Iran Rejects Claims of Impending Collapse, Says IRGC Retains Its Forces

Tehran, Iran – Iranian officials have rejected allegations that the country can no longer support its regional allies, while acknowledging that US sanctions and conflict have created financial challenges.

Last week, General Brad Cooper, commander of US Central Command (CENTCOM), said the combination of military strikes and a naval blockade of Iran's southern ports had "dealt heavy blows" to the country. According to him, the US has blocked at least $25 billion in Iranian crude oil exports and helped freeze around $350 million in cryptocurrency assets. This, the commander said, has left the IRGC unable to pay its soldiers or the financially strapped regional allied groups.

"Financial pressure on Iran's military has become so severe that there are reports that Iran-aligned armed groups in the region are withholding payments to fighters in order to send money back to the IRGC, while the force is also not paying its own troops," Cooper said.

The information was presented by the US as a victory in its confrontation with Iran, at a time when Washington has so far achieved few concrete results on the ground.

According to Michael Knights, head of Middle East and North Africa research at Horizon Engage – a US-based geopolitical intelligence and risk consultancy – Hezbollah in Lebanon and the Houthis in Yemen have suffered financial losses over the past few years.

"The national economies that sustain the Hezbollah and Houthi movements are severely depleted, so they continue to receive subsidies and in-kind support – specifically fuel products – from Iran," Knights told Al Jazeera.

How allied groups are funded

For decades, the IRGC's Quds Force has provided money, weapons, components, training and manufacturing expertise to allied groups in the region. According to UN experts and US officials, this mechanism helps partners confronting the US and Israel to assemble or produce many types of weapons locally.

These groups also rely on business activities, including oil exports, along with donations and local resources to fund their operations. Some Iraqi factions have been integrated into the official security forces and receive government funding through the Popular Mobilization Forces (PMF).

The US Treasury accuses the commercial networks of allies in Iraq of selling Iranian goods and distributing the proceeds through intermediary entities and money exchange houses. According to Knights, this gives them a stronger financial position than their "less fortunate brothers" Hezbollah and the Houthis, and in recent years there have been reports that some money is being transferred from Iraq to Iran.

"Some Iraqi militiamen and government employees are indeed being paid late, at the same time as Iraqi militia groups are transferring money abroad to support Iran, the Houthis and Hezbollah in Lebanon," Knights said.

In September, the US Treasury accused Kataib Hezbollah – an influential Shia Muslim armed group in Iraq backed by Tehran – of "siphoning off" Iraqi resources to support Iran. It also cited earlier large transfers from the Quds Force to Hezbollah, describing money flowing in both directions.

Earlier this month, Reuters cited unnamed sources as saying Hezbollah had received $200 million from Iran in September. The US State Department rejected the report at the time, saying Hezbollah was "trying to save face with fabricated stories about cash flows from Iran".

Iran insists there is no risk of "collapse"

Iran's economy has suffered multiple shocks in recent years due to conflict, internal mismanagement and sanctions. The result has been soaring inflation, low-paying jobs, a depreciating currency and isolation from the international community for the country's 90 million people.

The outlook for improvement appears unclear, with the World Bank forecasting this month that Iran's economy will contract by 7.7 percent in the 2026-2027 fiscal year.

Nevertheless, Iranian officials stress that these difficulties have not shaken their resolve, and reject the US Treasury's assessment that economic pressure could cause Tehran to lose control within a few months.

"Despite all the pressure, Iran's economy has shown great resilience, and claims that Iran's economy is collapsing are nothing more than an illusion," Central Bank Governor Abdolnaser Hemmati said earlier this month.

Financial difficulties and the response

On Sunday, President Masoud Pezeshkian acknowledged that military strikes and the maritime blockade had caused major problems for the country, but said the government was relying on domestic capacity to withstand the pressure.

He asserted that managing consumption has now eliminated the need to import gasoline – spending that, if imports were possible, would cost $12 billion. The president pledged to return to households the revenue from a recent fuel price increase through a slight increase in electronic food vouchers.

According to Knights, Iranian officials are "stuck in an escalation spiral with the US administration regardless of the state of Iran's economy".

"Trump is betting that being poorer will make the Iranian regime more flexible, but that has never been a wise bet," he said.

Negar Mortazavi, a senior fellow at the Washington-based Center for International Policy, predicted that Tehran will continue to prioritize its regional allies despite financial pressure.

"Economic pressure is certainly constraining Iran's military resources, but that does not mean it will fundamentally change the IRGC's strategic calculus or force Tehran to capitulate," she told Al Jazeera.