Ottolenghi: Lower Burden of Proof Needed For Designating Companies “IRGC Shells”

Fellows at the Foundation for Defense of Democracies have been some of the most outspoken, and most published, voices on how the United States can most forcefully impose sanctions on Iran. Suggestions from FDD have included: recalling Switzerland as the representative of U.S. diplomatic interests in Iran to punish them for allowing a Swiss energy company to violate sanctions; sanctioning Chinese and Russian companies who dare to do business with Iran; and, in the same breath, calling for the West to “lay the foundation for military strikes.” But FDD’s Emanuele Ottolenghi, writing in Foreign Affairs, says that it is time for U.S. and European governments to dramatically expand the number of Iranian companies named as Iranian Republican Guard Corp (IRGC) shells.

Ottolenghi writes:

If a business thought to be IRGC-related is publicly identified, government agencies can better investigate its identity and operations. This may then lead to a designation by one or more Western governments. Even if a business is not designated as IRGC-affiliated, however, the mere act of identification is useful.

His proposal sounds decidedly biased against Iranian companies and Western companies which do business in Iran. But as Ottolenghi makes abundantly clear, this is of little concern:

If some governments prove reluctant to designate a firm even after its exposure, designation by one government alone could raise the reputational and monetary risk faced by Western companies for associating with IRGC shells.

Ottolenghi outlines how, ideally, his guilty-until-proven-innocent system would work [my emphasis]:

But identifying Iranian entities linked to the IRGC is not easy. Take the Ghomroud water conveyance system, a network of tunnels built earlier in the last decade in the Isfahan mountains to improve nearby water supply. Two European companies — Germany’s Wirth and Italy’s Seli — supplied tunnel-drilling machinery and ventilation equipment. On the surface, the project appeared legitimate. But according to documents that were, until recently, available on Wirth’s Web site, the Iranian building contractor for the project was Gharargahe Sazandegi Ghaem, a subsidiary of Khatam al-Anbiya, the IRGC’s largest company. This means that the Iranians could have later used the technology provided by European companies to construct nuclear and ballistic missile facilities, which are often located underground. Given that prospect, Western governments and companies should err on the side of caution in doing business with IRGC-related firms, avoiding contact entirely rather than unwittingly aiding Iran’s nuclear ambitions.

Other than the tenuous link that nuclear facilities “are often located underground,” this example provides no indication this company participated in any activities that could be construed as “aiding Iran’s nuclear ambitions.” While Ottolenghi doesn’t mind playing fast and loose with blacklisting companies, it’s worth asking how Germany and Italy will respond to U.S. pronouncements that their companies are “unwittingly” assisting the Iranian nuclear program. And, in the process of “error[ing] on the side of caution,” deny improvements to the Iranian water supply for ordinary Iranians.

The point of this campaign, as outlined in the article, is that “Western countries should redouble their efforts and ensure that Iran’s procurement networks and IRGC companies, at home and abroad, are named, shamed, and banished from the polite company of the corporate world.” FDD, which appears to have an in-house project of designating various German, Swiss, Italian, Chinese and Russian companies as IRGC business partners, is quick to call for ever tighter sanctions regimes.

What Ottolenghi and other FDD fellows don’t explain is how falsely accusing companies of being “IRGC shells”–as is nearly certain to happen with the low-burden of proof described in the frequent op-eds by FDD fellows–will help the U.S. maintain its alliances in the UN sanctions regime. Perhaps more importantly, analysts like Ottolenghi don’t address how their proposed sanctions regime will help everyday Iranians see the United States as anything other than an existential enemy that indiscriminately sanctions Iranian companies doing business with Western firms and pressures foreign governments to sever trading relationships with Iran.

Eli Clifton

Eli Clifton reports on money in politics and US foreign policy. He is a co-founder of the Quincy Institute for Responsible Statecraft. Eli previously reported for the American Independent News Network, ThinkProgress, and Inter Press Service.