IRGC commander suspected dead after Israeli airstrike in Damascus

The hardline faction has ramped up their opposition to the international anti-money laundering and counter-terrorism financing body after eight years of its appeals for compliance.

The infighting within the government comes at a time when Iran’s economy is grappling with sanctions, inflation, and widespread public dissatisfaction, posing challenges for new President Masoud Pezeshkian’s administration. The FATF demands compliance with global rule on money laundering and terrorism financing among other requirements.

Iran continues to fail to meet FATF requirements to exit the organization’s blacklist, a designation that continues to isolate the country from international financial systems. However, the hardline faction, embedded within Iran’s power structure, views compliance with FATF as a threat to Iran’s regional influence, particularly its financial and military support for its proxy groups like Hezbollah and Hamas which the Islamic Republic has built to exert military influence across the region.

Abolfazl Aboutorabi, a member of Iran’s parliament, made the case against FATF clear in a statement earlier this week. He described the organization as "a tool and weapon in the hands of the enemy to pressure us so that we are forced to hand over our data to them."

Aboutorabi’s comments encapsulate the mistrust that many within Iran’s political elite have towards international institutions, fearing that adhering to the FATF’s standards would jeopardize Iran’s ability to maintain its alliances with regional proxy forces, which Tehran views as essential to its defense and regional strategy.

One of the most contentious aspects of the FATF debate in Iran is the Palermo Convention, which requires member countries to combat transnational organized crime.

Aboutorabi and other opponents argue that joining this convention would result in Iran labeling groups like Hezbollah and Hamas as "terrorist organizations," a move they say would cripple Iran’s ability to support what they call "liberation movements."

"If we join the Palermo Convention, we are cutting off our own strong arms," Aboutorabi warned, reflecting the belief among hardliners that FATF compliance would weaken Iran’s hand in the region.

The new president faces growing resistance

The internal discord over FATF poses a challenge for President Masoud Pezeshkian, who was elected on promises of economic reform. After an election campaign marked by low voter turnout and public disillusionment with the political system, Pezeshkian secured victory by promising to address the country’s dire economic situation amid the worst crisis since the founding of the Islamic Republic. But fulfilling these promises has become an uphill battle, as regional instability, particularly growing tensions with Israel, further complicate the situation.

Critics of FATF, bolstered by hardline media outlets like Kayhan, have framed the debate as a matter of national security. The newspaper, which frequently echoes the sentiments of Iran’s conservative establishment, wrote in a recent editorial that "we are in the middle of a war," and argued that joining FATF would tie Iran’s hands in supporting Hezbollah and other groups.

Kayhan accused the pro-FATF camp of “failing to grasp the gravity of the situation,” asserting that FATF membership would be tantamount to surrendering Iran’s strategic capabilities.

In late June, Iran remained on the FATF's blacklist after a meeting in Singapore. The blacklist status means that Tehran is subject to increased scrutiny and restrictions from international financial institutions on top of banking sanctions imposed by the United States.

Toby Dershowitz, Managing Director of the Foundation for Defense of Democracies, explained that being on the FATF blacklist carries both "reputational and real consequences," deterring foreign investment and complicating trade relations. "It sends a message to the whole financial system…that basically says it’s not safe to do business with Iran," Dershowitz said.

However, not everyone believes that exiting the blacklist will solve Iran’s problems. Nour News, a media outlet close to Iran’s Supreme National Security Council, stated on X on Tuesday that the government’s efforts to leave the FATF blacklist would not lead to improvements in foreign trade due to the "oppressive sanctions" still in place. Iran has been sanctioned for its nuclear program, support for Russia's war on Ukraine and rights abuses by the US and European countries.

The outlet emphasized that Iran should prioritize national production and strengthen ties with neighboring countries and regional economic organizations instead. "Focusing on national production and regional economic cooperation holds a higher priority," the post read. However, the policy of isolationism has further plunged Iran's economy into crisis.

President Pezeshkian’s administration continues to face pressure to resolve the FATF issue. According to Mahdi Ghodsi, an economist with the Vienna Institute for International Economic Studies, FATF compliance could help normalize trade relations and reduce Iran’s reliance on black-market oil sales.

