Iran’s leaders have over the years repeatedly denied allegations of supporting terrorism or intending to develop nuclear weapons. But the international community remained unconvinced. The country has been termed a ‘state sponsor of terrorism’ since the mid-1980s and the United Nations, the European Union, the United States and other countries have all imposed a growing list of sanctions against Iran, both in relation to terrorism and human rights abuses, as well as to the country’s suspected military nuclear programme.
With an interim nuclear agreement reached between world powers and Iran in 2013, and the subsequent Joint Comprehensive Plan of Action (JCPA) expected to be implemented in early 2016, the sanctions connected to the nuclear programme are expected to be lifted according to the JCPA.
The support to foreign paramilitary groups on the one hand, and the nuclear programme on the other hand, are both crucial factors in achieving Iran’s geostrategical goals in the Middle East and creating lines of defence against its opponents.
Over the past few decades (since 1979), Iran’s foreign policy has not only consisted of traditional diplomacy but also support for a range of armed militias and repressive governments in the Middle East. This support has consisted of funds, weapons, strategic advice and military training. The broad aim, of course, is to consolidate and expand the Iranian regime’s influence in the region.
Among the groups provided with Iranian funds as well as material and strategic support and included in this research are:
- Hezbollah in Lebanon (since 1983)
- Several Shia militias in Iraq (since 2003)
- Hamas and the Islamic Jihad in the Gaza Strip (since 2007)
- the Houthi rebels in Yemen (since 2010)
- the Assad regime forces and militias in Syria (since 2011).
While there are many indications of this support, it is much more difficult to quantify the levels of engagement. A lack of verifiable data means that the flow of funds, training, weapons and other support provided by Iran to foreign militias and governments remains largely subject to speculation. Based on available, credible information, Iran’s estimated support for the above-mentioned entities over the specified periods of time can be summarised as follows:
– 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.
These large funds provided to various paramilitary groups and allied governments, despite being heavily constrained by sanctions and continuously decreasing oil prices, show the level of importance that the Iranian regime has placed on increasing its influence in the region. While there are many clear indications that various types of support are funneled to these parties, the financial trails of Iranian funding remain largely non-transparent. There has been ample speculation over the years on how especially the Iranian Sepah Qods Force is financed and what assets are at the direct disposal of the Supreme Leader Ayatollah Ali Khamenei, but available data from credible sources is largely based on assumptions.
When talking about ‘Iran’ as a source of funds, it is important to bear in mind that it is unlikely that all the financial assistance originating from the country passes through official government channels and appears in the official budgets. It rather has to be concluded that Iranian support for militant groups comes from such budgets only partially; for a large part, it originates from funds managed outside the official government structures. Enormous assets have been found to be at the disposal of Ayatollah Khamenei and Sepah Pasdaran, the Islamic Revolutionary Guard Corps (IRGC). Religious foundations and clandestine business networks under their supervision generate billions of dollars of annual revenues. They 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. The costs of only one nuclear reactor operational in the country are estimated to be approximately US$ 11 billion. This figure increases tremendously to an estimated US$ 100 billion when one also takes into consideration the indirect costs, especially those caused by the international sanctions imposed on the country in relation to military nuclear activities. Moreover, the nuclear programme makes little economic sense when looking at the costs of electricity production.
Considering economic factors as well as the geography of Iran, a determined strategy to quit high-carbon and nuclear energy generation and to rather implement alternative, renewable energy sources seems to be more economically and environmentally viable. In addition, the potential for attracting foreign investments when pursuing a renewable energy path may be promising.
The nuclear deal and the subsequent lifting of sanctions 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 international markets. There have been justified fears that part of the released funds would end up being used by the Iranian regime to further fuel conflicts in the Middle East and increase military spending and financial assistance to allied Arab regimes and paramilitary groups. While the risk of additional financing of terror is widely acknowledged, many experts see Tehran’s foreign ambitions to be less influenced by economic calculations than by political and strategic considerations.