Iran may nix Starlink internet unless SpaceX heeds rules, ex-official says

Hossein Shamkhani, son of ex-security chief Ali Shamkhani, oversees a network of companies central to facilitating weapons shipments across the Caspian Sea to Moscow amid its ongoing war in Ukraine, the report said.

Through his Dubai-based company Crios Shipping LLC, the younger Shamkhani began moving missiles, drone components, and dual-use goods last year, relying on at least two ships.

The Bloomberg report cited information provided by more than a dozen unnamed US, UK, and European officials, along with others familiar with the transactions.

These shipments, according to sources cited by Bloomberg, are part of a barter arrangement in which Moscow pays Tehran with oil cargoes in order to bypass sanctions restricting both nations’ access to international financial systems.

“My understanding is the Shamkhani network ties into the drone contracts for use in Ukraine,” said John Bolton, former US National Security Advisor, now a senior fellow at the Foundation for American Security and Freedom.

Shamkhani’s trading prowess highlights Iran's broader use of a vast network of companies spanning commodities trading and hedge funds.

A family legacy of influence and controversy

Hossein Shamkhani’s ascent in global commerce and politics is intertwined with his father Ali Shamkhani’s legacy. As a long-serving Iranian defense minister and national security advisor, Ali Shamkhani has remained close to Supreme Leader Ali Khamenei, leveraging his influence even after stepping down from the Supreme National Security Council in 2023.

The Shamkhani family has faced repeated allegations of corruption and abuse of power. Iran International’s investigative journalist Mojtaba Pourmohsen has reported extensively on family members’ involvement in high-profile scandals, including accusations of illicit business dealings, ownership of extravagant properties and bank accounts abroad.

One particularly contentious episode involved their role in the collapse of a building in Khuzestan province in 2022, a tragedy that left dozens dead. The building’s owner, a businessman linked to the family, was found to have violated multiple construction regulations.

Hossein Shamkhani has denied any wrongdoing and rejected claims of involvement in illegal arms shipments or sanction-busting oil trades.

A lawyer representing him told Bloomberg that the allegations are baseless and lack supporting evidence. Similarly, Mohamed Al Hashmi, managing director of Dubai-based Milavous Group Ltd—another firm tied to Shamkhani—dismissed allegations of involvement in Iranian or Russian oil trading.

Complexities of sanctions and enforcement

The cross-Caspian shipments highlight challenges in enforcing Western sanctions. Ships linked to Shamkhani’s network, including the Sea Castle and Sea Anchor, have completed multiple trips between Iranian ports and Russia’s Astrakhan in the past year.

These vessels, though modest in size by global shipping standards, are believed to have been sufficient for transporting weaponry on the short Caspian routes.

Bloomberg’s analysis of ship tracking data suggests these voyages accelerated in 2023, coinciding with Russia’s increased reliance on Iranian arms for its operations in Ukraine.

Shamkhani’s maritime network extends beyond these two vessels. Bloomberg cited sources describing an extensive fleet of tankers and cargo ships controlled through entities such as Oceanlink Maritime DMCC and Koban Shipping LLC.

While the US Treasury has sanctioned several of these ships and their associated companies, enforcement has been complicated by frequent changes in ownership and the lack of direct links to Shamkhani in official records.

“Sanctions enforcement against these barter networks is a lot harder, particularly when you consider Russia’s historic dominance in the region,” said Behnam Ben Taleblu, a senior fellow at the Foundation for Defense of Democracies.

He emphasized the importance of transparency and international cooperation to expose these networks and curb their activities.

Expanding business empire and diplomatic implications

Beyond shipping, Shamkhani’s network includes a hedge fund operating in financial hubs such as London, Geneva, and Singapore, and a Dubai-based commodities trading firm dealing with Western oil companies.

Despite these connections, he has not been personally sanctioned by the US or European governments. This lack of direct penalties has fueled concerns about loopholes in current sanctions regimes, particularly as entities within Shamkhani’s network continue to conduct significant business with Chinese buyers using yuan transactions, avoiding the US financial system.

Both Iran and Russia have acknowledged their growing military cooperation without detailing specific arms deals.

While their collaboration appears not to inherently violate international law, it exposes participants to potential sanctions.

A State Department spokesperson warned of the broader security implications, saying, “This partnership threatens European security and illustrates how Iran’s destabilizing influence reaches beyond the Middle East and around the world.”

The allegations against Hossein Shamkhani, if substantiated, underscore the resilience of global sanctions evasion networks and the complexities of monitoring illicit trade.

With limited transparency and persistent geopolitical rivalries, success in curtailing Iran's sanctioned trade has eluded the West and its allies.

The experts including Special Rapporteur on human rights in Iran Mai Sato highlighted reports of Baha’i women being subjected to arrests, interrogations, enforced disappearances, home raids, confiscation of personal belongings, travel restrictions and prolonged detentions without due process.

