The Office of Foreign Assets Control (OFAC) in the U.S. Department of Treasury, on 20 November, sanctioned “a network of individuals and entities involved in a large-scale scheme to help Iran’s Islamic Revolutionary Guard Corps-Quds Force (IRGC-QF) counterfeit currency to support its destabilizing activities” in Yemen.
The Quds Force is the expeditionary wing of the IRGC, led by the infamous Qassem Sulaymani, charged by the Iranian constitution with the “ideological mission of jihad in God’s way” to extend “the sovereignty of God’s law throughout the world”. Put simply, IRGC-QF is the leading edge of the campaign to export the Iranian revolution globally, which has involved everything from underwriting mass-murder in Syria to bombing Jewish cultural centres in Argentina.
Treasury designations are issued only after the most thorough review of the intelligence because their findings have to withstand legal scrutiny in a court of law. As such, this designation is an important piece of evidence documenting the Iranian regime’s relationship with the extremist Huthi organisation in Yemen, a relationship that some observers—including in Western governments—are keen to downplay.
The activity for which the Tehran was sanctioned on Monday struck “at the heart of the international financial system”, U.S. Treasury Secretary Steven Mnuchin said, and underlined the “serious risks faced by anyone doing business with Iran” since the IRGC continues to dominate economic life in Iran and “hide behind the façade of legitimate businesses to perpetrate its nefarious objectives”.
THIS WEEK’S SANCTIONS
The most important individual sanctioned by the Treasury, Reza Heidari, “acted for or on behalf of the IRGC-QF and … assisted in, sponsored, or provided financial, material, or technological support for, or financial or other services to or in support of, the IRGC-QF.” Heidari was the “managing director” of Pardavesh Tasvir Rayan Co. (“Rayan Printing”), an Iran-based company that was also sanctioned for lending support to IRGC-QF.
“Heidari played a key role in procuring secure printing equipment and materials for the IRGC-QF in support of the group’s currency counterfeiting scheme”, Treasury reports. Rayan Printing was “involved in printing counterfeit Yemeni rial bank notes potentially worth hundreds of millions of dollars for the IRGC-QF, as of late 2016.”
To obfuscate his activities, Heidari worked through front companies in Europe. ForEnt Technik GmbH, which is based in Germany, was sanctioned because it is “owned or controlled by Heidari”. Heidari is “the Managing Director and sole shareholder of ForEnt Technik Gmbh”. And Printing Trade Center GmbH (PTC), also German-based, was “designated for having acted for or on behalf of, and assisted in, sponsored, or provided financial, material, or technological support for, or financial or other services to or in support of, Heidari.” Heidari used both ForEnt and PTC “as front companies to deceive European suppliers, circumvent export restrictions, and acquire advanced printing machinery, security printing machinery, and raw materials in support of the IRGC-QF’s counterfeit currency capabilities. These raw materials included watermarked paper and specialty inks from European suppliers.”
Rayan Printing is owned by, Tejarat Almas Mobin Holding, another Iranian company, which was also designated as a sponsor of terrorism by these sanctions. And the managing director of Tejarat Almas Mobin, the parent company to Rayan Printing, is Mahmoud Seif, who was “designated … for having assisted, sponsored, or provided financial, material, or technological support for, or other services to or in support of, the IRGC-QF.”
“Heidari and Seif coordinated on the procurement of raw supplies and equipment that enabled the IRGC-QF counterfeiting capabilities”, Treasury explains. “Seif was involved with the logistics of importing materials for the counterfeiting project into Iran. Additionally, Seif has previously been involved in the procurement of weapons for the IRGC-QF.
THE HUTHIS, SHI’ISM, AND IRAN
The largest branch of Shi’ism recognises Twelve Imams, the last of whom is believed to have gone into occultation in 873 and whose return will herald the end of time and the coming of an age of justice. The Iranian regime claims an adherence to this mainstream “Twelver” version of the faith, but the revolutionary elite in fact operates under the politicised doctrine of Grand Ayatollah Ruhollah Khumayni.
