Seven Ways Iran Spends its Money in the Syrian War

Fighters run for cover as a tank shell explodes during heavy fighting in Syria. (Reuters)
Fighters run for cover as a tank shell explodes during heavy fighting in Syria. (Reuters)
TT
20

Seven Ways Iran Spends its Money in the Syrian War

Fighters run for cover as a tank shell explodes during heavy fighting in Syria. (Reuters)
Fighters run for cover as a tank shell explodes during heavy fighting in Syria. (Reuters)

“Get out of Syria! Think about our plight!” This was one of the slogans canted during last December’s nationwide protests in more than 100 Iranian cities.

Seven years ago when Iran started getting involved in the Syrian conflict the narrative promoted by the authorities was that Iran was going there to protect “the Shi’ite holy shrines” against attacks by “Sunni extremists”, a defensive strategy, and would not become involved in the broader struggle for power between regime leader Bashar al-Assad and his opponents. Falling victim to mission creep, however, Iran was quickly re-cast as the chief guarantor of the survival of the regime, an objective labeled as “vital” for Iran’s own security.

Russia’s involvement two years after the Syrian conflict had started, and President Vladimir Putin’s quick emergence as the key setter of agenda in Syria, punctured the myth of Iran as the key player in Syria. That, in turn, has inspired complaints, at first sotto voce, but more recently openly, about the reasons for what Islamic Majlis member Mahmoud Sadeqi in Tehran has dubbed “our Syrian adventure.”

President Hassan Rouhani has tried to re-tell the Syrian story by claiming that Iran was showing a high degree of altruism by helping “our Syrian brothers in need.”

“Even in harsh circumstances we cut our own needs in order to help our Syrian brothers,” he said last month.

With the high number of human losses sustained by Iran and “allies” including Lebanese, Pakistani and Afghan mercenaries admitted officially, the question that people now ask is focused on the financial cost of “our Syrian adventure.”

Iran’s financial commitments in Syria could be divided into seven categories.

The first consists of the value of arms and other military materiel supplied by Iran to forces supporting Assad. These include Iranian-made surface-to-surface missiles modeled on the Chinese Silkworms originally developed for use at sea. Another major item consists of armored cars of which Iran is reported to have delivered over 400 to replace losses sustained by Assad’s elite 4th Armored Division. According to estimates by researchers in Iran, Iran has also supplied Assad with over 500 pieces of Russian-made heavy artillery for use against urban centers.

Because of many of the arms supplied to Syria come from Iran’s own stocks, often dating back to years, it is hard to put a price on them. It is even possible that Iran has tried to recycle its old arms as part of a broader plan to renew its arsenal of weapons.

However, some analysts, including Reza Saberi, claim that arms supplied by Iran could be valued at around $1.2 billion.

The second item on Iran’s expenses’ list in Syria consists of delivery of oil and petroleum products to Assad forces. This is done in the context of a credit line that Iran has opened for Syria. The most credible figure cited by the Iranian media puts the size of that “line” at between $2-3 billion a year. The total “credit line” allows for up to $6 billion a year and includes food and medical supplies which Iranian Foreign Minister Mohammed Javad Zarif has put at around $2.5 billion a year.

The third item in Iran’s “Syria expenses” list consists of what the central Bank of Iran calls “transfer funds”. This means Iran exporting a certain quantity of its own oil on behalf of Syria with the understanding that Syria will repay in due course in an interest-free arrangement.

According to Jesse Shahin, spokesman for the office of Staffan de Mistura, the United Nations’ Special emissary on Syria, the “transfer funds” amounts to Iran giving the Assad regime an average of $6 billion a year, sums largely spent on paying civil servants and the forces still more or less loyal to the regime.

The fourth item in Iran’s expenses consists of “emergency funds” made in 2012 and 2103. According to Nadim Shehadah, professor at the Tufts University in the US, cited by BBC researcher Ali Qadimi, that amounted to $14-15 billion.

Tehran sources say the “emergency funds” were disbursed with the help of Austrian and Italian private banks over 30 months in tranches of $300 to $1.2 billion.