Noting that Baha’i women make up two-thirds of all Baha’i prisoners in Iran, the experts said many were being held incommunicado.

This increase in persecution, they warned, represents a worrying deterioration of gender discrimination and persecution of religious minorities in the country.

“In the larger context of the targeting of women in Iran and the challenges with gender equality, this dramatic rise in persecution against Baha’i women is an alarming escalation,” the experts said in a statement Monday.

“This is affecting a group of people who face intersectional discrimination and persecution: as women and as members of the Baha’i religious minority.”

The experts also pointed to the ongoing persecution faced by all Baha’is in Iran, including the denial of higher education, restrictions on economic and cultural participation, and bans on university attendance and public employment.

“We are concerned at the use of ambiguously formulated accusations such as ‘threat to national security’ or ‘propaganda against the State’ to systematically restrict the peaceful exercise of their rights,” they said.

“This may have a significant chilling effect on other members of the Baha’i religious minority and the exercise of their human rights and freedoms.”

The experts, part of the UN Human Rights Council's Special Procedures—a group of independent experts who monitor and investigate human rights issues worldwide—said they raised their concerns directly with the Iranian government.

The Iranian authorities responded by asserting that Baha’is enjoy full rights and face no restrictions. However, just days after receiving this response, reports emerged that 10 Baha’i women in Isfahan had been sentenced to a total of 90 years in prison.

The experts emphasized that the Iranian government's response contradicts the situation on the ground, where Baha’is continue to face significant challenges to their rights and freedoms.

The Baha’i International Community also warned on Monday that 71-year-old Mahvash Sabet, a Baha’i prisoner in Iran, had undergone open-heart surgery after being denied medical care for years. The BIC called for her immediate release, the cancellation of her sentence and assurances she would not be returned to jail.

An architect of the 2015 deal over Iran's disputed nuclear program, Zarif is a cogent voice in English-speaking policy circles for greater engagement with Tehran.

"Like all nations, Iran has faced its share of challenges and missteps. The Iranian people, having endured significant sacrifices, are now prepared—with resilience and confidence—to take bold steps," Zarif, now vice-president for strategic affairs, wrote.

"This shift from a threat-centered perspective to an opportunity-driven one aligns with the vision outlined by President Pezeshkian (and myself) during last summer’s presidential campaign in Iran."

The Islamic Republic is now suffering some of the biggest military and economic setbacks in its nearly 50-year history with its armed allies and air defenses largely neutered by punishing Israeli attacks and Donald Trump due to levy harsher sanctions.

Western-educated Zarif and soft-spoken President Masoud Pezeshkian are seen as largely separate from strategic and military decisions which are ultimately in the hands of Supreme Leader Ali Khamenei and the Islamic Revolutionary Guard Corps (IRGC).

To enshrine dialogue, Zarif proposed in his op-ed a Muslim West Asian Dialogue Association (MWADA) spanning Muslim states as far as Egypt but excluding top military power and arch-nemesis Israel.

"A non-aggression pact among MWADA states, coupled with collective regional monitoring, will help institutionalize stability and protect the region from external interference as well as from internal strife."

Zarif cited "much improved relations between Iran, the United Arab Emirates and Saudi Arabia today," saying better Tehran-Riyadh relations would tamp down sectarian tensions plaguing the region.

In another conciliatory gesture to Iran's erstwhile foes, the rebel groups now running Syria, Zarif said the country could rebuild with help from Iran and other neighbors.

"Governance reforms in Syria—as a basis for economic assistance—will promote accountability and lay the groundwork for a safe and stable country where women and minorities can thrive."

Iran's own treatment of women and minorities was recently criticized in a United Nations General Assembly Resolution and Tehran largely quelled a women's rights protest movement in 2022 with deadly force.

"Following extensive deliberations, the members reached a unanimous consensus to lift restrictions on access to select widely utilized foreign platforms, including WhatsApp and Google Play, while underscoring the paramount importance of maintaining lawful governance in cyberspace," state-controlled IRNA news wrote.

The decision follows President Masoud Pezeshkian’s election pledge to improve access to foreign platforms, many of which are commercially critical for Iranians, especially those with small businesses.

However, while WhatsApp and Google Play restrictions are being lifted, Instagram, YouTube, and Telegram remain in limbo amid hardliner resistance.

The decision to unblock WhatsApp and Google Play still requires ratification by the office of Iran's Supreme Leader, Ali Khamenei, according to Abolhassan Firouzabadi, the former head of Iran's Supreme Council of Cyberspace, who spoke to state TV on Tuesday.

Iran's ruling clerical and military establishment have been wary of social media platforms as a vehicle for organizing protests, which have played out more on X and Telegram than the apps unshackled by the latest move.

Google Play would enable android phone users to download VPN apps to bypass government internet filtering.

