees? Customs authorities? No—everything would have to be coordinated through the IRGC.
On the third day of the war, President Pezeshkian apologized to the Gulf states. Five minutes later, Khatam al-Anbiya issued a statement effectively retracting his remarks.
Trump ended up giving the IRGC everything it wanted. What he did ultimately strengthened the organization. From now on, the IRGC will operate openly in the economy.
If yesterday the IRGC was the emperor of Iran’s hidden economy, today it is becoming the central authority within the formal and visible economy. I am confident that no major protocol or policy will be written from this point forward without the IRGC playing a role. Everything will require its approval and coordination.
So a return of Motalefeh to power is unlikely?
In this new political landscape, neither Motalefeh nor any other political party is likely to play a decisive role.
Trump made what I would describe as a strategic mistake. The IRGC now sees the situation as a blessing in disguise. A ripe fruit has fallen into its lap, and it has no intention of sharing that fruit with anyone else.