Ghodsi pointed out that while Iran continues to sell oil through intermediaries in countries like Malaysia, the profits from these sales primarily benefit a small group of government insiders, leaving ordinary Iranians to suffer the consequences of international isolation.

"So these are the people who we don't know. They are not part of the government. They are hidden financial apparatus that nobody cares about," Ghodsi told Iran International. "They're benefiting the government, but at the same time, they're benefiting themselves enormously."

"Whoever attacks us will be hurt and will pay a price. Our attack will be deadly, precise and above all surprising, they will not understand what happened and how it happened, they will see the results," Gallant added.

Earlier on Wednesday, US President Joe Biden together with Vice President Kamala Harris and Israeli Prime Minister Benjamin Netanyahu spoke in a phone call in a bid to form a united front on Israel's likely counterattack to the Oct. 1 missile barrage

White House press secretary Karine Jean-Pierre said the call lasted around 30 minutes but provided no details beyond calling the discussion “productive, it was direct.”

Asked in an interview with CNN about the discussion, Harris declined to elaborate, saying the call was "classified".

A photograph released by Netanyahu's office showed the prime minister along with top military and government aides participating.

A visit to Washington DC planned for the previous day by Israel's Defense Minister Yoav Gallant was cancelled without explanation, underscoring rifts at home and abroad over Netanyahu's war aims.

Both Gallant and Biden have feuded with Netanyahu about Israel's conduct of a year-long military campaign in Gaza following the Hamas-led attack by Palestinian militants on Israel on October 7.

The US president telephoned Israel's President Isaac Herzog rather than Netanyahu to convey his condolences on the one-year anniversary of the assault which killed around 1,100 Israelis, most of them civilians.

The two leaders have not spoken since August and their lack of a working relationship has complicated efforts to reach a ceasefire in Gaza and Lebanon, and after Iran's Oct. 1 attack on Israel with nearly 200 missiles, about how Israel should respond.

The United States, Western and Arab powers helped repel the onslaught, which killed a lone Palestinian man and was dismissed as a failure by the United States.

A previous missile salvo by Iran on Israel in April only provoked a muted Israeli response after the United States urged its ally not to escalate tensions further.

Biden has said Israel should not target Iran's nuclear sites and publicly counseled against hitting its oil facilities, though he maintained that the two allies were in constant coordination about the appropriate retaliation.

Harris, the Democratic candidate to succeed Biden, on Tuesday described Iran and the United States' main threat, while her opponent former President Donald Trump criticized Biden for not blessing an attack on nuclear sites.

The relatively moderate Iranian news site Rouydad24 wrote in an editorial on Wednesday that despite the possibility of attacks on Iran's nuclear infrastructure, the International Atomic Energy Agency’s (IAEA) silence was perplexing.

“Should this silence be interpreted as tacit approval for such an attack, or does it imply the IAEA sees no reason for concern on this issue?” the editorial asked, suggesting that the agency's silence could be interpreted as either passive endorsement or indifference to the potential threat.

The website characterized Western and Israeli discussions about the possibility Israel will destroy Iran's nuclear capabilities as a warning sign that the IAEA should intervene.

Publication of such articles in the tightly controlled Iranian media may indicate that the government's top policy bodies have agreed or prompted a particular point of view to be made public.

The article may be an attempt by Iran to raise the issue of an IAEA intervention to stop a possible Israeli attack on its nuclear sites, especially since the US government has also voiced opposition to such a move.

Historically, the IAEA has remained neutral on political matters while stressing the importance of nuclear facility safety. Its statements generally focus on the consequences of strikes such as a potential radioactive release rather than on endorsing or opposing any party in a conflict.

Following Russia's invasion of Ukraine the IAEA took an unusually vocal stance on nuclear safety, especially around the Zaporizhzhia Nuclear Power Plant. Director-General Rafael Grossi has repeatedly warned of the severe risks from military actions near nuclear reactors and has called for a protective zone around ZNPP to prevent a potential radioactive disaster.

The outlet went on to posit that the IAEA's silence on a possible Israeli strike on Iranian nuclear sites could be seen as an indication that the agency perceives Israel’s threats not as imminent actions but as strategic moves aimed at influencing Iran’s stance and pressuring the US to meet certain demands.