The details of the lifting of restrictions have yet to be published, but the Mehr News agency which is close to the conservative establishment reported on a possible four-stage plan that might represent the actual framework discussed by the Council.

Stage one: Short-term measures

The outlet wrote that the first stage proposes immediate steps to ease access, such as providing more infrastructure to domestic platforms, offering advertising funds to support local messaging apps, and reopening Google Play and WhatsApp.

Stage two: Controlled expansion

The government also proposes a controlled opening for platforms such as YouTube through governance-compliant portals, drafting anti-fake news legislation, and encouraging domestic content creation. Additionally, government agencies would be banned from officially using foreign platforms.

Stage three: Quality improvement

Addressing the need to improve domestic platform quality, Mehr says the government would make certain essential government services like subsidies, legal services, and fuel cards exclusively available through domestic apps. A proposal has, it says, been made to reopen Telegram under strict conditions, or alternatively, integrate it with domestic infrastructure if negotiations fail.

Stage four: Enforcement

The final stage introduces stricter rules and enforcement measures, including criminalizing tools that bypass filtering, taxing foreign platforms, and escalating judicial actions against unauthorized platform use. Proposals include negotiating the reopening of additional platforms, but only if they comply with strict regulatory conditions.

Who decides?

The Supreme Council of Cyberspace, established in 2012 by the Supreme Leader Ali Khamenei, controls Iran’s internet policy. Its members include the President, the Speaker of Parliament, the Judiciary Chief, and several key ministers.

However, its jurisdiction often overlaps with Parliament and the Supreme Council of the Cultural Revolution, leading to conflicts amid blurred lines of authority.

Resistance from MPs and political maneuvering

Student News Network (SNN) wrote Tuesday that 136 members of Parliament had sent a letter to the Council, urging it to retain the restrictions.

According to Khabar Online, MP Reza Taghipour, a former Minister of ICT, has been gathering signatures from other MPs to oppose lifting restrictions.

His efforts have gained support from the Paydari Front, an ultra-conservative political faction, including figures such as Hamid Rasaee and Ghasem Ravanbakhsh.

However, Taghipour’s actions reveal inconsistency, as he previously criticized internet filtering on television, calling it a “business tool.”

In this year's latest Freedom House report on internet freedom, the watchdog ranked Iran the world's third worst country, amid a host of measures to limit open internet usage.

The head of the Isfahan Chamber of Commerce, Amir Kashani, told Bourse Press earlier this month that he estimates a total annual loss to the steel industry at around $4 billion.

In an interview with state television last week, an official of Abbas Abad Industrial Compound in the southeast of Tehran said the industries based in the compound are facing power cuts of up to 14 hours a day.

The industrial area is home to dozens of factories producing electronic and household appliances, car parts, plastic, and dairy products.

Mohsen Zabihi, the coordination deputy of TAVANIR, Iran's government-owned energy company, said on December 15 that low winter temperatures and the increase in domestic gas use have caused serious shortages in the supply of fuel to power plants, particularly in the northern areas of the country.

He announced that all industrial units have been informed that they must reduce their electricity consumption by 50 percent from 6am to 5pm, by 90 percent between 5pm to 12am, and by 70 percent until 6am the next day.

The continued disruption to production is putting many workers in danger of losing their jobs. In an unusually candid admission, Chief Justice Gholamhossein Mohseni-Ejei said on Monday that production companies are facing serious issues including cash flow problems and inability to pay the workforce due to power shortages.

Producers say power cuts are damaging their machinery and products, particularly food with poultry farmers reporting extensive deaths of young chickens, and dairy producers' products saying their products are spoiling during power cuts.

With the drastic deterioration of the economy in the past few years, workers’ strikes to protest low wages and long delays in the payment of their salaries have become more common.

If the situation worsens, the risk of protests looks increasingly high, with Mohseni-Ejei briefing security and intelligence officials to ready for such unrest, reminiscent of the nationwide protests of 2019.

Around 80 percent of Iran's electricity is produced from fuel. Officials say the private sector owns around 65 percent of fuel power plants.

However, many companies described as private are owned fully or partially by various state entities such as Bonyad-e Shahid, Bonyad-e Mostazafan, and government-owned banks such as Bank Sepah.

As in most other sectors, there is no transparency in data on electricity production, profits, and losses of fuel power plants but experts say they have been consistently accumulating huge losses since 2018 for various reasons including the government’s strict control of prices and failure to pay its debts to them.

Iran's minister of energy, Abbas Aliabadi, recently told reporters that "a considerable number" of organizations or individuals have been putting strain on the grid due to illegal Bitcoin mining. However, this includes state bodies such as the Revolutionary Guards (IRGC), the burden only adding to existing issues such as the dilapidation of power plants and the government's failure to store enough fuel for running them in the winter.