Iran’s Illicit Oil Sales Help Fuel Mass Military Buildup

Biden admin’s lax sanctions enforcement drives Iranian military spending

Iranian military truck carries missiles past portrait of Iranian Supreme Leader Ali Khamenei / Getty
October 11, 2022

The Biden administration’s lax enforcement of sanctions on Iran’s illicit oil trade has allowed the hardline regime to infuse more than $15 billion into its military and terrorist proxies during the past two years, according to analysis by a watchdog group.

Iranian military spending significantly jumped in 2022 as the regime got more access to cash through its multibillion-dollar trade in illicit oil—cash that made its way to the regime as a result of the Biden administration’s decision not to enforce U.S. sanctions, according to United Against Nuclear Iran (UANI), a watchdog group that tracks the regime’s oil sales and military spending.

Iran, according to a report by UANI and an open source military spending database, has allocated $10.5 billion this year for its military and Islamic Revolutionary Guards Corps (IRGC), a paramilitary fighting force that backs terrorist groups across the region. That number, which jumped from $4.5 billion in 2021, comes after the regime took in some $43 billion in funds from illicit oil sales, primarily to China. This cash is fueling Iran’s regional terror enterprise, as well as its crackdown at home on a growing protest movement that threatens to topple the hardline regime.

"Once it became clear that the Biden administration would not enforce sanctions as strictly as the Trump administration, the Iranian government drastically increased its military spending," according to UANI’s latest analysis. "These revenue changes have led to an increase in the Iranian government’s military spending, which includes outlays to its terrorist proxies."

Iran, the watchdog group concluded, became "substantially richer over Biden’s first year in office—partly due to high oil prices but also due to the increased export volumes." Iran sold $30.09 billion worth of oil in 2021, when Biden entered office, and that number rose to $43 billion this year. Most of these sales were to China, Syria, and Venezuela. It is a substantial increase from the $12.5 billion worth the country sold in 2020, when sanctions were still being strictly enforced.

Analysts, UANI says, "generally agree that Iran was forced to reduce its support to Hezbollah, Hamas, Palestinian Islamic Jihad, Iraqi proxies, and the Houthis [in Yemen] as a result of the reimposition of U.S. sanctions" by the Trump administration. Trump’s "maximum pressure" campaign on Tehran significantly restricted its oil trade, but those sales have skyrocketed under the Biden administration, which has turned a blind eye to enforcement as it seeks to ink a revamped version of the 2015 nuclear accord.

"The lack of sanctions on Iranian oil exports has led to a drastic increase in Iran’s military budget for 2022," UANI chief of staff Claire Jungman told the Washington Free Beacon. "This revenue also directly benefits Iran’s proxies, such as the Houthis and Hezbollah. It would not surprise me if we see further regional insecurity, destabilization, and humanitarian tragedies as Iran looks to display its power in the region as a result of its increased budget."

At this point, Jungman said, "there is no incentive" for Iran to ink a new nuclear deal, as the country and its terror proxies are already "getting everything they want and more as a result of lax sanctions enforcement."

Under the Trump administration’s strict sanctions enforcement regime, Iran and its terror proxies faced a serious cash crunch.

The Trump administration’s strict enforcement of sanctions on Iran’s oil trade directly impacted the regime’s support for terrorist groups across the Middle East. Hezbollah, for instance, the Lebanese terror group armed and directed by Tehran, closed some offices, furloughed militants, and reduced wages as a result of revenue shortfalls, according to UANI.

In 2020, Iran sold around $6.6 billion worth of oil to China. In 2021, when Biden took office and relaxed sanctions, Iran made $23.1 billion from its oil sales to China, according to figures compiled by UANI.

These cash windfalls have translated into greater military and terrorism spending.

"A large share of the Iranian regime’s military budget is earmarked for its terror proxy networks," according to UANI. "Oil export revenue spikes therefore translate into the growth of money allocated to Iranian terror proxies, which in turn has led to an increase in attacks by these proxies. This result is a direct threat to our national security interests, as well as those of our partners and allies in the region."

This spending stands to increase if a new nuclear deal is signed due to the massive sanctions relief built into the agreement.

"There is no reason for Iran to scale back these activities," UANI wrote. "Iran’s proxies and military—let alone its nuclear and ballistic missile program—directly benefit from sanctions relief."

Jerry Canto, a research and operations assistant at UANI, said that as long as Iran can keep selling oil, "its proxies will have the money they need to wreak havoc throughout the Middle East."