Commanders and members of the Islamic Revolutionary Guard Corps meet with Iran’s Supreme Leader Ayatollah Ali Khamenei in Tehran, Iran, Aug. 17, 2023. Photo: Office of the Iranian Supreme Leader/WANA (West Asia News Agency) via REUTERS

IRAN — The Iranian regime faces mounting financial strain as delayed salaries and shrinking government resources raise questions about the Islamic Republic’s ability to sustain its public institutions and security apparatus amid intensifying US economic pressure.

Iranian banks are running short on cash, and government officials and military personnel, including the Islamic Revolutionary Guard Corps (IRGC) and Basij paramilitary force, have been waiting for overdue salaries, with some payments reportedly delayed for more than a few months.

Family of one IRGC member, for example, told The Algemeiner that the salaries of the member and his colleagues have been delayed for months.

Iran’s financial difficulties are affecting military and government payrolls. The US naval blockade of Iranian ports has prevented the country from exporting at least $25 billion worth of crude oil, while authorities have also frozen approximately $350 million in cryptocurrency assets, according to Adm. Brad Cooper, commander of US Central Command (CENTCOM).

The financial pressure is hurting salaries, pensions, and benefits across several sectors, including energy, manufacturing, construction, and security.

Even Iran’s network of terrorist proxies is being affected. US Treasury Secretary Scott Bessent told CNBC on Wednesday that efforts to isolate Iran economically have been “very successful” and that Tehran is cutting off funding for its proxies.

“In the summer, the elected officials started worrying out loud about the economy. Now, publicly and privately, the IRGC is very concerned. They’re talking about a collapse,” he said.

“They’re not able to get dollars,” Bessent added. “What we are also seeing too, their proxies — whether it’s the Houthis, Hamas, or Hezbollah — their funding is being cut off.”

The IRGC is a multi-service military force charged with defending Iran’s authoritarian regime internally and expanding its Islamist revolutionary ideology externally. The IRGC’s notorious Quds Force is responsible for overseeing the regime’s operations and terrorist proxies abroad.

Bessent’s comments followed recent statements from CENTCOM officials and Arabic media reports saying that Iran-aligned armed groups in Iraq and perhaps elsewhere in the Middle East are at least partially withholding payments to their personnel to redirect funds to the IRGC.

The reported financial strain comes as Washington intensifies efforts to restrict Iran’s oil exports and access to international financial channels. The US recently expanded secondary sanctions that target countries doing business with Iran, and its naval blockade continues to cut off Tehran’s main source of revenue: oil and gas exports.

Iranian President Masoud Pezeshkian has said Iran’s total trade has fallen between 25% and 35%, with imports hit harder than exports.

Meanwhile, Iran’s currency has plummeted, while official inflation figures show severe pressure on household purchasing power. Last month, Iran’s rial fell to a record low of about 2.2 million to the US dollar, collapsing from around 1 million rials to the dollar a year ago. Iranian media reports describe limited access to foreign currency and disrupted trade routes as additional obstacles for businesses and importers.

Bessent predicted that the Iranian economy would contract by more than 25% in the 12-month period ending in March 2027.

“My advice to the Iranian people would be: Don’t pay your taxes because you’re not going to get anything back from the government,” Bessent told Iran International. “You should start stocking up on heating fuel. There’s going to be a big heating fuel shortage. In terms of gasoline, everyone should fill up their tanks now.”

To make the picture gloomier, a senior Iranian Labor Ministry official said on Tuesday that the country could lose up to 1.4 million jobs this year if its economy contracts by 7-8%. Malek Hosseini, deputy minister for entrepreneurship and employment development, estimated in an interview with the Iranian Labor News Agency that around 2.5 million people are already unemployed.

Reports of delayed payments are not limited to the military.

The recipients of unemployment benefits have experienced delays of several weeks, with some waiting as long as two months. Iranian media reported documented claims from workers in mining, manufacturing, aviation, and municipal services who said they had gone weeks or months without receiving their full wages. The reports indicate that payment difficulties are affecting households already struggling with rising living costs.

For public employees and military personnel, delayed salaries are adding to pressure from inflation and declining purchasing power. The Statistical Center of Iran reported on Wednesday that prices were 88.7% higher in October than a year earlier, adding that the point-to-point inflation rate reached a staggering 107% in rural areas. The 12-month average inflation rate stood at 76.8%.

For the government, widespread arrears risk undermining confidence in institutions responsible for delivering services and maintaining public order.

Financial pressure on the IRGC, Basij, and broader military could carry particularly significant consequences for a government that relies heavily on its security forces to maintain internal control.

The IRGC plays a central role in Iran’s military and regional policies, as well as in parts of its economic system, such as energy and construction. The unpaid personnel, reduced funding, and financial pressure could complicate the regime’s ability to sustain military operations and continue funding its proxies abroad.

The financial strain comes amid heightened tensions between Washington and Tehran and the possibility of renewed military confrontation.

Several reports over the past week have indicated US President Donald Trump will, along with Israel, resume high-intensity military operations against Iran after the US midterm elections on Tuesday.

The Wall Street Journal reported this week that US officials had told several Gulf Arab governments to prepare for a “short, intense” campaign after the American vote. The report, based on people briefed on the conversations, said Trump had not made a final decision but was leaning toward a major strike on Iranian infrastructure and nuclear sites.

Iran has warned that renewed hostilities could provoke strikes on economic and civilian targets across the region.

Maddie Ali, a former schoolteacher, is now a freelance contributor to The Algemeiner based in Iran. In addition to her academic work, she has been involved in civic activity in her hometown, including participating in and helping organize local protests alongside friends and family. Her name has been changed to protect her identity.