Iranian authorities have pushed back against suggestions that Tehran can no longer support its regional allies. At the same time, they have acknowledged that US sanctions and the ongoing conflict have created serious financial difficulties at home.
The dispute followed remarks last week by US Central Command chief Brad Cooper. He said a mix of military strikes and a naval blockade of Iran’s southern ports had “dealt severe blows” to the country.
US commander cites frozen assets and unpaid forces
Cooper said Washington had stopped at least $25bn in Iranian crude exports and had helped freeze roughly $350m in cryptocurrency assets. In his account, the Iranian Revolutionary Guard Corps (IRGC) is now struggling to pay its own soldiers, as well as the Iran-linked groups in the region that depend on it.
He also described reports that militias aligned with Iran across the region were holding back payments to their fighters so that money could be sent back to the IRGC. According to his remarks, the Guard is itself not paying its troops. The US is presenting these developments as a gain in its war with Iran, although so far it has had few clear successes to point to.
Proxy networks, oil revenue and Iraqi funding channels
Michael Knights, head of MENA research at Horizon Engage, a US-based intelligence and geopolitical risk advisory firm, said Hezbollah in Lebanon and the Houthis in Yemen had suffered financial damage over the past few years. He argued that the economies in their home countries were badly damaged, so the two movements still rely on stipends and in-kind support, including fuel, from Iran.
For decades, the Quds Force of the IRGC has provided money, weapons, components, training and manufacturing know-how to allied groups in the region. According to United Nations experts and US officials, this support has helped partners that are in conflict with the US and Israel to assemble or make some weapons locally.
These groups also raise funds through businesses, including oil exports, along with donations and local resources. Some Iraqi factions have been folded into the official security forces and receive state money through the Popular Mobilisation Forces. The US Department of the Treasury has claimed that allied commercial networks in Iraq sell Iranian commodities and move the proceeds through intermediaries and exchange houses.
Knights said this has left the Iraqi groups in a stronger financial position than their counterparts in Hezbollah and the Houthis. He pointed to what he called late pay for some Iraqi militiamen and civil servants, even as Iraqi militias send money abroad to support Iran and its partners. He said that in recent years some money was reportedly moving from Iraq to Iran.
The Treasury alleged in September that Kataib Hezbollah, a prominent Tehran-backed Shia armed group in Iraq, had diverted Iraqi resources to support Iran. It also described large earlier transfers from the Quds Force to Hezbollah, which it said flowed in both directions.
A wire-service report earlier this month cited unnamed sources as saying Hezbollah had received $200m from Iran in September. The US State Department rejected that report at the time. It said Hezbollah was “trying to save face with fake stories about cash influxes from Iran”.
Inflation, currency slide and official reassurances
Iran’s economy has been hit repeatedly in recent years by war, domestic mismanagement and sanctions. The result has been runaway inflation, low-paying jobs, a weakening national currency and isolation from the global community for 90 million Iranians.
There is little sign of near-term relief. The World Bank reported earlier this month that it expects the economy to contract by 7.7 percent in the fiscal year 2026-27.
Iranian officials say these pressures have not shaken their determination. They have also disputed US Treasury assessments that economic strain could lead to a loss of control within months. Central Bank chief Abdolnaser Hemmati said earlier this month: “Despite all these pressures, the Iranian economy has demonstrated very good resilience, and the claim that Iran’s economy is collapsing is nothing more than an illusion.”
President Masoud Pezeshkian acknowledged on Sunday that military attacks and the maritime blockade had caused major problems. He said the government was relying on domestic resources to withstand the pressure. He said consumption management had removed the need for petrol imports that would otherwise cost $12bn, adding that imports may not be possible at all under US pressure.
Pezeshkian also said revenue from recently raised fuel prices would be returned to households through a modest increase in electronic food vouchers.
Analysts divided over whether pressure will shift Tehran
Knights said Iranian authorities were caught in an aggressive cycle of escalation with the US government, regardless of how the economy was performing. He added: “Trump is betting that being poorer will make Iran’s regime more flexible, but that has never been a good bet.”
Negar Mortazavi, a senior fellow at the Center for International Policy in Washington, DC, said she expected Tehran to keep putting its regional partners first despite the financial strain. She told : “Economic pressure is certainly constraining Iran’s military resources, but that does not mean it will fundamentally change the IRGC’s strategic calculations or force Tehran to surrender.”
