There are ample indications that Iran has supported over the years a range of paramilitary groups, armed militias, as well as repressive governments in the Middle East in order to establish influence in the region. However, it is much more difficult to quantify the levels of support, which originates largely from secret budgets and shadowy networks of companies with no public accounts.
Due to a lack of verifiable data, the flow of funds, trainings, weapons and other support provided by Iran to foreign militias and governments remains largely subject to speculation. Summarising ranges of estimated support to different paramilitary groups over different periods of time, the available information suggests that Iran on average supported:
- The Iranian regime’s closest proxy, Hezbollah Lebanon, has been provided with approximately US$ 100 million to US$ 200 million per year since its early years in the 1980s, not accounting for special payments or arms deliveries. Considering apparent budget cuts, this amount may have dropped to approximately US$ 50 million to US$ 100 million per year between 2010 and 2012. Another round of cuts was reported for 2014/15. This has been attributed to the difficult economic situation in Iran due to a range of factors including international sanctions and decreasing oil prices. The massive support provided to the Assad regime in Syria is certainly another factor. Iran is also indirectly responsible for Hezbollah’s fighters present – by the end of 2015 – in several other conflicts, namely in Syria, Iraq and, to a lesser degree, in Yemen, where they have been providing varying levels of training, weapons, strategic support and experienced fighters on the ground.
- A range of Shia militias in Iraq were provided, in the mid to late 2000s, with an estimated US$ 10 million to US$ 35 million annually. This increased to an estimated US$ 100 million to US$ 200 million yearly from around 2009 onwards. In addition to cash and weapons, foreign fighters funded by Iran, as well as Iranian elite units, have increasingly been sent to Iraq since 2014 to fight against the so-called Islamic State in Iraq and Syria (ISIS).
- Hamas was provided with approximately US$ 100 million to US$ 250 million between 2007 and 2011. Iran also provided training, advice and equipment. For the period from 2012 to 2014, it has to be assumed that financial backing was reduced significantly or even completely cut off due to Hamas’ lack of support for the Assad regime in the current Syrian war. Since the end of 2014, however, funding has apparently resumed, although it is likely to be at lower levels than in 2010-2012.
- The Islamic Jihad was provided with approximately US$ 100 million to US$ 150 million annually since 2007. As of the beginning of 2015, it has to be assumed that this support has been cut due to the group’s lack of support for the Houthi rebels in Yemen.
- The Houthi rebels have been provided with approximately US$ 10 million to US$ 25 million since 2010, partly as cash but mostly in the form of training, strategic advice and military equipment.
- The Assad regime and Syrian militias fighting on its side since the outbreak of the Syrian revolution in March 2011 have been provided with approximately US$ 15 billion to US$ 25 billion over a period of five years, equating approximately to US$ 3 billion to US$ 5 billion annually. The support has taken the form of credit facilities, fuel supplies, training, strategic advice and military equipment as well as support on the ground by Iranian special forces and Iranian-backed foreign fighters. Some sources provide even higher estimates of around US$ 20 billion annually.
Predominantly drawing on estimates and anecdotal evidence quoted in various sources, the findings suggest that Iran’s expenditure on various paramilitary groups and allied governments in the Middle East within the considered periods of time totalled between a low estimate of US$ 20 and a high estimate of US$ 80 billion.
The available information suggests that Iranian support for these militant groups comes partly from public budgets, but a large part of it allegedly comes from funds managed outside of the official government structures. Enormous funds have been found to be at the disposal of the Iranian Supreme Leader Khamenei and the Revolutionary Guard Corps. The clandestine business networks under their supervision generate billions of dollars of annual revenues and are not accountable to the public and cannot therefore be traced.
Similarly obscure as the funding of the foreign engagement of Iran is the country’s investment in its nuclear programme. Not even the Iranian parliament seems to be fully informed on the financial dimension. The costs of the only nuclear reactor operational in the country alone are estimated at approximately US$ 11 billion. This figure increases tremendously when one also takes into consideration the indirect costs of the nuclear programme, which are estimated at US$ 100 billion to a high estimate of up to US$ 500 billion.
Even if this figure may be exaggerated, the programme certainly comes at very high costs. Leaving aside possible intentions to develop nuclear weapons, Iran’s nuclear programme makes little economic sense when looking at the electricity production costs. Iranian officials argued that these would become more economically viable if more reactors are added;310 this may also become possible after the July 2015 nuclear deal and subsequent lifting of nuclear-related sanctions in 2016.
However, a determined strategy to quit high-carbon and nuclear energy generation and to implement alternative, renewable energy programmes seems to be a much more sensible choice, in light of both economic and environmental arguments. In addition, the potential for attracting foreign investments when pursuing a renewable energy path are more promising.
The expected lifting of sanctions in 2016 would make billions of frozen assets available to the Iranian regime, as well as offering large growth potential for the economy due to regained access to the international markets.
There have been fears that, next to domestic investment needs, part of the released funds could end up fueling conflicts in the Middle East even further due to increased military spending and financial backing of allied militias and governments like the Assad regime in Syria.
The increase in Iran’s 2015/16 current defence budget may be a first sign of this. In recent months, Ayatollah Ali Khamenei and the Iranian Minister of Defence, Hossein Dehqan, both made it clear that they had no intention to cut their support to Hezbollah, Hamas, the Islamic Jihad, the Houthi militias in Yemen, the Syrian and Iraqi governments and their militias, despite a nuclear deal.311
While the risk of additional terrorist financing is widely acknowledged many analysts and politicians see Tehran’s foreign ambitions to be less influenced by economic calculations than by political and strategic considerations.312
Notes & References:
310. Mousavian, S.H. (2014, February 21), “How much nuclear power does Iran need?”, Al-Monitor, online: http://www.al-monitor.com/pulse/originals/2014/02/iran-nuclear-energy-domestic-need.html#, accessed in November 2015.
311. Naylor, S.D. (2015, July 20), “Will curbing Iran’s Nuclear threat boost its proxies?”, Foreign Policy, online: http://foreignpolicy.com/2015/07/20/will-curbing-irans-nuclear-threat-boost-its-proxies/, accessed in October 2015;
Tehran Times (2015, September 1), “No limit on cooperation with Russia: Iranian defense minister”, online: http://www.tehrantimes.com/index_View.asp?code=249065, accessed in October 2015.
312. Clawson, P. (2015, July 10), “How Iran’s economic gain from a nuclear deal might affect its foreign policy”, Policy Watch 2452, Washington, United States: The Washington Institute;
Goodenough, P. (2015, July 15), “Kerry dismisses iran’s financial support for Hezbollah, other terror groups”, CNSNews, online: http://www.cnsnews.com/news/article/patrick-goodenough/kerry-dismisses-irans-financial-support-hezbollah-other-terror, accessed in October 2015;
Sanchez, R. (2015, August 5), “Barack Obama admits Iran nuclear deal will mean more money for terror groups”, The Telegraph, online: http://www.telegraph.co.uk/news/worldnews/middleeast/iran/11786027/Barack-Obama-admits-Iran-nuclear-deal-will-mean-more-money-for-terror-groups.html, accessed in October 2015.