Last year, Grossi condemned what he called Iran's "disproportionate and unprecedented" move to bar multiple inspectors assigned to the country, hindering the UN nuclear watchdog’s oversight of Tehran's atomic activities.

The editorial may highlight a catch-22: by barring inspectors, Iran itself has limited the IAEA’s influence and capacity to respond effectively to the looming threat of a possible strike by Israel on nuclear targets.

Tehran’s removal of inspectors not only limits the IAEA’s influence but also isolates Iran further from the international system, complicating any calls for international intervention to prevent Israeli strikes.

As a threshold nuclear state, Iran has accumulated highly enriched fissile material for producing a nuclear weapon, though it has not yet taken the final step toward weaponization.

Although Tehran has consistently argued that its nuclear program is meant for peaceful purposes, the current state of its nuclear program, experts say, could act as a deterrent against Israeli aggression.

Some military analysts argue that Israel would require US assistance to effectively strike Iran's nuclear targets. Despite this, the Biden administration has not received any assurance from Israel that targeting Iran’s nuclear facilities is off the table, according to a senior US State Department official who spoke to CNN last week.

Amid an ongoing economic crisis, compounded by challenges from the 2019 Beirut port disaster to the pandemic, Lebanon is already on its knees.

Prior to the war, only one third of the country, mainly Shiites, had confidence in Hezbollah, but as the destruction of Israel’s bombardment of the Iranian proxy continues, Dr Michael Robbins from the Arab Barometer warns it could sway the balance.

“In times of war, it is very difficult to know for sure how public opinion will change,” he said. “In Arab Barometer’s last survey of Lebanon in the spring, just 30% of Lebanese had confidence in Hezbollah. However, this was deeply divided by sect. The vast majority of Shiites in Lebanon had confidence in Hezbollah compared with a small minority of Christians, Sunnis, or Druze.

“However, when we asked if it was good the Arab region that Hezbollah is getting involved in regional politics, Christians, Sunnis, or Druze were more likely to agree in spring 2024 than they were in late 2021 to early 2022. Hezbollah’s attacks on Israel after October 7 are the most likely explanation for this increase.”

As the Israeli offensive now leaves around one million Lebanese displaced, the risk of allegiance to Hezbollah grows.

“While many in the Shiite community turned to Hezbollah for protection and social services, Hezbollah’s inability to protect them or provide for them may have driven down support for this organization, at least in the short term. The broader question is really the longer-term effects. If Hezbollah is able to successfully resist the Israeli invasion, as it did in 2006, then Lebanese attitudes may once again become more favorable toward the group as it did when it repelled Israel in 2006. So, it is too soon to say what will be the ultimate effect on views of Hezbollah.”

Huge swathes of southern Lebanon have been turned to rubble, in addition to Hezbollah strongholds in Beirut, the group buried deep within and underneath the civilian infrastructure.

Targeted killings have reached the top levels of the group, including the once seemingly immune Hassan Nasrallah. Over 1,500 operatives were also taken out of action in a mass pager and walkie-talkie attack, which Israel has not claimed responsibility for.

However, for Iran, the group is a key asset and experts say the support from Iran will only strengthen in the face of such destruction by Israel.

“Iran would likely replenish Hezbollah’s material losses and provide financial support to help the group recover, as it did in 2006,” according to the Center for Strategic and International Studies. “Iran has also increasingly signaled its willingness to directly attack Israel in response to the Israeli threat to Hezbollah, and the Israeli response to Iran’s October 1 ballistic missile attack will risk further escalation between the two regional powers.”

Before the latest escalation, the worst since the last war in 2006, many Lebanese, especially those who were not Shiite, were deeply opposed to Hezbollah and many wanted it destroyed, said Dr Robbins. “Yet, at a time of war, the situation often changes. Confronted with the realities of an Israeli invasion, it is possible that there has been a “rally-around-the-flag” effect where Lebanese, despite their differences, band together against a foreign force. Surveys conducted after October 7 in the Palestinian Territories showed increased levels in support for Hamas. It’s possible that the same is happening today in Lebanon but it is difficult to say without new survey data on this topic.”

