The potential influx of Iranian Money following the Joint Comprehensive Plan of Action (JCPOA) and the lifting of sanctions presents a complex scenario for the Middle East. While Tehran may prioritize domestic needs, history suggests a significant portion of this newfound wealth could be directed towards bolstering its regional influence. This analysis examines the potential impact of increased Iranian financial resources – or Iranian money – on key areas including Syria, Iraq, Lebanon, Palestine, and the Arabian Peninsula, as well as its conventional military capabilities. Understanding how Iranian money might be deployed is crucial for anticipating shifts in regional power dynamics and stability.
Syria: A Lifeline for Assad
Increased Iranian money would act as a crucial lifeline for the Assad regime in Syria, significantly improving its chances of survival, albeit in a diminished state. Iran’s existing commitment to Syria is estimated to be billions of dollars annually. Additional financial support would be channeled into various critical areas. This includes supplementing the Syrian government’s dwindling public funds, ensuring the bureaucracy remains functional, maintaining what remains of the Syrian army, and artificially propping up the exchange rate of the Syrian pound. These financial transfers would be in addition to the ongoing shipments of subsidized goods, particularly vital energy resources like crude oil and refined diesel fuel, which have largely remained outside the scope of international sanctions. Recent estimates suggest Iran has been shipping around 60,000 barrels of crude oil per day to Syria, amounting to approximately $1.2 billion annually.
Beyond direct governmental aid, a surge of Iranian money would empower the National Defense Forces (NDF), pro-Assad local militias under the command of Iran’s Islamic Revolutionary Guard Corps (IRGC). These militias, often dominated by minority groups, are estimated to be as large as the Syrian army itself and are bearing the brunt of casualties in the ongoing conflict. Furthermore, Iran sponsors a growing number of foreign Shiite fighters in Syria, providing salaries, training, weaponry, and daily operational expenses. This includes significant deployments from Lebanese Hezbollah, with estimates placing their fighters around 5,000 strong. The injection of Iranian money would dramatically enhance the IRGC’s capacity to coordinate the operations of these diverse groups, engage in direct battlefield actions, and thereby deepen the Assad regime’s dependence on Tehran for its very survival.
Iraq: Intensifying Iranian Influence
The release of Iranian money through the JCPOA is likely to trigger an unprecedented surge in Iranian influence-buying within Iraq, a nation at a critical political juncture. This financial boost comes at a strategically opportune moment for Iran. Since 2014, the Hashd al-Shabi (Popular Mobilization Units or PMUs) have become a significant force in Iraq’s fight against ISIS. Crucially, these militias are largely commanded by figures backed by Iran, including leaders like Hadi al-Ameri of the Badr Organization, Qais al-Khazali of Asaib Ahl al-Haq, and Abu Mahdi al-Muhandis, a designated terrorist by the United States. Furthermore, some of the most powerful PMUs, such as Kataib Hezbollah, are themselves U.S.-designated terrorist organizations with direct command and logistical links to the IRGC’s Qods Force.
Consequently, increased Iranian money funneled through the IRGC would translate directly into greater financial and military support for these PMUs. Currently, U.S. funding for the Iraq Train and Equip Fund stands at $1.6 billion, with only $700 million slated for disbursement in the coming year. If Iran commits substantial Iranian money to Iraq post-sanctions, it could potentially eclipse Washington as Baghdad’s primary security partner. This would have devastating consequences for the Iraqi military professionals the United States is attempting to strengthen. The threat is not limited to ISIS; a significant shift in the military balance against the formal Iraqi security forces could occur if Iran significantly outpaces Western efforts in arming its allies.