Khumayni extended the traditional concept of wilayat al-faqih (guardianship of the jurist), which places the indigent in the care of the clergy, to encompass the whole of society. Thus, everybody in Iran is considered a ward under a system of clerical custodianship. At the head of this system is the Supreme Leader, to whom adherents of absolute wilayat al-faqih—in Iran and beyond—owe allegiance. Khumayni was the first Supreme Leader, between the 1979 revolution and his death in 1989. Khumayni was succeeded by Ali Khamene’i, who retains the post to this day and has taken to referring to himself as the “shadow of God on earth”.
There are two other major branches of Shi’ism. One is the Isma’ilis, who broke with the line of Imams at the seventh. It is from the Isma’ili branch that the Nizaris or “Assassins” emerge. The second is the Zaydis or “Fivers”, and it is to this branch of Shi’ism that the Huthis, formally Ansar Allah, belong.
The theological differences between the Iranian theocracy and the Huthis are often posited as demonstrating distance between the two. Zaydism, it is said, is closer to Sunnism than Shi’ism. This argument correctly rejects any essentialist reading of religious sectarianism, but it misses the point. In the first place, Tehran has been proselyising for its politico-religious creed among Yemeni Zaydis for quite some time. Beyond that—without even getting into Iran’s long record of support for Sunni jihadism, including al-Qaeda—Iran has been training Huthi militants and sending money and weapons to them since at least 2010, often through Hizballah. This dual track of ideological and practical support has built into considerable “soft” power for Iran within the Zaydi community in Yemen writ large, and an important degree of control over the Huthi movement.
IRAN’S INVOLVEMENT IN YEMEN
Yemen’s former ruler, Ali Abdullah Saleh, violently resisted the “Arab spring” in 2011 and was nearly killed in the attempt. Saleh was forced out under Saudi pressure, and an interim government put in place led by Abdrabbu Mansur Hadi. An election with Hadi as the sole candidate in February 2012 rubber stamped this change of president.
At that moment, in early 2012, Yemen was in turmoil: an insurgency led by al-Qaeda in the Arabian Peninsula (AQAP) had taken over parts of Abyan Province on the southern coast; an insurgency by the tribally-based, Salafi-influenced Hirak secessionist movement was ongoing, also in the south but further to the east; and the Huthi insurgency that began in 2004 continued in the north-west.
Under Saudi auspices, a National Dialogue Conference (NDC) was opened to try to compose the country through a new political compact. The NDC comprises 565 delegates from all the political, social, tribal, and religious communities and factions: the ruling General People’s Congress, the main opposition Islah Party (a branch of the Muslim Brotherhood), the Zaydis/Huthis, the Hiraks, and independents from the various tribes, youth movements, and women’s groups.
In January 2014, after ten months of consultation, the NDC arrived at a consensus document that charted the path forward. Hadi would oversee changes to the constitution that would enshrine non-sectarianism in the government, restructure the parliament to give fairer representation to north and south, and give Yemen’s communities, especially the Hiraks and Zaydis, more autonomy. Then, within a year, a competitive election would be held to complete the political transition. There were many who found problems with this state-building process, especially among the youth groups, because it put more emphasis on stability than change, but nonetheless it was agreed by all sides and provided a workable roadmap.
The Huthis aborted this political process, overrunning Sanaa on 21 September 2014 and officially completing their coup d’état on 22 January 2015 by forcing Hadi to resign. In between these two events was a concerted effort to deny that this was a putsch, and, even after what had happened was plain for all to see, to minimise Iran’s role. By the account of Iran’s own officials there had been a surge of Iranian support to the Huthis in the run-up to the coup at the end of 2014, and when the Huthis sacked the American Embassy in Sanaa they handed U.S. intelligence files—many of which had been left because of the haste in which U.S. diplomats had to depart—“directly to Iranian advisers”, exposing U.S. assets and crippling U.S. counter-terrorism operations in Yemen. Iran sent the first international plane to Huthi-controlled areas—this being Iran’s method of transferring men and materiel to its proxies—and the first Huthi delegation after their capture of the capital was to Tehran.
