U.S. economic warfare against Iran is hitting the regime’s sources of power as troops go without pay—just as they are needed to quell growing unrest in southeastern provinces.
In a video message posted on Friday, U.S. Central Command chief Adm. Brad Cooper said the naval blockade has prevented Iran from exporting at least $25 billion worth of crude oil. The U.S. and its partners have also frozen nearly $350 million cryptocurrency assets, he added.
The effects have rippled throughout Iran’s economy, forcing the regime to withhold salaries, pensions, and benefits to workers in the energy, manufacturing, construction and security sectors, including the Islamic Revolutionary Guard Corps, Cooper said.
“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,” he explained. “The Islamic regime is clearly feeling the economic pain, and the IRGC is increasingly showing signs of greater desperation as a result.”
Cooper pointed to the resurgence in Iranian attacks on commercial shipping in the Persian Gulf in recent weeks. Still, the flow of oil remains near prewar levels, as Iran’s neighbors export their crude under the protection of the U.S. military.
Iran’s economic collapse is so severe that even Supreme Leader Mojtaba Khamenei has expressed concern. Earlier this month, state media said Mohsen Rezaei, Iran’s top security official, admitted that the situation is one of the most difficult periods the country has ever faced.
Meanwhile, Iran currency is in free fall as oil revenue dries up, with the trickle of sales from crude that was already at sea prior to the U.S. reimposing its blockade now running out.
Payments for those final oil deliveries, which primarily end up in China, could stretch out to December. Once that spigot runs dry, however, the Iranian regime will be deprived of what was previously its top source of hard currency.
Oil sales typically make up about a third of Iran’s state budget and are also key sources of funding for the IRGC. Central Command’s update Friday tracks with earlier signs the Iranian regime is suffering a cash crunch.
Local media have reported that retired government employees staged protests in recent weeks because they didn’t receive their full pensions, according to the New York Times. Workers in the public and private sector have also announced on social media that they are quitting due to insufficient pay.
That’s as inflation is now near 90% and accelerating each month, eroding the salaries that Iranians earn and forcing consumers to pay for everyday essentials like groceries with installment plans.
Iran’s inability to pay its troops comes at an especially critical time. Not only is the military getting more aggressive in the Strait of Hormuz against tankers, it’s also preparing for a fresh U.S. offensive that may come after midterm elections while fighting more domestic unrest.
Separatist militants in the southeastern provinces of Sistan and Baluchestan, where Iran has long battled insurgencies, have stepped up attacks against the regime.
State media reported that at least eight members of Iran’s security forces have been killed there in the past three weeks. That includes a police officer, a Basij militia fighter, and even a senior IRGC commander.
Iran’s security forces are stretched due to a lack of resources as well as increased foreign and internal threats, according to Shay Khatiri, a senior fellow at the Yorktown Institute.
“As the Iranian regime weakens, the number of such local movements will likely multiply in number and consolidate in power,” he added in a post for the Middle East Forum.