The fifth item of Iranian expense consist of funds needed to maintain several paramilitary forces made up of “volunteers for martyrdom” from Afghanistan, Pakistan and, in much smaller numbers, Iraq. The umbrella organ for these forces is the so-called Fatemiyoun Division, formerly a brigade, which was built up to 12,000 men in 2016.

At the time, General Qasem Soleimani, Commander of the Quds Corps, the organ that is supposed to coordinate Iranian operations in Syria, claimed that “volunteers for martyrdom” received no more than $100 a month in cash.

However, several Majlis members, speaking on condition of anonymity, claim that the payment is closer to $1,000 a month as Quds Corps also pays “subsistence pay” to families of the “volunteers for martyrdom.” All in all, the Fatemiyoun Division and ancillaries cost Iran around $1 billion a year. That does not include the $800 million paid annually to the Lebanese branch of “Hezbollah” led by Hassan Nasrallah.

A sixth source of income to finance the war on Assad’s side is provided by what Tehran terms bilateral trade. Much of this, of course, is more in the nature of transit trade with Iranian companies selling Syria’s oil and gas and phosphate to third countries. According to General Yahya Rahim Safavi, a military adviser to “Supreme Guide” Ali Khamenei, in addition to that trade Iran has won a major mobile phone contract in Syria with the prospect of creating a major new source of income to finance the war.

A major source of income for Assad consisted of money spent by over 1.2 million Iranian pilgrims, who visited Syria each year prior to 2011. However, the flow of pilgrims has almost completely dried up with Iranians preferring to visit “holy shrines” in Iraq. Meanwhile, some of the infrastructure, including over 100 hotels, built with Iranian money have either been badly damaged or left abandoned in previously peaceful areas turned into battlefields.

According to some studies, Iran’s losses on that score could be put at over $2 billion as much of the infrastructure may no longer be recoverable.

A seventh source item of cost for the Syrian war is represented by what Iran spends on keeping around 13,000 of its own troops, often presented as advisers or technicians, in Syria. No official figures are available. But if Iranian troops in Syria receive the same treatment as comparable military ranks inside Iran itself the annual cost could be around $3 billion in salaries and upkeep, not taking into account the cost of weapons and materiel used. The most conservative estimate would see Iran spending an average of $12.7 billion a year in Syria of which less than $2 billion may be recovered in trade deals using Syrian energy and raw material.

According to Tehran sources, part of the funds needed is raised through a special one per cent tariff imposed on all car imports in Iran with the proceeds credited to a special “Resistance Account” controlled by the office of the “Supreme Guide”.

Another source of funds is provided by “voluntary donations” supposedly for the defense or rebuilding of “shrines ”. Under that scheme 26 of Iran’s 31 provinces are assigned quotas to fulfill by raising funds from local businesses and through donations collected at mosques and bazaars. Provinces with a Sunnis majority are excluded from the scheme. As these “donations” are collected by local Friday prayer leaders, it is hard to know what percentage is actually transferred to the central fund and how much is kept by the involved clerics themselves.

Tehran University Professor Sadeq Ziba-Kalam recently invited the leadership in Tehran to review involvement in Syria. He was rewarded with a prison sentence of 18 months.

Nevertheless, many Iranians are beginning to realize that Syria is a costly war, both in terms of human losses and financial burden. And that, some analysts, believe is already encouraging a re-think of what some Iranians regard as a losing strategy.



From India-Pakistan to Iran and Ukraine, a New Era of Escalation

The Iron Dome, the Israeli air defense system, intercepts missiles fired from Iran, over Tel Aviv, Israel, 17 June 2025. (EPA)
The Iron Dome, the Israeli air defense system, intercepts missiles fired from Iran, over Tel Aviv, Israel, 17 June 2025. (EPA)
TT
20

From India-Pakistan to Iran and Ukraine, a New Era of Escalation

The Iron Dome, the Israeli air defense system, intercepts missiles fired from Iran, over Tel Aviv, Israel, 17 June 2025. (EPA)
The Iron Dome, the Israeli air defense system, intercepts missiles fired from Iran, over Tel Aviv, Israel, 17 June 2025. (EPA)

By Peter Apps

As India’s defense chief attended an international security conference in Singapore in May, soon after India and Pakistan fought what many in South Asia now dub “the four-day war”, he had a simple message: Both sides expect to do it all again.