The Saudi government’s attempts to resolve the crisis through mediation were met with Iranian intransigence, including public gloating from senior Iranian officials that “three Arab capitals [Beirut, Damascus, and Baghdad] have already fallen into Iran’s hands and belong to the Iranian Islamic Revolution”, and Sanaa was now the fourth. This brazen sectarian intrusion into Yemen helped catalyse a counter-reaction, emboldening the Islamic State’s branch in the country, which conducted hideous atrocities against Zaydi Shi’is. The Huthis and Iran pressed on. On 21 March 2015, the Huthis, by now linked-up with forces loyal to fallen president Saleh, began marching on Aden, where the remnants of Hadi’s government had gathered.
THE SAUDI INTERVENTION
Four days later, with a radical militia under Iranian guidance rampaging, the fortunes of jihadi-salafists on the rise, Yemen tipping into civil war, and six months of diplomacy having proven futile, the Saudis led a military intervention into Yemen with the stated goal of restoring the legitimate government and therefore the political transition it was in the process of enacting. The campaign halted the Huthi offensive and undercut the Islamic State’s claim to be the only Sunni bulwark against Iran’s expansionist regional project, but quickly ran into trouble in terms of progress toward stability.
The failure to quickly and decisively restore the Hadi government allowed the Huthis to consolidate their regime. The Huthis have persecuted the Baha’is, a religious community that has suffered horrendously under the clerical regime in Iran. The Huthis have also led a particularly savage campaign of arrests, torture, and assassination against the independent media. 150 or more journalists and activists have been kidnapped and remain in custody, including the prominent activist Hisham al-Omeisy.
Moreover, as the war dragged out, Iran found ways to circumvent the blockade and get weapons to the Huthis, which has led to escalating threats to shipping and to Saudi Arabia. A Huthi missile was intercepted as it headed for Mecca in July and a missile toward the Saudi capital was interdicted at the beginning of this month. The 4 November missile was likely a response to Saudi Arabia’s move to undermine Iran’s domination of Lebanon earlier that day—and since then the Iranians has also responded in Bahrain with an intensified campaign of terrorism.
There have been serious inadequacies in the Saudi-led coalition’s targeting and, while Iran’s belligerence has contributed mightily to the ongoing threat of famine, that is not a political-media dispute the Saudis can win. Riyadh will have to lift the restrictions to aid flows, knowing that Tehran will exploit the space to smuggle in the resources to protract the war, which for Iran is something close to victory.
The Saudi interest and goal in Yemen is stability, a grindingly difficult mission. By contrast, Iran works best in chaotic environments where sectarian passions are inflamed; stoking or maintaining such environments is far easier—and cheaper. A Huthi official in 2015 stated that the group had “received tens of millions of dollars in cash from Iran over the past couple of years.” Amir Toumaj at The Long War Journal reports that in 2016, “the estimated cost of Iran’s Yemen portfolio was $25 million.” For the purposes of scale: Iran spends about $15 billion annually in Syria. The counterfeiting scheme that drew the U.S. sanctions on Monday “would permit Iran to sustain its operations in Yemen for years”, Toumaj notes, because “Tehran’s bar for success is low in that war: it just has to continue supporting the Yemeni insurgency and bleed the Saudi-led coalition.”
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 U.S. President Donald Trump announced on 13 October that IRGC would now be considered a terrorist organisation in its entirety by OFAC. Trump stopped short of having the State Department designate IRGC as a Foreign Terrorist Organization (FTO), though there are two components of the IRGC—Hizballah in Lebanon and Kataib Hizballah in Iraq—that are on the FTO list. One reason the U.S. did not label the whole IRGC as a FTO is, as Secretary of State Rex Tillerson explained, that it would create “complexities” and “place certain requirements where we run into one another in the battlefield … that we think are … not necessarily in the best interest of our military actions”. The reference in this loquacious and evasive answer is to the fact that the U.S. has been the air force of numerous IRGC proxies in Iraq as part of the anti-Islamic State Operation INHERENT RESOLVE. An FTO designation would have made that situation even more dubious, and since IRGC is now so entrenched in the Iraqi state it would deeply complicate—politically, never mind legally—the U.S.’s dealings with Baghdad. (In Syria, the Coalition deputised the Kurdistan Workers’ Party (PKK), which is a registered FTO, as its ground force, and the U.S. dealt with this by simply denying the identity of its partner force.)
Originally published at The Henry Jackson Society