Before the strike on Nasrallah, non-Shia Lebanese were longing for Israel to take action against the group which has hijacked the country’s political and economic systems. But now, as destruction continues, the feelings are changing.

George Khoury, a Christian from Beirut, told Iran International: “This is not Gaza, we didn’t ask for this and this is not a way for us to live. We are all being punished for Hezbollah. Yes, we want the end of this terror group, but this is a huge price we are all paying now.”

The future of Hezbollah is now in question, but killing its ideology is harder still. “Even if Israel were successful in destroying Hamas, it is unclear what would fill the resulting vacuum. ISIS filled such a vacuum in parts of Syria and Iraq while ISIS and al-Qaeda affiliates have done the same in the Sahel region just south of the Sahara in recent years," Dr Robbins said.

“It is impossible to bomb away an ideology and generally such tactics lead to the destruction of lives and growing resentment. Most likely, this is what will happen in Lebanon just as it has in Gaza. Although Israel might be able to destroy the operational capacity of Hezbollah or Hamas, the events of the last year indicate no clear plan for the day after. Very likely, these same groups would reconstitute or new organizations with a similar ideology would emerge instead.”

The MPs argue that Iran's supreme leader Ali Khamenei can reconsider his religious ban on nuclear weapons on the grounds that the circumstances have changed.

“To create deterrent capability and ensure national security, the ability to develop nuclear weapons is necessary,” Iranian MP Mohammad Reza Sabaghian said Wednesday. “While having nuclear weapons is possible for Israel, Iran must pursue nuclear weapons for self-defense.”

Iranian officials have repeatedly asserted that the country's nuclear program is peaceful, referring to a religious ruling by Khamenei prohibiting weapons of mass destruction, including nuclear bombs.

But growing tensions between Iran and Israel has led some hardliners in Tehran to push for stronger measures, questioning the permanence of that ruling.

"In the context of jurisprudence, time and place can influence the modification of rulings, and secondary rulings can replace primary ones," another Iranian MP Hassanali Akhlaghi Amiri said on Tuesday.

The ruling, or fatwa, is not a legal document but an advisory opinion on Islamic law offered by a high-ranking cleric. It is not set in stone and can be changed at any time.

His remarks come as the hardline Javan newspaper, closely aligned with Iran's ultra-conservative factions, has recently called for a shift in Iran’s nuclear doctrine. Following Iranian missile attacks on Israel earlier this month, the outlet argued for an immediate "transformation" in the Islamic Republic’s nuclear program.

Javan also questioned whether Israel, if facing an existential threat, might issue threaten Iran with a nuclear attack. "Is the possibility of Israel issuing a clear or secret nuclear ultimatum out of the question?" the article asked, hinting at the possibility of nuclear escalation between the two adversaries.

Tehran’s stockpile of uranium, currently enriched to 60%, could potentially be refined to weapons-grade 90% in as little as two weeks. The shift in doctrine would likely be a signal of Iran's willingness to develop nuclear weapons if Israeli military actions threaten its core interests.

Former Israeli Prime Minister Naftali Bennett recently urged Israel to seize the opportunity to cripple Iran’s nuclear program after last week's attack in which 181 ballistic missiles were sent by Iran to the Jewish state.

Iran’s ultra-hardliners have been increasingly vocal on social media, advocating for retaliatory actions against Israel and pushing for the development of a nuclear bomb.

Supporters of former nuclear negotiator Saeed Jalili have been particularly critical of Iran's current leadership, accusing President Masoud Pezeshkian of failing to adequately respond to Israeli airstrikes in Gaza and Lebanon, a result of the October 7 Hamas-backed attacks on Israel.

In May, an adviser to Iran's supreme leader stated that Iran would reconsider its nuclear doctrine if Israel threatens its existence.

In April, amid rising tensions with Israel, which is widely believed to possess nuclear weapons, a senior Iranian Revolutionary Guards commander also warned that Israeli threats could lead Iran to alter its nuclear policy.

The head of UN nuclear watchdog has warned that Iran may be weeks away from having enough weapons-grade nuclear material.