It was a stark and perhaps counterintuitive conclusion: the four-day military exchange, primarily through missiles and drones, appears to have been among the most serious in history between nuclear-armed nations.

Indeed, reports from both sides suggest it took a direct intervention from US Secretary of State Marco Rubio to halt an escalating exchange of drones and rockets.

Speaking to a Reuters colleague in Singapore, however, Indian Chief of Defense Staff General Anil Chauhan denied either nation had come close to the “nuclear threshold”, describing a “lot of messaging” from both sides.

“A new space for conventional operations has been created and I think that is the new norm,” he said, vowing that New Delhi would continue to respond militarily to any militant attacks on India suspected to have originated from Pakistan.

How stable that "space" might be and how great the risk of escalation for now remains unclear. However, there have been several dramatic examples of escalation in several already volatile global stand-offs over the past two months.

As well as the “four-day” war between India and Pakistan last month, recent weeks have witnessed what is now referred to in Israel and Iran as their “12-day war”. It ended this week with a US-brokered ceasefire after Washington joined the fray with massive air strikes on Tehran’s underground nuclear sites.

Despite years of confrontation, Israel and Iran had not struck each other’s territory directly until last year, while successive US administrations have held back from similar steps.

As events in Ukraine have shown, conflict between major nations can become normalized at speed – whether that means “just” an exchange of drones and missiles, or a more existential battle.

More concerning still, such conflicts appear to have become more serious throughout the current decade, with plenty of room for further escalation.

This month, that included an audacious set of Ukrainian-organized drone strikes on long-range bomber bases deep inside Russian territory, destroying multiple aircraft which, as well as striking Ukraine, have also been responsible for carrying the Kremlin’s nuclear deterrent.

All of that is a far cry from the original Cold War, in which it was often assumed that any serious military clash – particularly involving nuclear forces or the nations that possessed them – might rapidly escalate beyond the point of no return. But it does bring with it new risks of escalation.

Simmering in the background, meanwhile, is the largest and most dangerous confrontation of them all - that between the US and China, with US officials saying Beijing has instructed its military to be prepared to move against Taiwan from 2027, potentially sparking a hugely wider conflict.

As US President Donald Trump headed to Europe this week for the annual NATO summit, just after bombing Iran, it was clear his administration hopes such a potent show of force might be enough to deter Beijing in particular from pushing its luck.

“American deterrence is back,” US Defense Secretary Pete Hegseth told a Pentagon press briefing the morning after the air strikes took place.

Iran’s initial response of drones and missiles fired at a US air base in Qatar – with forewarning to the US that the fusillade was coming – appeared deliberately moderate to avoid further escalation.

Addressing senators at their confirmation hearing on Tuesday, America’s next top commanders in Europe and the Middle East were unanimous in their comments that the US strikes against Iran would strengthen Washington's hand when it came to handling Moscow and Beijing.

Chinese media commentary was more mixed. Han Peng, head of state-run China Media Group's North American operations, said the US had shown weakness to the world by not wanting to get dragged into the Iran conflict due to its “strategic contraction”.

Other social media posts talked of how vulnerable Iran looked, with nationalist commentator Hu Xijn warning: "If one day we have to get involved in a war, we must be the best at it."

LONG ARM OF AMERICA

On that front, the spectacle of multiple US B-2 bombers battering Iran’s deepest-buried nuclear bunkers - having flown all the way from the US mainland apparently undetected - will not have gone unnoticed in Moscow or Beijing.

Nor will Trump’s not so subtle implications that unless Iran backed down, similar weapons might be used to kill its Supreme Leader Ali Khamenei or other senior figures, wherever they might hide.

None of America’s adversaries have the ability to strike without warning in that way against hardened, deepened targets, and the B-2 – now being replaced by the more advanced B-21 – has no foreign equal.

Both are designed to penetrate highly sophisticated air defenses, although how well they would perform against cutting-edge Russian or Chinese systems would only be revealed in an actual conflict.

