Iran Update, May 4, 2023

May 4, 2023, 4:30 pm ET

Contributors: Ashka Jhaveri and Aleeshyah Lightfoot

The Iran Updates are produced by the Critical Threats Project (CTP) at the American Enterprise Institute with support from the Institute for the Study of War (ISW). To receive Iran Updates via email, please subscribe here.  

The Iranian regime is seeking to take advantage of political and economic developments in Syria and Iraq to improve the Iranian economy and advance its strategic goals in the region. Various Raisi administration ministers met with Syrian officials on May 4. Economic and Financial Affairs Minister Ehsan Khandouzi announced the “removal of obstacles” to Iranian export companies operating in Syria following a meeting with several Syrian economic officials.[i] Information and Communications Technology Minister Issa Zare Pour separately signed a cooperation agreement with his Syrian counterpart, Iyad al Khatib, to facilitate Iranian involvement in modernizing Syria’s telecommunications infrastructure.[ii] Zare Pour additionally emphasized Iranian satellites’ ability to produce high-resolution images that Syrian officials can use in agriculture, infrastructure, and construction. Defense and Armed Forces Logistics Minister Mohammad Reza Ashtiani and Roads and Urban Development Minister Mehrdad Bazrpash also accompanied Raisi to Damascus.[iii] Ashtiani likely sought to secure weapons sales while Bazrpash likely discussed plans with Syrian officials to establish a rail link between Iran and Syria.

The regime may use these economic and political initiatives with the Assad Regime to alleviate Iran’s economic challenges. The Iranian rial reached 556,500 rials to one US dollar on May 1, marking a 10-percent reduction in the value of the rial in the past month, as CTP previously reported.[iv] Reformist-affiliated Etemad additionally reported on May 3 that some Iranians have resorted to bartering household items to afford basic goods such as chicken due to rising inflation.[v]

The regime may simultaneously use these initiatives to pay for and increase the Axis of Resistance’s influence in the region. Al Araby reported on May 4 that the Iraqi government awarded the Muhandis Company—a contracting company modeled after the IRGC Khatam ol Anbia Construction Headquarters and operated by the Iraqi Popular Mobilization Forces (PMF)—infrastructure and development projects across multiple Iraqi provinces.[vi] CTP has previously reported that elements of the Iranian-backed Shia Coordination Framework are attempting to modify and capture Iraqi state institutions to enhance their political power.[vii] The PMF may similarly use these contracts to amass revenue from the state contracts and reuse them to fund PMF operations in Iraq and potentially Syria. Expanding the PMF’s funding streams may allow it to become more self-sufficient and allow Iran to redirect financial resources previously allocated to the PMF back into the Iranian economy. Iran may also use these contracts to evade sanctions and bring hard currency into the Iranian economy in that way.

Iran may specifically use the Muhandis Company to launder the potential influx in Arab and Gulf state financing that would come with Syrian normalization efforts back into the Iranian economy. CTP previously assessed that Iranian reconstruction and economic agreements with the Assad regime may include contracts for organizations affiliated with Iran’s Axis of Resistance in Syria, which would provide the groups with an alternative source of revenue to fund their military operations.[viii] The Muhandis Company could fulfill reconstruction contracts for the Assad regime—with Gulf and Arab state funding—and could use these contracts to facilitate Iranian sanctions evasion.

These economic opportunities will enable the regime to entrench itself further in Syria. The regime’s ability to reap the economic, political, and military benefits of reconstruction depends on Iranian and Syrian officials' implementation of the agreements they have signed.

Iran may respond to renewed Israeli airstrikes on Iranian and Iranian-backed forces in Syria by causing Iranian-backed militias to attack US forces ostensibly in retaliation. Israeli combat aircraft conducted airstrikes on Iranian-backed militants at military airports in Homs and Aleppo Provinces respectively on April 28 and May 1, as CTP previously reported.[ix] The three maps below illustrate a shift during the month of April in the areas of Syria in which Israeli airstrikes and artillery barrages have targeted Iranian and Iranian-backed militants. Israeli kinetic activity primarily concentrated in southwest Syria in the period April 1-27. Israeli kinetic activity before and after April 1-27 demonstrate a wider array of target locations. CTP previously reported that Israel refocused its airstrikes on Palestinian and Syrian Arab Army locations in southwest Syria at the beginning of April, away from its previous focus on Iranian convoys transporting weapons, lines of communication, and military production sites.[x] Lebanese Hezbollah-aligned social media accounts accused the US of tacit involvement in the May 1 airstrike—a tactic that Iran and the Axis of Resistance have employed to justify retaliatory attacks against US forces in eastern Syria in the past.[xi] This rhetorical condition setting suggests that Iran is preparing to renew retaliatory attacks on the US, which it paused for the month of April possibly in response to the shift in Israeli attack locations.

