Iran Update, June 21, 2023

The Iran Update aims to inform national security policy by providing timely, relevant, and independent open-source analysis of developments pertaining to Iran and its Axis of Resistance. This update covers political, military, and economic events and trends that affect the stability and decision-making of the Iranian regime. It also provides insights into Iranian and Iranian-sponsored activities abroad that undermine regional stability and threaten US forces and interests. The Critical Threats Project (CTP) at the American Enterprise Institute with support from the Institute for the Study of War (ISW) provides these updates Monday through Friday. To receive Iran Updates via email, please subscribe here.

The Institute for the Study of War (ISW) with support from the Critical Threats Project (CTP) at the American Enterprise Institute launched a new interactive map of Iran and the Middle East. The map depicts events in Iran that affect the stability of the Iranian regime, namely anti-regime protests and reported poisoning incidents. It also shows developments in Syria that jeopardize regional stability and pose threats to US forces and interests, including Iranian and Iranian-backed militia positions.

Key Takeaways

1. The Syrian regime is leveraging regional normalization with Arab states to fund the reconstruction of Syria’s railways, which could block some Iranian efforts to secure revenue from such projects. The reconstruction of Syria’s rail infrastructure is likely to facilitate Iranian efforts to generate revenue through greater regional trade, nonetheless.
2. Iran is seeking to leverage arms sales to generate revenue for the Iranian economy.

Iranian Activities in the Levant

This section covers Iranian efforts to consolidate and expand Tehran’s economic, military, and political influence throughout the Levant and especially in Syria. This section examines some of the many campaigns that Iran is pursuing to achieve this strategic objective. CTP will update and refine our assessments of these campaigns over time and in future updates.

The Syrian regime is leveraging regional normalization with Arab states to fund the reconstruction of Syria’s railways, which could block some Iranian efforts to secure revenue from such projects. Eight Arab states—Egypt, Iraq, Jordan, Lebanon, Libya, Palestine, Sudan, and Tunisia—discussed rebuilding Syrian rail infrastructure at the Arab Railway Union conference in Damascus on June 20, the first conference of its kind in 11 years.[i] Arab Economic Unity Council Secretary General Mohammadi Ahmed al-Nani announced at the conference that the council will help Syria receive Arab investment for trade and transportation projects in late 2023.[ii] The Arab Economic Unity Council is part of the Arab League. The conference did not result in any memoranda of understanding, agreements, or contracts, however. Agreements or contracts between Syria and the Arab League would conflict with deals the Iranian and Syrian regimes reached in May. Iranian President Ebrahim Raisi signed railroad-related agreements with Syrian President Bashar al Assad during his May 3 - 5 trip to Syria.[iii] Raisi separately asserted that Iranian companies are prepared to be the primary providers of reconstruction projects in Syria during an interview with Lebanese Hezbollah-run Al Mayadeen on May 2.

The reconstruction of Syria’s rail infrastructure is likely to facilitate Iranian efforts to generate revenue through greater regional trade, nonetheless. Iran seeks to build a railway line linking Iran to Syria via Iraq to bolster its domestic economy, create regional economic dependency, and evade international sanctions. Iran and Iraq have agreed to railway projects in April and May 2023 with the stated aim of economic integration.[iv] CTP previously assessed that Iranian Roads and Urban Development Minister Mehrdad Bazrpash likely discussed plans with Syrian officials to establish a rail link between Iran and Syria during Raisi’s May trip.[v] Bazrpash stated on May 9 that Iran and Syria are working together to improve Syrian rail infrastructure and that once the Iran-Iraq section is completed Iran will have a rail route to Syria.[vi] Establishing these rail connections will provide Iran with a rail link to the Levant and the Mediterranean Sea, enabling Iran to reap greater trade profits despite sanctions. An Iran-Iraq-Syria railway would also facilitate Iranian and Syrian sanctions evasion through unsanctioned Iraqi ports.

Iran’s efforts to establish greater regional trade are part of the Raisi administration’s broader “neighborhood policy,” which is an economic policy centered on building relations with regional and extra-regional states to undermine Western sanctions.[vii] These countries cannot individually revive Iran’s economy but can cumulatively generate significant revenue for Iran. Iranian officials have met with their counterparts from various countries, including Cuba, Indonesia, Nicaragua, Syria, Turkmenistan, Uzbekistan, and Venezuela, in recent months to capitalize on foreign economic opportunities and boost the Iranian economy.[viii] Raisi announced that Iran and Venezuela plan to increase bilateral trade to 20 billion dollars during a joint press conference with Venezuelan President Nicolas Maduro in Caracas, Venezuela on June 13.[ix] Raisi and Uzbek President Shavkat Mirziyoyev separately signed a preferential trade agreement on June 18 to increase bilateral trade between Iran and Uzbekistan from roughly one to three billion US dollars annually.[x]

Iranian Domestic and Political Affairs

This section covers factors and trends affecting regime decision-making and stability. CTP will cover domestic politics, significant protest activity, and related issues here.

Iran is seeking to leverage arms sales to generate revenue for the Iranian economy. Armed Forces General Staff Chief Major General Mohammad Bagheri stated on May 31 that Iran will export its military capabilities to “friendly” countries.[xi] Bagheri also called on Foreign Affairs Ministry officials to relay Iran’s willingness to export its defense capabilities to foreign dignitaries.[xii] Defense Minister Brigadier General Mohammad Reza Ashtiani separately expressed Iran’s willingness to supply Mali with military equipment and small arms on May 29 and offered to sell arms to and help develop Syria’s defense industry on May 8 and 10.[xiii] Other African countries, including Ethiopia, have also expressed an interest in purchasing Iranian-made drones.[xiv] Iran has established drone manufacturing factories in Tajikistan and Venezuela and is building another in Yelabuga, Russia.[xv] These efforts align with the Raisi administration’s recent economic diplomacy with several regional and extra-regional states to generate revenue through economic trade, as CTP previously assessed.[xvi]

Iran is unlikely to sell missiles to Russia for use against Ukraine as such a transfer would undermine its ongoing efforts to secure a nuclear deal. Iran is pursuing de-escalatory negotiations with the United States to receive sanctions relief for its struggling economy.[xvii] Iran also is trying to avoid driving the European states from nuclear negotiations that would include sanctions relief.[xviii]  Iranian missile exports to Russia would escalate tensions with the US and European countries, the latter of which have recently threatened to snapback UN sanctions were Iran to continue high-level enrichment and drone sales to Russia.[xix]