Iran Update, May 3, 2023

Iran Update, May 3, 2023

Annika Ganzeveld, Johanna Moore, Amin Soltani and Kitaneh Fitzpatrick

May 3, 2023, 4:00 pm ET

Contributor: Anya Caraiani

The Iran Updates are produced by the Critical Threats Project (CTP) at the American Enterprise Institute with support from the Institute for the Study of War (ISW). To receive Iran Updates via email, please subscribe here.  

Iranian President Ebrahim Raisi signed 15 cooperation agreements with Syrian President Bashar al Assad in Damascus, Syria on May 3, which could improve the Iranian economy and increase regime stability.[1] Raisi signed these agreements on the first of his two-day trip to Syria, the first trip an Iranian president has made to Syria since the start of the Syrian civil war in 2011 and Arab Spring.[2] Raisi and Assad signed several memorandums of understanding covering oil, energy, transportation, reconstruction, and communications technology. Raisi also asserted that Iranian companies are prepared to be the primary providers of reconstruction projects in Syria during an interview with Lebanese Hezbollah-run Al Mayadeen on May 2.[3] The head of the Iran-Syria Joint Economic Commission and Iran’s Roads and Urban Development Minister Mehrdad Bazrpash separately announced on May 3 that the commission established a joint Iranian-Syrian bank to facilitate business transactions between the two countries.[4] The commissioner’s announcement of the joint bank while Iran and Syria signed economic cooperation agreements suggests the bank will have a role in funding Iranian reconstruction projects in Syria and transferring payments to Iran. These payments would increase capital inflow to Iran, which would help reinvigorate Iran’s deteriorating economy. The role of Iranian para-statal organizations in generating revenue through Syria’s reconstruction would not alleviate Iran’s high inflation and unstable currency, although the regime may attempt to frame it as such to the Iranian people. Such para-statal organizations include the Khatam al Anbia Construction Headquarters, which is the IRGC’s engineering and development firm that oversees large-scale civil-military construction projects and helps the regime circumvent sanctions.

Iranian reconstruction and economic partnership in Syria may include contracts for Iran’s Axis of Resistance in Syria, which would provide the groups with an alternative source of revenue to fund their military operations. The Iranian regime had to cut salaries for its proxies and militias due to the compounded effect of US sanctions and COVID-19 measures.[5] Contracts for Iranian-backed proxies and militias would provide other sources of revenue to pay fighters and purchase weapons to support Iran’s military posture and influence in Syria. Iraqi proxies already have demonstrated their willingness and capability to take part in Syria’s reconstruction. Several of the groups built several hundred apartment units in north-western Syria following the February 6 earthquake which proxies also used to strengthen and expand militia positions as CTP previously assessed.[6] Iranian economic and reconstruction projects would have the added benefit of retaining Iranian influence within Syria at a time when several neighboring countries are engaging in normalization efforts with Syria.

Key Takeaways

• Iranian President Ebrahim Raisi signed 15 cooperation agreements with Syrian President Bashar al Assad in Damascus, Syria on May 3, which could improve the Iranian economy and increase regime stability.
• Iranian reconstruction and economic partnership in Syria may include contracts for Iran’s Axis of Resistance in Syria, which would provide the groups with an alternative source of revenue to fund their military operations.
• At least six protests occurred in five cities across five provinces on May 3.
• Iranian officials and clerics continued to express concern about deepening divides between the regime and its populous.
• President Ebrahim Raisi and an IRGC-affiliated media outlet discussed strengthening indoctrination efforts in Iranian schools.
• Reformist-affiliated Etemad reported on May 3 that some Iranians have resorted to bartering household goods to afford chicken amid deteriorating economic conditions.
• The IRGC Navy seized the Panamanian-flagged oil and Greek-managed Niovi tanker in the Strait of Hormuz on May 3, the second tanker seized by Iranian naval forces this week.

Internal Security and Protest Activity

At least six protests occurred in five cities across five provinces on May 3. CTP assesses with moderate to high confidence that protests occurred in the following locations:

Esfahan City, Esfahan Province[7]

• Size: Small
• Demographic: Esfahan Art University students, anti-regime protest

Tehran City, Tehran Province[8]

• Size: Small
• Demographic: Teachers

Ahvaz, Khuzestan Province[9]

• Size: Small
• Demographic: Retirees

CTP assesses with low confidence that protests occurred in the following locations:

Oroumiyeh, West Azerbaijan Province[10]

• Size: Small
• Demographic: Individuals protesting land seizures

Tehran, Tehran Province[11]

• Size: Small
• Demographic: Disabled individuals

Ghazvin, Ghazvin Province[12]

• Size: Small
• Demographic: Disabled individuals

CTP recorded student poisoning incidents in three cities across two provinces on May 3.

Domestic Affairs

Iranian officials and clerics continued to express concern about deepening divides between the regime and its people.[13] Interior Minister Ahmad Vahidi discouraged private citizens from enforcing mandatory veiling on May 3 following increased confrontations between unveiled women and regime vigilantes in recent weeks. Prominent Cleric Ayatollah Mohammad Javad Alavi Boroujerdi stressed the need to repair fissures between the clergy and the Iranian population in a tweet published on May 1. Boroujerdi urged Iranian officials to address the population’s grievances with the regime. Former reformist president Hassan Rouhani separately published an article discussing the need for regime officials to engage in ”critical dialogues” with the Iranian people on May 3.

President Ebrahim Raisi and an IRGC-affiliated media outlet discussed strengthening indoctrination efforts in Iranian schools.[14] Raisi stressed his commitment to stabilizing management within the education system and implementing a cultural document that promotes Iranian-Islamic ideology and pro-regime rhetoric in schools on May 2. IRGC-affiliated Javan News separately published an op-ed criticizing the Iranian education system for failing to provide children with an Iranian and Islamic identity on May 3. Iranian school children spearheaded acts of anti-regime defiance following the Mahsa Amini protest movement.[15]

Economic Affairs

Reformist-affiliated Etemad reported on May 3 that some Iranians have resorted to bartering household goods to afford chicken amid deteriorating economic conditions.[16] A shopkeeper interviewed by Etemad stated that individuals who were wealthy several months ago are currently unable to afford items such as chicken. A different shopkeeper informed Etemad that chicken sales have decreased roughly 50 percent in recent months because of consumers’ decreased purchasing power.  These reports follow the Wall Street Journal’s assessment on May 1 that the Statistical Center of Iran may have intentionally avoided publishing inflation data in recent months to conceal evidence of rising prices.[17]

External Security and Military Affairs

The IRGC Navy seized the Panamanian-flagged oil and Greek-managed Niovi tanker in the Strait of Hormuz on May 3, the second tanker seized by Iranian naval forces this week. Iranian news outlets reported that the IRGC Navy seized the tanker following Iranian judicial orders over an unspecified complaint.[18] The US Fifth Fleet confirmed the seizure and published aerial drone surveillance footage of IRGC fast attack small boats swarming the Niovi.[19] The Artesh Navy seized the Chinese-owned, Marshall Islands-flagged tanker Advantage Sweet on April 27, as CTP previously reported.[20]