Key Takeaways

• The Iranian regime is seeking to take advantage of political and economic developments in Syria and Iraq to improve the Iranian economy and advance its strategic goals in the region.
• The regime may use economic and political initiatives with the Assad Regime to pay for and increase the Axis of Resistance’s influence in the region.
• Iran may respond to renewed Israeli airstrikes on Iranian and Iranian-backed forces in Syria by causing Iranian-backed militias to attack US forces ostensibly in retaliation.
• Deputy Foreign Affairs Minister for Political Affairs and Chief Nuclear Negotiator Ali Bagheri Kani met with his Irish counterpart, Sonia Hyland, in Tehran on May 4.
• IRGC Quds Force Commander Brigadier General Esmail Ghaani met with prominent Shia cleric Grand Ayatollah Hossein Nouri Hamedani on May 4 to present a report on the Quds Force’s regional activities.
• Iranian President Ebrahim Raisi met with senior Palestinian militia officials in Damascus on May 4, likely to emphasize their increasing integration into the Axis of Resistance.
• Eye of Euphrates reported on May 4 that over 200 local recruits for Iranian-backed militias abandoned their posts in Mayadeen, Deir ez Zor Province.

Internal Security and Protest Activity

At least one protest occurred on May 4. CTP assesses with low confidence that one protest occurred in the following location:

Lamerd, Fars Province[xii]

• Size: Small
• Demographic: Farmers

CTP did not record any student poisoning incidents on May 4.

Foreign Policy and Diplomacy

Deputy Foreign Affairs Minister for Political Affairs and Chief Nuclear Negotiator Ali Bagheri Kani met with his Irish counterpart, Sonia Hyland, in Tehran on May 4.[xiii] The two discussed expanding Irish-Iranian relations and unspecified global developments. President Ebrahim Raisi met with former Irish Foreign Affairs Minister Simon Coveney in Tehran on February 14, 2022.[xiv] Raisi called for enhancing relations between the two countries citing Ireland’s independence “in the face of the US and European governments.” Ireland was reportedly instrumental in facilitating a series of diplomatic engagements between Iran and other countries over regional issues and the nuclear deal.[xv] Ireland plans to open its embassy in Tehran this year.[xvi]

External Security and Military Affairs

IRGC Quds Force Commander Brigadier General Esmail Ghaani met with prominent Shia cleric Grand Ayatollah Hossein Nouri Hamedani on May 4 to present a report on the Quds Force’s regional activities.[xvii] Quds Force commanders have previously consulted Hamedani on Quds Force and Axis of Resistance activities. Ghaani presented a similar report to Hamedani and other senior Shia clerics in June 2021.[xviii] Former Quds Force Commander Major General Qassem Soleimani also met with Hamedani and Assembly of Experts Member Grand Ayatollah Nasser Makarem Shirazi in December 2017.[xix] Ghaani separately called on clerics to “enlighten” the population on the importance of resistance during a speech to Qom Seminary students on May 4.[xx]

Iranian regime affiliated Islamic Awakening World Assembly (IAWA) published a statement threatening retaliation against Israel for the death of Palestinian Islamic Jihad leader Sheikh Khader Adnan.[xxi] IAWA stated that Israel “will pay a heavy price for the martyrdom of Adnan” and “every drop of blood shed in [Palestine]...will shorten the life of the criminal Zionist regime.” Supreme Leader Foreign Affairs Adviser Ali Akbar Velayati chairs IAWA. Other regime officials have similarly published rhetoric condemning Israel in response to Adnan’s death.[xxii] Iranian-backed Palestinian militants also conducted several mortar and rocket attacks into Israel on May 2.[xxiii] Adnan died after an 87-day hunger strike in Israeli custody, as CTP previously reported.[xxiv]

Iranian President Ebrahim Raisi met with senior Palestinian militia officials in Damascus on May 4, likely to emphasize their increasing integration into the Axis of Resistance.[xxv]  Palestinian Islamic Jihad Secretary General Ziyad al Nakhalah and Hamas political bureau member Khalil al Hayya led a delegation to brief Raisi on the situation in the West Bank, the Gaza Strip, and Jerusalem.[xxvi]  Raisi emphasized that Iran will continue to support their armed resistance against Israel. Raisi urged Nakhalah and Hayya to continue and maximize military pressure on Israel.[xxvii]

Eye of Euphrates reported on May 4 that over 200 local recruits for Iranian-backed militias abandoned their posts in Mayadeen, Deir ez Zor Province.[xxviii] Eye of Euphrates claimed that the militants vacated their headquarters facilities in Mayadeen and outposts facing out into the Central Syrian Desert for fear of US-led international coalition airstrikes.[xxix] US-led international coalition airstrikes typically do not target these outposts. CTP has previously reported that ISIS militants have conducted attacks on these outposts, however.[xxx] The militants may have alternatively abandoned their positions for fear of ISIS attacks.