China’s effort at building something similar, the H-2, has been trailed in Chinese media for years – and US officials say Beijing is striving hard to make it work.

Both China and Russia have fifth-generation fighters with some stealth abilities, but none have the range or carrying capacity to target the deepest Western leadership or weapons bunkers with conventional munitions.

As a result, any Chinese or Russian long-range strikes – whether conventional or nuclear – would have to be launched with missiles that could be detected in advance.

Even without launching such weapons, however, nuclear powers have their own tools to deliver threats.

An analysis of the India-Pakistan “four-day war” in May done by the Stimson Center suggested that as Indian strikes became more serious on the third day of the war, Pakistan might have taken similar, deliberately visible steps to ready its nuclear arsenal to grab US attention and help conclude the conflict.

Indian newspapers have reported that a desperate Pakistan did indeed put pressure on the US to encourage India to stop, as damage to its forces was becoming increasingly serious, and threatening the government.

Pakistan denies that – but one of its most senior officers was keen to stress that any repeat of India’s strikes would bring atomic risk.

"Nothing happened this time," said the chairman of the Pakistani joint chiefs, General Sahir Shamshad Mirza, also speaking to Reuters at the Shangri-La dialogue in Singapore. "But you can't rule out any strategic miscalculation at any time."

For now, both sides have pulled back troops from the border – while India appears determined to use longer term strategies to undermine its neighbor, including withdrawing from a treaty controlling the water supplies of the Indus River, which Indian Prime Minister Modi said he now intends to dam. Pakistani officials have warned that could be another act of war.

DRONES AND DETERRENCE

Making sure Iran never obtains the leverage of a working atomic bomb, of course, was a key point of the US and Israeli air strikes. Trump and Israeli Prime Minister Benjamin Netanyahu agreed that the dangers of a government so hostile to Israel obtaining such a weapon would always be intolerable.

For years, government and private sector analysts had predicted Iran might respond to an assault on its nuclear facilities with attacks by its proxies across the Middle East, including on Israel from Hezbollah in Lebanon and Hamas in Gaza, as well as using thousands of missiles, drones and attack craft to block international oil exports through the Strait of Hormuz.

In reality, the threat of an overwhelming US military response – and hints of an accompanying switch of US policy to outright regime change or decapitation in Iran, coupled with the Israeli military success against Hezbollah and Hamas, appear to have forced Tehran to largely stand down.

What that means longer term is another question.

Flying to the Netherlands on Tuesday for the NATO summit, Trump appeared to be offering Iran under its current Shi'ite Muslim clerical rulers a future as a “major trading nation” providing they abandoned their atomic program.

The Trump administration is also talking up the success of its Operation ROUGH RIDER against the Iran-backed Houthi militia in Yemen.

Vice Admiral Bradley Cooper, selected as the new head of US Central Command, told senators the US military had bombed the Houthis for 50 days before a deal was struck in which the Houthis agreed to stop attacking US and other international shipping in the Red Sea.

But Cooper also noted that like other militant groups in the Middle East, the Houthis were becoming increasingly successful in building underground bases out of the reach of smaller US weapons, as well as using unmanned systems to sometimes overwhelm their enemies.

“The nature and character of warfare is changing before our very eyes,” he said.

Behind the scenes and sometimes in public, US and allied officials say they are still assessing the implications of the success of Ukraine and Israel in infiltrating large numbers of short-range drones into Russia and Iran respectively for two spectacular attacks in recent weeks.

According to Ukrainian officials, the drones were smuggled into Russia hidden inside prefabricated buildings on the back of trucks, with the Russian drivers unaware of what they were carrying until the drones were launched.

Israel’s use of drones on the first day of its campaign against Iran is even more unsettling for Western nations wondering what such an attack might look like.

Its drones were smuggled into Iran and in some cases assembled in secret there to strike multiple senior Iranian leaders and officials in their homes as they slept in the small hours of the morning on the first day of the campaign.

As they met in The Hague this week for their annual summit, NATO officials and commanders will have considered what they must do to build their own defenses to ensure they do not prove vulnerable to a similar attack.

Judging by reports in the Chinese press, military officials there are now working on the same.