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Where is the Money? The connection between Iranian support of foreign militias and economic distress

Over the last couple of days a wave of demonstrations across Iran has captured the world’s attention. Many people from different walks of life in Iran have gathered together and have start protesting on the economic and political situation. Protests are extremely rare in Iran, an authoritarian country with a tight grip on its population. The previous wave of demonstrations dates back to 2010. At that time, the reason for the demonstrations were fraud allegations in the 2009 elections. Those demonstrations, also known as the Green Movement, resulted in 36 confirmed deaths, many injuries, and thousands of arrests. Although the Green Movement did not bring a political change, its scope and severity shocked the regime and made it much more attentive to popular voices. However, drawing a direct parallel from the 2010 demonstrations to the current wave of protests may be wrong. The new demonstrations are different. They are smaller and do not carry a united message. Ironically, it seems that they were initiated by conservative fractions that are displeased with the current moderate leadership of Rouhani. By doing so, they hoped to press Rouhani and to place his policies under pressure. Yet, the demonstrations gained their own momentum and calls against Rouhani shifted quickly to protesters chanting “death to the dictator” aimed at the Supreme Leader Khamenei and the system as a whole.

I would like to focus on particular aspect of the current protests; the economical one. It seems that the main uniting issue is the poor state of the economy and the disillusionment from promises made before the nuclear deal was struck. Some of the more popular slogans in those demonstrations are "Forget Palestine", "Not Gaza, not Lebanon, not Syria, my life for Iran". Those slogans criticize the Iranian foreign policy of supporting the Assad Regime and militant groups across the Middle East. Iran has been running an ambitious foreign policy that includes support for their ally in Syria, Bashar al-Assad, as well as several militant groups across the Middle East. This foreign policy has made Iran into one of the most influential players in the region. Yet this success came with a price. To support this policy Iran has been investing great amounts of money and resources, which have been therefore denied from the Iranian people. So how much money does Iran spend on its policy? The crux of the current Iranian foreign policy is the survival of the Assad Regime in Syria. Assad has been struggling to maintain its role, facing a bitter and harsh civil war as well as the rise of ISIS. Since the beginning of the war Iran has been Assad’s greatest supporter, spending between $6-$35 billion a year to keep Assad in power. These estimates include loans, investments, military bases, and military support from Iranian or proxy forces. One of those proxies, Hezbollah, is another important part of the Iranian foreign policy. Hezbollah was created by Iran and groomed as a strategic force against Israel. Later, when the Assad forces were losing ground, Iran urged Hezbollah to step in and support Assad. Hezbollah represent a significant investment for the Iranian government, with an estimated annual support which ranges $100-$300 million, not including arms and training. Other proxies used strategically against Israel are Hamas and the Islamic Jihad Movement in Palestine (PIJ), two Palestinian militant groups located in the Gaza Strip. Hamas’ success in the Palestinian elections and its successful hostile takeover over the Gaza Strip made the organization valuable for Iran. Hamas has been receiving an amount of $20-$25 million per month to cover its governing budget since 2006. In the last couple of years this amount was reduced due to disagreements between Iran and Hamas. Nonetheless, Iran did not halt its support altogether and currently it is estimated that Iran supplies Hamas with tens of millions of dollars annually. Nonetheless, after the fall out with Hamas, Iran began supporting the PIJ with an annual budget to the tune of $70 million. Iran also supports the Houthi rebels in Yemen in their struggle against the Sunni majority and Saudi Arabia. Iran’s investment in the Houthi rebels is part of its proxy struggle against Saudi Arabia. The Houthi rebels receive an annual budget of tens of millions of dollars as well as military and logistical support. Finally, Iran has been investing in dozens of Shia militias in Iraq, including active recruitment and training. Those militias are the ones that pacified rebellious groups in Iraq, took over the Kurdish Iraqi region after it referendum, and are at the forefront of the fight against ISIS. Estimated as 60,000 strong they enjoy Iranian funding. One of those militias, As'aib Ahl Al Haq, receives a support of $1.5-$2 million per month. A report estimated that Iran pays fighters in this militia and other a monthly salary of $500-$1000.

Drawing from those numbers I conservatively estimate that the Iranian regime spends about $7 billion annually on various Middle Eastern actors. Examination of the 2016 Iranian budget shows that these figures are significant. For instance, they represent more than three times the Health Insurance Organization’s annual budget and almost equal the annual budget of the Iranian Ministry of Education. Iran’s GDP that had steadily been rising since 2012 took a sharp turn in 2015. Ironically, this occurred after the nuclear deal. The nuclear deal was supposed to improve the Iranian economy, but instead the Iranian economy seems to have suffered. Thus, since 2015, Iran’s economic measures tell a gloomy story of an economy in distress. I don’t know if those estimated $7 billion are the sources of this economic situation, yet it seems that the people demonstrating surely believe so.

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