Iranian Supreme Leader Ali Khamenei "has become a hostage" of an elite branch of Iran’s army that has quietly consolidated its economic and political power, a top analyst said Tuesday.

The Islamic Revolutionary Guard Corps (IRGC) appears to have supplanted Khamenei and other top clerics in a significant power shift that has left Iran a "military dictatorship," according to Ali Alfoneh, who has spent years investigating the IRGC.

Khamenei "has become a hostage in the hands of his own praetorian guard," Alfoneh said Tuesday during a discussion hosted by the American Enterprise Institute.

Thirty-four years since the Iranian revolution installed an extremist Islamic leader, the country has "degenerated into a military dictatorship which is disguising itself. … They want to preserve the illusion the regime" is still in power, he said.

The IRGC, Iran’s principal fighting force in its 1980 war with Iraq, has quietly seized control of Iran’s economy and political bodies and controls around $80 billion in private economic assets, according to Alfoneh.

The IRGC paid $9 billion in cash to purchase the Telecommunication Company of Iran, Alfoneh said. Most of the IRGC’s private holdings are owned via front groups that are controlled by its members.

This combination of wealth and military prowess has permitted the IRGC to position itself an Iran’s true power broker.

While religious ideology was once Iran’s main political criteria, now "the single factor which qualifies Iranian leaders to join public life is not just being a war vet … but being a member of the IRGC," he said.

Outgoing Iranian President Mahmoud Ahmadinejad, the country’s first military veteran to hold this post, initiated most of the privatization efforts that allowed the IRGC to gain its economic foothold.

The IRGC is a "vengeful" group of militants who are out to impose their will on all Iranians, Alfoneh said.

The militant group is perhaps "most vengeful against the clerical class because they feel the clerical class betrayed them" and didn’t sacrifice during the Iran-Iraq war, he added.

"They talk about the rich clerics who managed to amass great wealth during the war at the same time these people were making the sacrifice," Alfoneh said.

As the Western world tries to prevent Iran from obtaining a nuclear weapon, the IRGC is doing its best to ensure the opposite outcome.

"This generation of revolutionary guards has very little respect for the U.S., particularly this president and this administration," Alfoneh said. "Even worse, they misunderstand the signals President [Barack] Obama is sending to them."

The IRGC views Obama’s public overtures as a sign of weakness, Alfoneh explained.

"President [George W.] Bush, he was a much better communicator" because he was firm and consistent, Alfoneh said. "In Washington, you do not understand the value of someone like President Bush."

"In Tehran, the revolutionary officers began saying ‘Oh, he’s even more crazy than we are.’ That served the interest of the U.S.," Alfoneh explained. "They fundamentally believed President Bush was completely unpredictable and capable of doing anything against them. The liberal class in this country does not understand" the value of this perception.

Military strategist Fred Kagan agreed the IRGC has expanded its reach significantly in Iran.

"It’s all of the same network" in many different sectors of Iranian society, "and has spread its tentacles through all of the security services," as well as "the Iranian economy," Kagan said.

This raises questions about what would happen should Khamenei and the IRGC find themselves at odds with one another.

"We’ve now reached the point where sanctions are hurting the IRGC and even the smugglers are hurting from the sanctions to a greater extent," Kagan said. "What would happen if any significant power bloc in the Islamic republic of Iran decided it wanted to cash in the nuke program or some part of it in exchange for easing of sanctions? … We’ve allowed ourselves to see simplicity where this is in fact a lot of complexity."