Beyond military support, Iranian proxies are poised to leverage their prominent role in the fight against ISIS to dominate Iraq’s upcoming provincial elections in 2017 and parliamentary elections in 2018. Success in these elections could fundamentally alter the political landscape, marginalizing Shiite moderates and technocrats like Prime Minister Haider al-Abadi. As seen in numerous electoral contests globally, financial resources play a critical role in Iraqi politics. During the 2010 parliamentary campaign, then-Vice President Joe Biden estimated that Iran spent approximately $100 million to bolster its Iraqi proxies. With increased Iranian money, this could escalate into a torrent of sponsored media, grassroots electioneering, and patronage networks supporting former PMU commanders turned political candidates. More broadly, the influx of Iranian money into Iran’s influence-building operations – including subsidized electricity for Iraqi border provinces, cultivating influence among Shiite bureaucrats and leaders, and pilgrimage-related investments – could be the decisive factor undermining moderates striving to maintain Iraq’s strategic independence amidst already intense Iranian pressure.
Hezbollah: Rebuilding and Expanding Operations
Iran stands as Hezbollah’s principal benefactor, providing an estimated $200 million annually in funding, alongside weapons, training, intelligence, and logistical support. However, the decline in oil prices and intensified international sanctions over the preceding eighteen months had forced Iran to curtail this support. In March 2014, the U.S. Treasury Department explicitly acknowledged that a collateral benefit of its sanctions regime was “squeezing Tehran’s ability to fund terrorist groups such as Hezbollah.” This financial pressure had palpable effects on Hezbollah’s political, social, and military activities within Lebanon. Reports in early 2015 highlighted the organization’s domestic financial strains: Hezbollah’s social service institutions faced budget cuts, employees experienced payment delays or layoffs, and funding for affiliated civilian organizations, both Shiite and Sunni, was reduced. Notably, Hezbollah’s operations in Syria remained an exception, a testament to Tehran’s unwavering commitment to the Assad regime.
The lifting of sanctions and the resultant increase in Iranian money would swiftly reverse this trend, eliminating the collateral benefit of undermining Hezbollah’s financial stability. An influx of Iranian money would empower Hezbollah to counter political and social forces within Lebanon, particularly within the Shiite community, that are increasingly uneasy with the repercussions of its prolonged intervention in Syria.
Furthermore, increased Iranian money would bolster Hezbollah’s regional and international operations. Initially focused on Lebanese politics and conflict with Israel, Hezbollah has evolved into a regional actor engaged in conflicts across the Middle East, frequently in concert with Iran. With greater financial resources, Hezbollah could escalate its support for Shiite militias in regions like Iraq and Yemen, deploying trainers and potentially fighters. Yemen’s Houthi rebels, currently supported by Hezbollah operative Khalil Harb, a close advisor to Hassan Nasrallah, could see significantly expanded assistance.
Crucially, enhanced Iranian money could facilitate the reconstitution of Hezbollah’s international terrorist capabilities. The group has already been expanding its reach into countries as diverse as Cyprus, Peru, and Thailand. The recent arrest of a Hezbollah operative in Cyprus, using his residence as a hub for funneling explosives for attacks in Europe, underscores this growing international dimension.
Hamas and Palestinian Groups: Rekindling Militancy
Hamas has been facing a dire situation in Gaza since the 2014 conflict with Israel. Unable to reconcile with Fatah and struggling to independently finance reconstruction, Hamas also faces internal challenges from Salafi jihadist groups aligned with ISIS. Despite pursuing political solutions, Hamas’s military wing remains dominant, actively preparing for future conflict with Israel through training camps, tunnel construction, and weapons procurement. An injection of Iranian money would enable Hamas to address internal pressures by providing services and reconstruction in Gaza, while simultaneously enhancing its military capabilities. Intelligence reports from early 2015 suggest Iran had already begun funding new tunnel reconstruction and rocket procurement, indicating that increased Iranian money could significantly accelerate this military buildup.
Hamas operations beyond Gaza, including activities in the West Bank directed by Saleh al-Arouri, could also benefit from increased Iranian money. Recent cases, such as the interception of funds being smuggled into the West Bank for Hamas, highlight the existing financial networks linked to Arouri’s Turkey-based operations.
