Iran Rejects Claims of Imminent Collapse Amid US Assertions of IRGC Financial Strain

Tehran, Iran – Iranian authorities have refuted claims that the nation is unable to financially support its regional allies, while acknowledging that U.S. sanctions and ongoing conflicts have presented significant financial hurdles. U.S. Central Command chief Brad Cooper asserted last week that a combination of military actions and a naval blockade targeting Iran’s southern ports have inflicted “severe blows” on the country. Cooper stated that the U.S. has successfully prevented at least $25 billion in Iranian crude oil exports and frozen approximately $350 million in cryptocurrency assets, leading to a situation where the Iranian Revolutionary Guard Corps (IRGC) may be struggling to pay its soldiers and Iran-linked regional groups are experiencing financial shortfalls.

“The financial strain on Iran’s military has become so significant that there are reports of Iran-aligned militia groups across the region withholding payments to their soldiers in order to funnel money back to the IRGC, which also is not paying its troops,” Cooper said. This development is being framed as a victory for the U.S. in its ongoing engagement with Iran, which has yielded limited tangible successes for Washington thus far. Michael Knights, head of MENA research at Horizon Engage, a U.S.-based intelligence and geopolitical risk advisory firm, noted that Hezbollah in Lebanon and the Houthis in Yemen have faced financial difficulties in recent years. “The national economies feeding the Hezbollah and Houthi movements are badly broken, so they continue to receive stipends and in-kind funding – in fuel products – from Iran,” Knights informed Al Jazeera.

For decades, the IRGC Quds Force has been instrumental in supplying funds, weaponry, components, training, and manufacturing expertise to allied groups in the region. According to United Nations experts and U.S. officials, this support has enabled these partners, often in opposition to the U.S. and Israel, to develop or produce various weapons domestically. These allied groups also leverage businesses, including oil exports, alongside donations and local resources to finance their operations. Some Iraqi factions have been integrated into official security forces and receive government funding via the Popular Mobilisation Forces. Allied commercial networks in Iraq are reportedly selling Iranian commodities and distributing proceeds through intermediaries and exchange houses, as alleged by the U.S. Department of the Treasury. Knights indicated that this has placed them in a more favorable financial position compared to their “poorer cousins” in Hezbollah and the Houthis, with some funds allegedly flowing from Iraq back to Iran in recent years. “Some Iraqi militiamen and government civil servants are indeed paid late at the same time that Iraqi militias send funding overseas to help Iran, the Houthis and Lebanese Hezbollah,” he told Al Jazeera. The U.S. Treasury further alleged in September that Kataib Hezbollah, a prominent Tehran-backed Shia Muslim armed group in neighboring Iraq, diverted Iraqi resources to support Iran. The Treasury also detailed significant earlier transfers from the Quds Force to Hezbollah, illustrating financial flows in both directions. A Reuters report earlier this month, citing unnamed sources, suggested that Hezbollah received $200 million from Iran in September, a claim the U.S. State Department refuted at the time, stating Hezbollah was “trying to save face with fake stories about cash influxes from Iran.”

Iran's economy has endured a series of setbacks in recent years, attributed to conflict, domestic mismanagement, and sanctions. This has resulted in escalating inflation, low-wage employment, a declining national currency, and international isolation for its 90 million citizens. The outlook for improvement appears dim, with the World Bank projecting a 7.7 percent economic contraction for the fiscal year 2026-27. Despite these challenges, Iranian authorities maintain their resolve and have contested U.S. Treasury assessments suggesting a potential loss of control within months due to economic pressure. Central Bank chief Abdolnaser Hemmati stated 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 engagements and the maritime blockade have created substantial difficulties for the nation. However, he expressed confidence in the government's reliance on domestic capabilities to weather the pressure. He claimed that consumption management had eliminated the need for gasoline imports, which would have cost $12 billion if U.S. pressure had permitted such imports. The president pledged to return revenues from recent fuel price increases to households through modest enhancements to their electronic food vouchers. Knights commented that Iranian authorities are “stuck in an aggressive cycle of escalation with the U.S. government no matter what state Iran’s economy is in.” 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, D.C., anticipates that Tehran will continue to prioritize its regional allied groups despite the financial constraints. “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,” she told Al Jazeera.