Beyond Hamas, other Palestinian militant groups would also gain from increased Iranian money. Palestinian Islamic Jihad (PIJ), primarily focused on violent action against Israel, has faced severe financial constraints recently. Earlier in 2015, PIJ experienced a major financial crisis, forcing it to close offices and struggle to pay operatives. Given its relatively small size, PIJ could rapidly revitalize its capabilities with renewed Iranian money.
Iran could also channel Iranian money to militant factions associated with Fatah, such as the al-Aqsa Martyrs Brigades. Even modest funding could empower disgruntled Fatah operatives to act against Israel, potentially destabilizing the Palestinian political landscape. Historically, relatively small amounts of Iranian money have enabled Palestinian groups to launch attacks at critical junctures, such as before Israel’s 1996 elections and during the second intifada.
Arabian Peninsula: Heightened Tensions
The prospect of Iran gaining access to substantial Iranian money is a major concern for Sunni-ruled Gulf states, particularly Bahrain, with its Shiite majority, and Saudi Arabia, whose Eastern Province holds a significant Shiite population and key oil infrastructure. Foreign Minister Zarif’s recent Gulf tour, notably excluding Bahrain and Saudi Arabia, while including Qatar, Kuwait, and Iraq, and initially including then excluding the UAE, further underscores these tensions.
Bahrain recently announced the interception of a speedboat carrying Iranian-origin weapons and recalled its ambassador to Tehran in protest. Iran dismissed the allegations as unfounded, accusing Bahrain of creating regional tension. Simultaneously, a bombing in Bahrain, resulting in police fatalities, was attributed to explosives similar to those allegedly smuggled from Iran. This incident likely diminishes any hope that post-JCPOA, Iran would prioritize diplomatic pressure for Shiite political participation over supporting violence.
In Yemen, the Saudi/UAE-led coalition continues to accuse Iran of supporting Houthi rebels. While the extent of current Iranian aid is debated, the lifting of sanctions and influx of Iranian money would remove financial constraints on future support for the Houthis.
Conventional Arms: Modernization and Proxy Support
While the JCPOA maintains restrictions on arms transfers to Iran, Tehran has stated its intention to reject and circumvent these limitations. Despite sanctions, Iran has already acquired key equipment for its missile programs. The influx of Iranian money would exacerbate this, enabling Iran to more easily compensate intermediaries facilitating illicit transfers. Domestically, Iran would likely increase procurement from its own arms industry, particularly ammunition, small arms, and light vehicles – essential for its regional allies. Iran might also seek UN permission to acquire advanced technologies like sensors and night vision devices, ostensibly for border security against ISIS.
Iran’s strategy has long been to utilize foreign proxies, minimizing direct Iranian military involvement. However, Hezbollah and Iraqi militias are currently strained across multiple fronts. Increased Iranian money could allow Iran to avoid committing its own forces by expanding foreign recruitment, including Afghan and Pakistani Shiites, although their effectiveness remains questionable. Even incremental reinforcements could be significant in protracted conflicts where Iranian allies are showing fatigue.
Once the arms embargo on Iran is lifted after five years, Tehran might pursue targeted modernization of its conventional forces, focusing on areas like advanced air defense systems, munitions, armored vehicles, and ground support aircraft. Bolstering logistical and force-projection capabilities would also be a priority if Iran intends to maintain its regional military engagements.
Conclusion: Shaping Regional Perceptions
Perhaps the most significant impact of the JCPOA and the ensuing flow of Iranian money is the validation of Iran’s narrative as a rising power and the perception of declining U.S. influence. By utilizing Iranian money to fund and arm regional allies, Iran aims to portray itself as a more reliable partner than the United States. This strategy is deeply rooted in reputation management, a critical aspect of the Iranian regime’s approach. In a region where perception often outweighs reality, the influx of Iranian money and its strategic deployment will be viewed by allies and adversaries alike as a major achievement for Iran, further shaping the regional psychological landscape in ways that serve its interests.
